CMS Cancels Mandatory Hip, Cardiac Bundled Payment Models

November 30, 2017 - CMS recently finalized proposals to eliminate mandatory hip fracture and cardiac bundled payment models slated to launch on Jan. 1, 2018 and decrease the scope of the existing Comprehensive Care for Joint Replacement (CJR) bundled payment initiative.

In addition to the elimination of the Episode Payment and Cardiac Rehabilitation Incentive Payment Models, the number of mandatory geographic regions in the CJR will decrease from 67 to 34 areas. The CJR initiative will continue as a voluntary program in the 33 other regions.

Low-volume and rural hospitals also will not be required to participate in the CJR initiative under the new rule.

“While CMS continues to believe that bundled payment models offer opportunities to improve quality and care coordination while lowering spending, we believe that focusing on developing different bundled payment models and engaging more providers is the best way to drive health system change while minimizing burden and maintaining access to care,” stated CMS Administrator Seema Verma.

Verma added that the federal agency will focus on developing more voluntary bundled payment models, rather than mandatory initiatives.

Compulsory Medicare alternative payment models drew criticism from policymakers and healthcare stakeholders. Former HHS Secretary Tom Price argued in 2016 that CMS overstepped its authority by requiring providers to participating in the upcoming hip fracture and cardiac bundled payments, as well as the CJR initiative.

He also stated that CMS should not force providers to join an alternative payment model until small-scale demonstrations prove that the models improve care quality and reduce costs.

Industry groups, such as Premier, agreed that CMS should focus on voluntary bundled payments. Premier contended that providers should have the flexibility to select the appropriate alternative payment models for their patient population and care setting, instead of being forced to comply with a new model.

The American Hospital Association (AHA) also called on CMS to make all future bundled payment models voluntary because mandatory models overreach the agency’s regulatory authority.

While the AHA backed the CMS proposal to eliminate the mandatory Episode Payment and Cardiac Rehabilitation Incentive Payment models, the association warned the federal agency that the elimination could counter many of the investments providers have made toward participating in the Quality Payment Program.

The hip fracture and cardiac bundled payment models qualified for maximum incentive payments under the Advanced Alternative Payment Model track of the program. Without the models, eligible clinicians have fewer options to join the Advanced APM track, which currently includes less than a dozen approved models.

The AHA urged CMS to quickly develop new voluntary alternative payment models to encourage more clinicians to move to the Advanced APM pathway.

CMS may be scaling back on Medicare bundled payment models as officials take a new approach, but healthcare experts do not foresee the end of episodic payments.

“The introduction of bundled pricing has already changed the face of the industry,” stated Michael Abrams, MD, Managing Partner at Numerof & Associates. “We’re seeing conversations across the industry that were not happening seven years ago about new approaches. The Federal approach to bundled pricing was weighed down by a great deal of bureaucracy, and in many respects was arbitrary and even punitive to those organizations that started out being fairly efficient.”

Abrams viewed the proposal to cancel the mandatory bundled payments as an effort to establish a more collaborative relationship between CMS and providers, not an attempt to undercut the value-based reimbursement transition.

The private sector is also likely to step in if CMS does not create new bundled payment models.

“Commercial payers are going to be responsive to employers, and employers are being crushed, along with their employees, by the cost of healthcare insurance,” he said. “Employers recognize that the answer is about driving down the cost of care and not how to spread around the cost of the premiums. As employers continue to advocate for changes to healthcare delivery that will bring costs under control, payers will be forced to turn to providers and demand innovations like bundled pricing.”

CMS opened the final rule to comments, with a specific call for feedback on how to address the episode cost concerns and needs of providers located in areas affected by natural disasters, like Hurricane Harvey and Irma.