It was probably just a matter of time.
Thursday afternoon, CMS sent to the White House for approval a proposed rule titled:
Cancellation of Advancing Care Coordination through Episode Payment and Cardiac Rehabilitation Incentive Payment Models; Changes to Comprehensive Care for Joint Replacement Payment Model (CMS-5524-P)
It is well-known that HHS Secretary Tom Price is no friend of bundled payments. Shortly after being confirmed by the U.S. Senate, Price announced a delay in implementation of three new Medicare Part A and Part B Episode Payment Models and a Cardiac Rehabilitation Incentive Payment model. Price also announced a delay in implementation of expansion of the CJR model.
Under the three new episode payment models announced in July of last year and discussed in greater detail here, acute care hospitals in 98 MSAs would be required to participate in mandatory retrospective episode payment models for acute myocardial infarction, coronary artery bypass graft and surgical hip/femur fracture treatment episodes.
The Cardiac Rehabilitation Incentive model would provide incentive payments for beneficiary utilization of cardiac rehabilitation services during the 90 days following discharge from a hospitalization for AMI or CABG.
Finally, the CJR payment model implemented by CMS in 2016 would have been amended to include surgical hip/femur fracture treatment excluding lower extremity joint replacement (the latter of which was included in the original CJR bundle.)
These bundled payments were originally scheduled to go into effect July 1, 2017, but were delayed until Oct. 1, 2017 with a possible additional delay to Jan. 1, 2018.
Now comes outright cancellation of the CR incentive payments and the cardiac EPMs.
Never having got off the ground, the cancellation of the cardiac bundles is not likely to affect Medicare FFS utilization or alter payer behavior. The bigger question is what changes CMS may make to the CJR mandatory bundle that has been implemented for over a year. Some ideas we have:
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Cancellation of the surgical hip/femur fracture treatment excluding lower extremity joint replacement which was included in the cardiac EPM rule will clearly be included
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Making participation in CJR voluntary. Since over 700 hospitals have implemented the CJR, it seems unlikely a shift to voluntary participation will have too much of an effect – at least not until risk/incentive payments are settled next year.
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Permitting physicians and not just hospitals to be episode initiators. When CMS proposed the CJR, it noted that it considered other episode initiators like physicians, but due to billing and coding constraints declined to include them in the mandatory CJR bundle. Secretary Price has repeatedly articulated a policy that placed physicians – not health systems – at the center of health care policy. Permitting physicians to initiate episodes, even on a voluntary basis, fits squarely within Price’s policy.
The decision to end the cardiac bundle and amend the CJR has a ripple effect across the health care system. CMS under the Obama administration had envisioned the mandatory bundles as a way for physicians to easily comply with MACRA. EHR providers like CERN and MDRX had set their sights on implementation of MACRA to offset slowing growth in the EHR replacement market. With CMS limiting mandatory bundles that do double duty as Advanced Payment Models, the pace of MACRA adoption will slow.
The possible cancellation of the cardiac bundles is welcome news for device makers but we would advise against getting too enthusiastic about the long term. CMS is floating trial balloons for removing certain cardiac procedures from the Inpatient Only List. Changes to the CJR probably come too late for implant makers like ZBH and SYK, especially in light of the proposal this summer to remove TKA from the IPO.
More broadly, the end to the yet unimplemented cardiac bundles and any change to the CJR strike a meaningful blow to a central thesis of the health care policy that has dominated the federal bureaucracy for 30 years. If regional price and utilization disparities could be eliminated through value-based purchasing, then Medicare would save $30 billion a year, so the theory goes.
This view was prompted by Clinton/Obama alums like Zeke Emmanuel, Topher Spiro at the Center for American Progress, Peter Orszag at Lazard whom you can partially thank for how the CBO scores ACA-related bills, and Bob Kocher at Venrock and former Special Adviser to President Obama. The theory manifested itself first in voluntary programs like Accountable Care Organizations and Medical Homes and then with the mandatory bundled payment systems. The apotheosis of this policy would be in a completely centrally managed capitated financing system.
The pivot away from mandatory bundled payments and by implication ACOs, Medical Homes and the like begs the question “to what, then?” MACRA is depending on new financing systems like bundled payments to shift the physicians payment system away from volume incentives.
The answer appears to be the Physician-focused Payment Model Technical Advisory Committee which acts as a sort of screener of crowd sourced payment models. Since April of last year, 13 proposals have been submitted and the pace is quickening. You can read the proposals here.
Regardless of what exactly happens to the mandatory bundles it is certain that Price Policy is going to be a very new and different thing in Washington and it is only just getting started.
Call with questions. Congress is on vacation but we are not.
Emily Evans
Managing Director
Health Policy
@HedgeyeEEvans
