November 9, 2018

Mandatory payment models are making a comeback, Azar says

Daily Briefing

    Read Advisory Board's take on this story.

    HHS Secretary Alex Azar on Thursday announced that CMS plans to test a mandatory payment model for Medicare beneficiaries with cancer and relaunch two previously canceled payment models for cardiac care.

    The move represents a reversal from the Trump administration's previous stance on mandatory payment models under former HHS Secretary Tom Price. In 2017, CMS issued a final rule that eliminated three planned mandatory Episode Payment Models for heart attack treatment, bypass surgery, and hip and femur fracture treatments billed through Medicare. The final rule also eliminated the planned voluntary Cardiac Rehabilitation Incentive Payment Model.

    Azar says CMS plans to pilot mandatory, voluntary payment models

    Azar during a speech at the Patient-Centered Primary Care Collaborative Conference said CMS' Center for Medicare & Medicaid Innovation (CMMI) "intend[s] to revisit some of the episodic cardiac models [it] pulled back and [is] actively exploring new and improved episode-based models in other areas."

    Specifically, Azar said CMMI plans to test a mandatory Medicare payment model for radiation oncology and "new and improved" versions of previously canceled payment models for cardiac care. Azar said CMS also is considering proposing payment models for primary care and building on a previously implemented mandatory joint replacement bundled payment model.  

    See our bundled payment resource series

    "Before the end of this year, you will see new payment models coming forth from CMMI that will give primary care physicians more flexibility in how they care for their patients, while offering them significant rewards for successfully keeping them healthy and out of the hospital," he said.

    Azar added that CMMI "want[s] to advance models like these in a collaborative manner." According to Azar, the payment models will not be "overly prescriptive." He said CMMI will "tell [providers] 'the what' that we want—better outcomes at a lower cost—but [CMMI is] not going to be overly specific about the how."

    Azar said the agency "envision[s] a spectrum of risk," meaning "[d]ifferent sizes and types of practices can take on different levels of risk." He said, "[E]ven smaller practices want to be, and can be, compensated based on their patients' outcomes," and CMS "want[s] to incentivize that, with a spectrum of flexibility, too." He added, "The more risk you are willing to take on, the less [the agency is] going to micromanage your work."

    Azar said, "[T]here is nothing virtuous about maintaining outdated systems within Medicare fee-for-service—effectively a mandatory system for so long—when we know we could be exploring better alternatives."

    Stakeholders raise concerns

    Oncologists were critical of Azar's announcement, saying CMMI should continue to allow providers to voluntarily participate in payment models for oncology—at least for the first few years, Modern Healthcare reports.

    Clifford Hudis, CEO of the American Society of Clinical Oncology, said, "Requiring physician participation in a broadly applied pilot Medicare reimbursement model would subject both the most vulnerable Medicare beneficiaries, as well as the already fragile cancer care delivery system, to untested methods for lowering healthcare costs and uncertain treatment outcomes."

    Laura Thevenot, CEO of the American Society for Radiation Oncology, said a mandatory payment model for radiation oncology will mark a significant shift. Thevenot said CMS will need to ensure all radiation oncology patients can maintain access to their treatments, and that the payment model does not disadvantage oncology practices with high fixed costs (Dickson, Modern Healthcare, 11/8; Firth, MedPage Today, 11/8; Baker, "Vitals," Axios, 11/9; Stein, Inside Health Policy, 11/8 [subscription required]; Clason, CQ Health, 11/8 [subscription required]).

    Advisory Board's take

    Rob Lazerow, Managing Director, Health Care Advisory Board

    Secretary Azar's announcement yesterday provides the latest evidence that CMS is continuing down the path toward accountable payment models—with an emphasis on driving performance. Introduced at the same time that CMS has proposed raising the stakes of the Medicare Shared Savings Program (MSSP), the upcoming bundled payment models would introduce mandatory bundles for radiation oncology and voluntary bundles for yet-to-be-specified cardiac care. But unlike ACOs, bundles are typically designed to reduce spending from the ground up by applying a discount at the outset, which increases CMS’ likelihood of generating savings.

    We look forward to learning more details about the upcoming mandatory oncology bundles and seeing how closely the voluntary cardiac bundles mirror the proposed Episode Payment Model (EPM) that CMS canceled last year. Regardless of where providers are in their journey to wide scale population health, the takeaway from this news is that they must also prepare to reduce spending and improve quality within discrete episodes of specialty care. That's the key to succeeding under bundled payments.


    Benchmark your episodic spending

    Advisory Board's Data and Analytics Group has developed a tool to help you assess your episodic spending and ensure your organization is on track for success under alternative payment models.

    Our Care Coordination Episode Profiler allows you to view national average episodic spending allocation by site of service and time intervals following anchor discharge, as well as modify your view from five to 90 days following anchor hospitalization.

    Access the Tool

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