Potential Challenges, Benefits of the Cardiac Bundled Payment

November 15, 2016 - Earlier this year, CMS proposed a cardiac bundled payment model that would reduce Medicare spending by $170 million on five years, but a new report in the Journal of the American Medical Association identified several potential drawbacks of the proposal.

Researchers from Massachusetts General Hospital and Harvard Medical School stated that the cardiac bundled payment model may limit the appropriate use of expensive treatments, incentivize providers to focus on short-term outcomes versus long-term improvement, and place unanticipated financial risk on participating hospitals.

In July, CMS announced a new Medicare bundled payment model that would cover the index hospitalization for acute myocardial infarction (AMI) or coronary artery bypass graft surgery and care for 90 days after discharge.

Hospitals in 98 metropolitan areas will be required to participate in the cardiac bundled payment model starting in July 2017 and bear some financial risk for the episodes of care. CMS plans to include a two-sided financial risk structure that will reward hospitals with low episode-level spending and high quality care. If spending exceeds the set budget, however, hospitals will be required to reimburse Medicare the difference.

While CMS intends for the cardiac bundled payment model to improve quality of care while reducing Medicare spending, researchers found that the model may incentivize hospitals to avoid expensive, but beneficial acute cardiovascular disease treatments.

For example, researchers stated that about 60 to 70 percent of AMIs are non-ST elevation MIs (NSTEMIs) and percutaneous coronary interventions have been proven to benefit high-risk NSTEMI patients. However, the intervention is less effective for lower-risk patients or those with type 2 AMIs.

CMS may not be able to discover if these expensive interventions are being used appropriately in a large proportion of AMI patients because the clinical data used to best assess risk is not captured in administrative data.

“Because the risk of future adverse events dictates the optimal treatment course, and risk is best assessed using clinical data (e.g., medical history, physical examination, laboratory, and electrocardiogram findings) that are often not captured in administrative data, CMS may encounter challenges in determining whether expensive treatments are being used appropriately or avoided for a substantial proportion of patients with AMI,” wrote researchers.

The 90-day episode limitation may also incentivize providers to focus on short-term outcomes, causing them to avoid expensive treatments that may potentially improve outcomes over a longer period, researchers added.

Using the NSTEMI example, researchers added that randomized trials of routine invasive versus selectively invasive NSTEMI management showed that routine invasive management has few short-term clinical benefits, but significantly decreases rates of repeat AMI, refractory angina, rehospitalization, and death during the six to 12 months following the intervention.

The 90-day period could dissuade providers from using routine invasive NSTEMI management, researchers stated, because the bundled payment model would only reimburse hospitals based on short-term outcomes and not long-term outcome improvement.

Under the cardiac bundled payment model, hospitals may have to unexpectedly bear financial risk, the report added. Unlike other Medicare bundled payment models, such as ones for chemotherapy or joint replacement surgery, the cardiac-specific model would reimburse hospitals for unanticipated healthcare events, like AMIs.

Hospitals cannot predict when a patient will come in with these cardiac episodes and the model would “compel hospitals that do not have the infrastructure or resources in reserve to manage emergent cardiac cases at times of full capacity to bear financial risk without warning.”

Smaller hospitals may face more pressure to transfer patients to higher-volume facilities, delaying definitive treatment, researchers continued.

The cardiac bundled payment model would also impose financial risk on hospitals for subsequent care at other hospitals, such as emergency department visits at other facilities. The original hospital, however, cannot control care at other facilities.

Additionally, researchers noted that cardiac bundled payment model may not incentivize hospitals enough to increase investments in cardiac rehabilitation. CMS designed the value-based reimbursement structure to reward hospitals for cardiac rehabilitation use, but researchers stated that certain hospitals are better positioned to refer patients and realize the associated benefits.

The other hospitals may not view the model’s incentives as enough to promote cardiac rehabilitation services and use.

While the report listed several potential challenges, researchers pointed out that the cardiac bundled payment model could improve healthcare spending on acute cardiac care. About 17 percent of Medicare beneficiaries hospitalized for AMI between 2012 and 2015 were readmitted within 30 days.

Under the model, hospitals may be encouraged to improve care transitions and post-discharge monitoring to prevent expensive hospital readmissions.

The model may also promote post-acute care standardization, the report added. Regional differences in Medicare spending is primarily driven by post-acute spending variations, but a bundled payment could reduce low-value and unnecessary post-acute services utilization.

Researchers advised CMS to make the following changes to improve the cardiac bundled payment model:

• Publicly report risk-adjusted one-year mortality for all participants, including long-term care quality measures for AMI

• Test other bundled payment durations to evaluate differential effects on outcomes

• Track percutaneous coronary intervention and coronary artery bypass graft surgery rates for different types of AMI to assess potential underutilization and monitor inter-hospital transfer patterns

• Require hospitals that transfer AMI patients to share accountability for the 90-day period with the receiving hospital

“Despite challenges, the cardiac payment model will be a meaningful step toward improving the quality and efficiency of cardiac care,” concluded the report. “Its performance might also serve as a bellwether for the applicability of episode-based payments to other clinical scenarios.”

An Avalere Health study from August also showed potential challenges with the proposed Medicare bundled payment model. The study stated that participating hospitals would only realize modest shared savings or losses under the cardiac-specific demonstration.

About 85 percent of providers that will be required to participate would not produce gains or losses over $500,000 per year, the report projected. Other participants may also face substantial penalties based on their historical spending patterns on cardiac care, which will be used to determine shared savings and losses for the demonstration’s first two years.

To improve shared savings opportunities, Avalere Health researchers suggested that participating hospitals focus on developing separate care management plans for surgical and medically-managed patients. Participants should also work to lower medical device spending to realize shared savings under the model.

Dig Deeper:

• Understanding the Basics of Bundled Payments in Healthcare

• How to Overcome the Challenges of Bundled Payment Models