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Keep Medicare Bundled Payment Models Mandatory, Experts Say

Several healthcare policy experts contended that making Medicare bundled payment models voluntary would undermine payment reform.

Brookings Institution experts argued that Medicare bundled payment models should remain mandatory

Source: Thinkstock

By Jacqueline Belliveau

- Switching Medicare bundled payment models that are currently mandatory in select regions to voluntary across the country would impede value-based reimbursement progress through episodic payment, industry experts warned the Trump administration in a recent Health Affairs blog post.

CMS currently has two compulsory bundled payment models: the Comprehensive Care for Joint Replacement (CJR) model and cardiac bundles under the Episode Payment Model (EPM). But the Trump administration recently delayed the implementation dates for the episodic payment programs or new components of the programs.

HHS Secretary Tom Price must decide during the freeze whether to continue the CJR and EPM bundles as intended or make the programs more voluntary.

Price has already spoken out against compulsory healthcare payment reform initiatives, arguing they overstep the legislative authority of CMS and bypass the Phase I testing statutory requirement.

Premier Health Alliance recently echoed Price’s concerns about mandatory bundled payment models. The organization stated that the programs should be voluntary to give providers more flexibility to select the most appropriate models for their organization and patient mix.

READ MORE: Understanding the Basics of Bundled Payments in Healthcare

But the five healthcare policy experts from the Brookings Institution argued that “making these models optional would eliminate the ability to generate robust evidence on their effectiveness, dealing a severe blow to efforts to use bundled payments to improve care delivery in orthopedics and cardiac care, and to the chances for bringing bundled payments to scale nationally in the coming years.”

The authors claimed that making the CJR and cardiac bundles models voluntary as well as other existing and future healthcare payment reform initiatives would be a mistake because of shortfalls associated with voluntary participation.

“Purely voluntary models like BPCI [Bundled Payment for Care Improvement] have important weaknesses that make them unlikely to generate the evidence required to take bundled payment arrangements to scale in Medicare or elsewhere,” the blog post stated.

Contributing to the limited scalability of voluntary bundled payment models is limited sizes of the programs, the policy experts argued. For example, the BPCI may have been Medicare’s largest bundled payment model test so far, but many care episodes did not have enough case volume to produce statistically precise estimates of the model’s impact on those conditions.

The selective participation component of voluntary bundled payment models also skews model evaluations. Selective participation makes it difficult to discern if actual care redesign under the models improved quality or cost outcomes or if participant and non-participant differences affected performance.

READ MORE: Bundled Payment Models Here to Stay Despite CMS Program Delays

For instance, providers choosing to take part in the BPCI generally resided in markets with twice as many specialists per capita compared to non-BPCI participants. Consequently, some stakeholders claimed that participant characteristics, not care redesigns, spurred performance changes.

Selective participation also causes bundled payment model test results to be less generalizable across provider types.

“Even where the other statistical challenges posed by selective participation can be overcome, a voluntary demonstration can typically only provide reliable evidence on how a model affects the types of providers who elect to participate,” stated the blog post. “If bundled payments are ever to reach national scale in Medicare or elsewhere, we will need evidence that they work for all providers, not just ‘early adopters.’”

In addition, the policy experts contended that voluntary bundled payment models do not drive larger care improvements as mandatory programs can. Compulsory models tend to use common healthcare spending benchmarks based on historical costs for all providers in the region.

“Setting common benchmarks creates a level playing field across providers and allows market forces to drive market share to the most efficient providers, a potential source of major cost savings,” the experts wrote. “Setting common benchmarks is also often viewed as more equitable.”

READ MORE: Understanding the Value-Based Reimbursement Model Landscape

However, voluntary models miss the mark with common spending targets for all providers. Historically high-cost providers may shy away from participating, which could narrow the model’s scope and potential effects.

On the other side, historically low-cost providers may flock to the models, but high volumes of these providers may create a “significant fiscal cost.”

Based on voluntary bundled payment model weaknesses, the policy experts stated that the Trump Administration’s options for making the CJR and cardiac EPM models “less mandatory” are limited.

The authors identified one option for HHS to make the program less compulsory. The federal department could slightly reduce payments for hospitals that do not participate. However, the payment reduction may be perceived as punitive.

Another option for HHS is to decrease the number of selected markets for mandatory participation. But the experts claimed that the number of regions in the models are already limited and reducing the areas would prevent some clinicians from participating in MACRA’s Advanced Alternative Payment Model track.

“Moreover, it would send a damaging signal to the healthcare industry about CMS’ ability to carry out mandatory demonstrations if the Administration backs away from bundled payments in CJR and EPM, sharply curtailing the potential effectiveness of the Innovation Center,” they continued. “In addition, such a retrenchment could have ripple effects for private payment reform efforts that attempt to complement CMS programs.”

Rather than modify models to be less mandatory, the experts advised HHS to focus on allowing providers to take on more financial risk under the bundled payment models.

Some stakeholders criticized Medicare bundled payment models as too “hospital-centric.” Therefore, HHS could permit providers to voluntarily accept ownership of CJR or EPM bundles. Hospitals would maintain accountability if a provider initiator does not exist or does not step forward.

Although, some hospital participants may complain that they will lose out on possible shared savings opportunities under the provider option.

HHS could also keep the Medicare bundled payment models mandatory, but implement more virtual bundles. Under virtual bundles, the federal department would extend financial risk to all participants in a care episode in proportion to the amount of care they provide. Therefore, physicians and post-acute care providers would be directly at risk.

The experts pointed out that the virtual bundle strategy may not disrupt the models since only payment allocation is changing. However, some facilities may face confusion over figuring out who is accountable for patient outcomes.

“The Department of Health and Human Services has several options for addressing Secretary Price’s prior objections to the hospital-at-risk structure of the CJR and EPM models that could maintain the integrity of these payment reform initiatives,” the blog post concluded. “In our view, however, the Department does not have a good alternative to the mandatory structure used for CJR and EPM that could preserve the integrity of the models tests and the scope of their potential impact.”

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