CMS wants to expand mandatory bundled payments—to cardiology. Here's what you need to know.

On Monday, CMS proposed a new mandatory bundled payment system for heart attack treatment and bypass surgery billed through Medicare—which would launch in July 2017—as well as updates to its existing mandatory bundled payment model for hip and knee replacements.

Register for the Aug. 5 webconference on the proposal

Stakeholders have greeted the proposal with excitement—and some trepidation. Former CMS CMO Susan Nedza told Modern Healthcare that the proposal is "a tipping point in the movement from fee-for-service to alternative payment models." Meanwhile, the American Hospital Association expressed concern that a new mandatory bundling program could be burdensome for providers who are already working to achieve success under other CMS alternative payment models.

So how should providers think about CMS's new proposals? The Daily Briefing's Josh Zeitlin spoke with Rob Lazerow, a managing director with the Health Care Advisory Board, and Kristen Barlow, a senior consultant with the Post-Acute Care Collaborative, to get their take.

Question: At a high-level, what should we take from the rule that CMS released on Monday?

Rob Lazerow: Monday's announcement reaffirms CMS's commitment to including bundled and episode-based payment as part of the transition to alternative payment models and shows that the agency is more than willing to mandate the use of bundled payment models. The proposed rule would both expand the existing orthopedic bundling program—the Comprehensive Care for Joint Replacement (CJR) model—by adding hip and femur fractures and introduce new mandatory cardiac bundles in 98 yet-to-be determined markets. CMS also indicated that they'll unveil a new voluntary bundling program for 2018 and asked for fairly expansive feedback—including comments on physician-led bundles. So my overarching takeaway: Bundled payment continues full steam ahead.

That said, it's important to note that Monday's announcement didn't just focus on the new bundled payment models. Equally critical—especially for providers outside the markets CMS selects for the cardiac bundles—is CMS's proposal to adjust its mandatory and future voluntary bundled payment models to qualify for the preferential Advanced Alternative Payment Model (APM) track of MACRA. This would be a huge win for specialists, who otherwise may have limited avenues to qualify for the APM track. I also expect we'll continue to see most new payment programs more closely aligned with the context of MACRA implementation.

Q: Rob, from your participation on the LAN Episodic Payment Work Group, and Kristen, from your work with both cardiovascular service line leaders and post-acute care providers—why do you think these cardiac services were added to CMS's bundled payment portfolio?

Lazerow: I wasn't surprised that CMS chose cardiovascular services as the next focus of mandatory bundling payment. Within the LAN's episode payment work group, we've explored three clinical areas for bundling: orthopedics, cardiac, and maternity. And as CMS noted in the announcement, they've tested cardiac bundles through a range of pilots and demos, including the Acute Care Episodes (ACE) Demo, Bundled Payments for Care Improvement (BPCI) initiative, and the coronary artery bypass grafting (CABG) demo in the 1990s. So there's plenty of precedence supporting cardiac bundles.

Kristen Barlow: I agree with Rob's take—no big surprise here. When CJR was announced, keep in mind that the stated rational for selecting those procedures was two-fold: They are common in the Medicare population and there's a large variation in spending. The exact same can be said of CABG and acute myocardial infarction (AMI), and we anticipated that cardiac was the next likely candidate for bundling.

Q: The proposed rule is more than 900 pages long—and it's been less than 24 hours since its release—but based on your first review, what stands out to you in the rule? Any surprises?

Barlow: While the focus on cardiac wasn't a surprise, there are some design elements that surprised me in the proposed rule. In particular, three major areas caught my attention.

First, the cardiac bundles would be mandatory like CJR—but unlike CJR, participants would be chosen by a completely random selection process of 294 eligible metropolitan statistical areas (MSAs). The element of random selection is interesting since it would likely result in significant variation in the types of markets that would be required to engage in the cardiac bundles. Additionally, the proposed scale of the cardiac bundle program is larger than CJRCMS plans to choose 98 MSAs, compared with 67 for CJR.

Second, a major surprise for me was how the AMI bundle would be structured. The MS-DRGs included in the AMI bundle encompass medical treatments and revascularization via percutaneous coronary intervention (PCI). By contrast, CMS defined AMI episodes under BPCI as only medical treatment. Including PCI would force hospital leaders to examine the efficiency of PCI treatment of AMI, which is a major challenge for many CV programs.

Third, I was surprised to see the new payment incentive for cardiac rehab services, which would pay $25 per cardiac rehab service paid for the first 11 services given during the episode. Subsequent services would be reimbursed at $175 per service. That's a clear sign from CMS that cardiac rehab services are important for reducing readmissions and improving long-term outcomes, and that CMS is willing to invest in encouraging utilization of these important services. The agency proposed the two-tier system based on evidence that shows improved outcomes for patients who complete at least 12 rehab sessions.

Q: How do you see these cardiac rehab incentive payments working in practice?

Barlow: Currently, many patients do not complete cardiac rehab, and co-pays are often cited as a barrier. CMS says that the incentive payments are intended to be used to increase patient adherence to completing cardiac rehab. For instance, the agency said the payment could be used to offset program investments to increase patient utilization of rehab services, such as transportation.

It's too early to say definitively if these payments would achieve their goal. But I think the strong incentives in the second tier will certainly put a spotlight on cardiac rehab and encourage many providers to focus on strategies for improving their cardiac rehab service offerings and to identify cost-effective strategies to improve patient adherence to cardiac rehab.

Q: What are you watching next?

Barlow: I'm going to be watching the market response to these different episodes very closely. For the hip bundle, those programs already in the CJR markets would have an even greater mandate to focus on post-acute care costs and utilization. So we'd be likely to continue to see the development of acute- and post-acute care partnerships. For the markets that would be required to participate in cardiac bundling, this may be many programs' first experience with episodic cost control. Providers would need to craft a thoughtful strategy that encompasses readmissions reduction and improved inpatient efficiency, but that's no easy task. Readmissions are a much bigger deal in cardiac episodes. So hospitals and physicians would likely need different interventions to succeed in the cardiac bundles than in CJR.

Lazerow: In addition to Kristen's list, I'm interested to see which markets CMS randomly selects for the cardiac bundles and if they overlap with the 67 CJR markets. I'm also curious how attractive the new voluntary bundles will looks—and if physicians, eager to qualify for the APM track, push hospitals into applying for them. The interplay between bundles and MACRA isn't a trivial issue.

Finally, I'm interested to see if CMS ultimately just unveiled a framework for future bundled payment models. Unlike CJR, CMS didn't name this model after a clinical intervention or service line. The more encompassing name, "Episode Payment Models," makes me wonder if more mandatory bundled payment models are in the works.

Mark your calendar: Register for our Aug. 5 webconference on the proposal

On Friday, Aug. 5, Kristen, Rob, and Eric Cragun are hosting a webconference on CMS's proposed expansion of mandatory bundled payments.

They'll break down the key information about CMS's new proposal, sources of care variation within proposed episodes, and implications for provider strategy.

Register now

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