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3 mandatory bundles canceled, a 4th scaled back. Here's what you need to know.

November 30, 2017

    On Thursday morning, CMS issued a final rule that canceled three mandatory bundled payment programs, significantly rolled back a fourth, and canceled a cardiac rehabilitation incentive payment model.

    Specifically, the final rule:

    • Rolled back the Comprehensive Care for Joint Replacement Model (CJR) bundled payment model, which has been in effect since April 2016, from 67 mandatory geographic regions to 34 mandatory regions;
    • Canceled the mandatory Surgical Hip and Femur Fracture Treatment (SHFFT) bundled payment model, which had been scheduled to begin in CJR's 67 regions on Jan. 1;
    • Canceled the mandatory Acute Myocardial Infarction (AMI) and Coronary Artery Bypass Graft (CABG) bundled payment models, also known as the Episode Payment Models (EPMs), which had been scheduled to begin in 98 metropolitan areas on Jan. 1; and
    • Canceled the Cardiac Rehabilitation (CR) Incentive Payment model, a program designed to incentivize providers in 90 U.S. regions to increase patient utilization of cardiac rehabilitation, which had been scheduled to begin on Jan. 1.

    The Daily Briefing's Josh Zeitlin in August spoke with several Advisory Board experts about what the proposed rule would mean for providers. We've updated that conversation below to reflect the final rule and other recent developments. 

    Daily Briefing: Rob, big picture, what are the implications of Thursday's news for providers' Medicare risk strategies?

    Rob LazerowIt's critical to remember that Thursday's news and the most recent bundled payment programs are just one portion of CMS's overall portfolio of new payment models. All the pay-for-performance programs and the optional Medicare ACO models continue. Also, MACRA certainly isn't going away, spurring physicians to take a new look at alternative payment models. In fact, on Wednesday HHS secretary nominee Alex Azar told the Senate HELP committee that one of the "critical areas" he would focus on if confirmed would be to "harness the power of Medicare to shift the focus of our health care system from paying for procedures and sickness to paying for health and outcomes." CMS in September also issued a "request for information" on new ideas to revamp CMMI that specifically mentioned wanting to focus on testing additional Advanced Alternative Payment Models (APMs) and Physician Specialty Models.

    It's true that CJR and EPM were unique in that they were the only mandatory APMs, so we are seeing the Trump administration scale back on the rollout of mandatory APMs. However, CJR is still mandatory in 34 markets, and signs continue to point to new voluntary programs emerging. Notably, CMS in the final rule underscored that they intend to unveil a new voluntary bundling program or programs for 2018 that would designed to meet the criteria for an Advanced APM under MACRA's Quality Payment Program.

    So big picture: While Thursday's announcement is newsworthy for the 98 EPM markets and half of the CJR markets, the broader transition to alternative payment models continues, and providers are still having the same conversations about participation in voluntary programs, particularly ACOs. So hospital leaders still need to design an intentional Medicare risk strategy.

    Learn the three steps to establishing an intentional Medicare risk strategy

    DB: Kristen, let's get into the specifics of the final rule. Starting with CJR, who is required to participate?

    Kristen BarlowSince it launched in April 2016, CJR has been mandatory for hospitals in 67 geographic areas, but the final rule cuts that number by nearly half, to 34 areas. It's interesting to note, these 34 markets have relatively higher average spending on joint replacement episodes. Hospitals in the 33 soon-to-be voluntary areas will then have a one-time chance to opt in to CJR by Feb. 1, 2018—otherwise, they'd be automatically withdrawn from the program.

    Beyond flipping some markets from mandatory to voluntary, CMS will further cut the number of hospitals required to participate in the program by exempting certain low-volume and rural hospitals, which will also have a one-time option to opt in by Feb. 1. The full lists of mandatory and voluntary areas and low-volume hospitals are on pages 46 through 53 of the rule.

    Right now, about 800 hospitals are required to participate in CJR. CMS expects that number to fall to about 370 hospitals under the final rule, and that another 60 to 80 hospitals will choose to participate voluntarily.

    CMS in the final rule also said it will establish an "extreme and uncontrollable circumstance policy" to prevent CJR participant hospitals in disaster areas—such as those affected by the recent hurricanes—from being unfairly penalized. The agency issued an interim final rule on the policy and will provide 60 days for public comment starting Dec. 1.

    DB: Rob, you work with hospital leaders on a daily basis. What are the big takeaways for them on the CJR news—especially if they are in a market that will become voluntary come Feb. 1?

    Lazerow: On one hand, hospitals in the 33 non-mandatory markets probably feel like they just got a reprieve, and CMS expects that most of these organizations will decide against remaining in CJR. Before making a decision, though, there are some critical considerations that leaders need to assess.

    It's easy to start with the economic case—what's the investment hospitals would need to make, and what are the odds they will receive reconciliation payments and share in the rewards of high performance?

    But I think there's an even more important set of considerations about what ending participation would mean for how a given hospital partners with its orthopedic surgeons. Near term, bundles can provide a relatively low-cost option for strengthening relationships with orthopedic surgeons and partnering to improve the quality and efficiency of care, without defaulting to employment.

    Longer term, clinicians across the country are preparing for MACRA, and CJR could give providers participating in the model a direct path to qualifying for the Advanced APM model. So before making a final decision, it's important for providers to think about the full context, not just the economic business case.

    DB: Megan, you're an expert in all things CV. What are your takeaways on the cancellation of the Episode Payment Models and Cardiac Rehab Incentive Payment Model?

    Megan TooleyMany hospitals that would have been required to participate in the EPMs may be breathing a sigh of relief, although it is too early to tell what the cancellation will mean for CV programs' MACRA strategies and prospects for success. EPMs were the only CV-specific payment models that would have qualified as Advanced APMs under MACRA. That said, CMS reiterated in the final rule that CMMI expects to develop new voluntary bundled payment models in CY 2018 that would quality as Advanced APMs.

    Furthermore, many CV leaders are disappointed that CMS canceled the Cardiac Rehab Incentive Payment Model. Given the potential for cardiac rehab to reduce costs and readmissions across a CV episode, hospitals and medical societies were on the whole supportive of the new model. Given that support, CMS did note in the final rule that it may revisit whether to create a similar model in the future.

    DB: How should these changes affect the way CV programs approach tackling costs for episodes of CV care?

    Tooley: CV programs should not view the cancellation of the EPMs as a respite from episodic cost scrutiny. Mandatory bundled aren't the only lever for CMS to push on those costs; in fact, the agency through several other regulations is increasingly tying payment to episodic cost performance.

    Use our Care Coordination Episode Profiler

    For example, under MACRA, the cost/resource utilization category in MIPS includes Medicare Spending per Beneficiary and Total per Capita Cost measures, and could potentially include episode-based measures for CV and other conditions in the future. CMS's pay-for-performance and reporting programs are also beginning to include episodic value measures, such as the AMI and heart failure 30-day episodic payment measures that will be added to the Value-Based Purchasing Program beginning in FY 2021.

    CV leaders must continue to develop an infrastructure for managing CV costs across the continuum so they can be set up for success going forward.


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