CMS Delays Start of Ortho, Cardio Bundling Demonstrations

Ken Terry

March 21, 2017

The Centers for Medicare & Medicaid Services (CMS) has pushed back the start dates for new bundled payment demonstrations and the changes required in the existing Comprehensive Care for Joint Replacement (CJR) project.

CMS's new "interim final rule with comment" (IFC) on these programs hints that the agency might modify, if not eliminate, the bundled payment demonstrations in the future. Health and Human Services (HHS) Secretary Tom Price, MD, has said he dislikes the bundled payment projects — a key part of the previous administration's value-based care initiative - -because of their mandatory nature.

The IFC postpones the effective date of the final rule for CMS's Advance Care Coordination Through Episode Payment Models (EPMs), the Cardiac Rehabilitation Incentive Payment Model, and changes to the CJR from March 21 to May 20, 2017. The IFC also delays the start date of the new programs and the CJR amendments from July 1 to October 1, 2017. In addition, CMS seeks comment on a further delay in start date until January 1, 2018.

One justification for the latter delay, the IFC suggested, is that the final rule specified the initial payment period for the EPMs was to be 6 months, starting July 1, and that subsequently the payment year would be same as the calendar year. If the start date were moved back to October 1, there wouldn't be enough time left in 2017 to start the program, CMS said.

Explaining the rationale for the announced postponement, CMS said, "This additional 3-month delay is necessary to allow time for additional review, to ensure that the agency has adequate time to undertake notice and comment rulemaking to modify the policy if modifications are warranted, and to ensure that in such a case participants have a clear understanding of the governing rules and are not required to take needless compliance steps due to the rule taking effect for a short duration before any potential modifications are effectuated." 

Better Care, Lower Costs?

The EPM program rule was finalized on December 20, 2016, in the waning days of the Obama Administration, and was published on January 3 of this year. Aimed at creating incentives for hospitals to deliver better care at lower cost, the EPMs include the following:

  • Acute myocardial infarction (AMI) model;

  • Coronary artery bypass graft (CABG) model;

  • Surgical hip and femur fracture treatment model; and

  • Cardiac rehabilitation (CR) incentive payment model

In each of these episodes of care, hospitals are paid retrospectively for the total costs of care provided to patients during their hospitalization and for 90 days after discharge. Initially, the hospitals will be eligible for bonuses if episodes of care cost less than historical benchmarks and the providers meet quality standards. But for all episodes ending January 1, 2019, or later, the hospitals will have to take downside risk: that is, they will owe CMS money if their costs exceed benchmarks.

The AMI and CABG demonstration projects will be mandatory for all acute-care hospitals in 98 markets. The CR model will be implemented in 90 markets, about half of which overlap the AMI and CABG projects. The surgical femur and femur fracture treatment model will join the CJR as a mandatory program in 67 areas.

The final rule also adjusts the CJR model, allowing it to qualify as an advanced alternative payment model (APM) under the Medicare Access and CHIP Reauthorization Act (MACRA). By voluntarily participating in one of these bundled payment demonstrations with hospitals that are required to participate in them, physicians could eventually qualify for the 5% annual bonuses guaranteed to clinicians in advanced APMs. However, their first performance year in such an APM would not occur until 2019, and they wouldn't receive their initial bonus until 2021, unless their hospitals elected to take downside risk sooner than that.

The CJR demonstration, which started April 1, 2016, prescribes bundled payments to about 800 hospitals for hip and knee replacement surgery and 90 days of postdischarge care. These procedures cost Medicare about $7 billion a year for the hospitalizations alone.

Dr Price, an orthopedic surgeon, has made no bones about his dislike of CMS's mandatory bundled payment programs. In a letter he sent to CMS last September, when he was still a congressman from Georgia, Dr Price said that these schemes were "experimenting with Americans' health" and that CMS had exceeded its statutory authority, according to Kaiser Health News.

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