CMS Unveils New Medicare APMs for Quality Payment Program

December 21, 2016 - CMS finalized several new Medicare alternative payment models that will qualify for a five percent value-based incentive payment through the Quality Payment Program. The announcement contained bundled payment initiatives for cardiac and orthopedic care and a new Medicare Shared Savings Program (MSSP) track as well as updates to the Comprehensive Care for Joint Replacement Model.

With new Advanced Alternative Payment Model (APM) opportunities, CMS expects over 70,000 new physicians to participate in an approved model by 2018.

“Today, we’re proud to continue progress strengthening Medicare for beneficiaries, providers, and taxpayers with alternative payment models that reward the quality of care over quantity of services,” stated Sylvia M. Burwell, HHS Secretary. “These models give providers and hospitals the tools they need to provide the kind of high-quality patient-centered care we all want for our own families, while also driving down costs for the nation.”

Cardiac and orthopedic care bundled payment models

In the announcement, CMS unveiled three bundled payment models and a performance-based program that aim to improve patient outcomes, reduce care variation, and lower preventable readmissions by boosting cardiac and orthopedic care coordination.

Over 200,000 Medicare beneficiaries were hospitalized for heart attack treatment or bypass surgery in 2014, costing Medicare about $6 billion, CMS reported.

Higher cardiac care spending stemmed from significant cost and care variation. The cost of treating patients for hospitalizations, bypass surgeries, and recovery varied by 50 percent across hospitals as did the share of heart attack patients readmitted to a hospital within 30 days.

To lower Medicare spending and improve care quality, CMS developed the following bundled payment models:

• The Acute Myocardial Infarction (AMI) Model

• The Coronary Artery Bypass Graft (CABG) Model

• The Surgical Hip and Femur Fracture Treatment (SHFFT) Model

The final rule also included adjustments to the Comprehensive Care for Joint Replacement (CJR) Model, which will now qualify as an Advanced APM in the Quality Payment Program. Model changes will also better align policies with episode payment arrangements, beneficiary engagement activities, compliance, appeals processes, and beneficiary notifications.

The bundled payment models as well as the updated CJR Model will reimburse acute care hospitals a retrospective episode-based payment for items and services associated with the respective care episode, starting with a hospitalization and going for 90 days after hospital discharge.

Participating hospitals should expect to receive Medicare episode quality-adjusted benchmark prices each performance year. The episode price will include payment for all related services furnished to eligible fee-for-service Medicare beneficiaries who were treated and discharged for the specific care episode.

Quality-adjusted prices, however, will be based on provider-specific and regional pricing. But CMS plans to gradually increase the proportion of regional pricing.

The new bundled payment models will also phase in downside financial risk. Although, the CJR Model’s downside risk timeline will not change.

At the end of each performance year, CMS will compare total actual spending on all episodes to the aggregate quality-adjusted target price for each hospital. Based on the hospital’s quality and cost performance, the hospital could receive an additional Medicare payment or repay CMS for a portion of the financial losses.

For the first and second performance years, participants in the new bundled payment models will not be required to repay financial losses, but there is an optional downside risk track in the second performance year. In the third and fourth performance years, CMS will implement a reduced discount percentage for repayment responsibility.

Hospitals that have actual spending below quality-adjusted benchmarks and earn an acceptable or better quality care score will be eligible to earn the following:

• 5 percent of target price in first, second, and third performance years

• 10 percent in fourth performance year

• 20 percent in fifth performance year

While the models contain downside financial risk, CMS will include stop-loss and stop-gain limits to protect hospitals from taking on too much risk. Rural, Medicare-dependent, rural referral, and sole community hospitals will receive lower stop-loss limits.

Only hospitals in select areas will participate in the new and updated bundled payment models. The AMI and CABG models will be implemented in 98 geographic areas, while the SHFFT Model will be in the 67 areas also covered by the CJR Model.

The AMI, CABG, and SHFFT Models will start on July 1, 2017 and last until Dec. 31, 2021.

Additionally, CMS introduced the Cardiac Rehabilitation Incentive Payment Model. The value-based reimbursement program will provide hospitals in 45 areas with an incentive payment for using cardiac rehabilitation.

Despite improving outcomes, only 15 percent of heart attack patients receive cardiac rehabilitation, CMS reported.

To incentivize providers to boost cardiac rehabilitation utilization, CMS will pay participating hospitals a retrospective payment based on total utilization. The initial payment will be $25 per cardiac rehabilitation service for each of the first 11 services reimbursed by Medicare during an AMI or CABG care episode. After the initial services, CMS will pay hospitals $175 per service in the episode.

CMS plans to launch the program on July 1, 2017.

Medicare Shared Savings Program Track 1+

Starting in 2018, providers can join a new MSSP track that includes more financial risk than Track 1, but less than Tracks 2 and 3.

MSSP Track 1+ will largely be based on Track 1 with a maximum 50 percent shared savings rate. The model will also have a fixed 30 percent loss sharing rate and the downside risk maximum will be based on ACO composition.

However, Track 3 elements will be incorporated into the new track, including the following:

• Prospective beneficiary assignment

• Symmetrical threshold options

• Skilled nursing facility 3-Day Waiver option

CMS intends for the MSSP Track 1+ to help providers ease into downside risk models while still promoting “rapid progression” of performance-based risk. To help providers take on more risk, the maximum loss limit in 2018, the model’s first performance year, will be either 8 percent of the ACO’s Medicare fee-for-service revenue or 4 percent of the ACO’s updated benchmark depending on ACO composition.

In 2019 and 2020, ACOs that are eligible for lower sharing limits can choose to include a higher percentage of Medicare revenue. However, the ACO’s loss sharing limit cannot exceed 4 percent of the ACO’s updated historical benchmark.

As the final MACRA implementation rule stated, the new MSSP track will qualify for value-based incentive payments under the Advanced APM track of the Quality Payment Program. The model’s downside risk requirements will align with Advanced APM nominal risk standards.

Interested ACOs can apply to participate in the MSSP Track 1+ during the annual application cycle for the Shared Savings Program. But CMS noted that organizations should expect to submit a mandatory Notice of Intent to Apply in May 2017.

The new track will be available to MSSP Track 1 ACOs that are currently in an agreement period, initial MSSP applicants, and Track 1 ACOs renewing their agreements.

“The new ACO Track 1+ was developed based on heavy stakeholder input and will enable many more physician practices to progress to an advanced model that receives incentive payments,” said Patrick Conway, MD, CMS Acting Principal Deputy Administrator. “The model allows doctors and other clinicians to practice the way they want to – working with patients to redesign care and provide the best outcomes possible.”

Dig Deeper:

• What We Know About Value-Based Care Under MACRA, MIPS, APMs

• CMS Timelines for Stage 3 Meaningful Use, MACRA Implementation