The Centers for Medicare and Medicaid Services’ (CMS) latest bundled payments proposal takes a bold step toward addressing Medicare payment reform for some of the most common, complicated, and costly care scenarios in U.S. healthcare.
The Bundled Payments for Care Improvement (BPCI) program was launched in 2011 based on provisions in the Patient Protection and Affordable Care Act that aimed to test the ability of bundled payments to improve care quality by placing more onus for financial and performance accountability on providers. The program looks to transition healthcare’s traditional fee-for-service model to a more coordinated care effort with particular attention paid to post-acute follow-through.
Bundled payment programs provision a set reimbursement price to cover both hospitalization and the subsequent 90 days of post-acute care for certain medical episodes. Providers’ fee-for-service costs are then reconciled against target bundled payment amounts. Providers who come in under cost while meeting quality benchmarks pocket the savings, while providers who exceed cost targets have to pay Medicare back for the difference at the end of the year.
In 2015 CMS announced the Comprehensive Care for Joint Replacement (CJR) initiative, the first mandated 90-day bundled payment program targeting joint replacement, the most common surgery among Medicare beneficiaries. CMS’ latest proposal seeks to expand mandatory bundled payments.
Under the new proposal introduced just weeks ago, mandatory bundled payment models would include treatment for acute myocardial infarction (heart attack) and coronary artery bypass surgery. The proposal also extends the purview of joint replacement bundles to include hip and femoral fractures.
2014 Medicare inpatient diagnosis volumes for new bundled payment models
|Acute Myocardial Infarction||280-282||139,455||$1.2b|
|Percutaneous Coronary Intervention||246-251||177,989||$2.9b|
|Coronary Artery Bypass Graft||231-236||61,144||$2.1b|
|Surgical Hip/Femur Fracture Treatment||480-482||137,387||$1.8b|
Source: Definitive Healthcare
In addition to broadening the scope of required bundled payment programs, the three new procedure areas take particular aim at some of the nation’s most high-risk patient populations. Patients with hip fractures have a five- to eight-fold increase in mortality risk in the three months after and the 200,000+ beneficiaries hospitalized for heart attacks or bypass surgery in 2014 cost Medicare more than $6 billion. The proposal also includes separate provisions for cardiac care that pay for cardiac rehab services, found to reduce risk of a second heart attack, though only about 15 percent of patients currently get that care.
The latest proposal would evaluate bundled payments performance over a five year period starting on July 1, 2017, in 98 randomly selected areas. Some argue that doesn’t leave providers much time to prepare given competing priorities like tech roll-outs and preparations related to the Medicare Access and Chip Reauthorization Act (MACRA).
One proposal provision allows physicians in cardiac and joint replacement bundled payment programs to qualify as participating in an Advanced Alternate Payment Model (APM) under MACRA. The administration aims to shift half of all Medicare reimbursements to alternative models like bundled payments by 2018.
If finalized, the new rules (and the associated financial risks physicians are facing) are expected to be phased in over the course of five years. No repayments would be required for the first 15 months of the mandatory bundles program. Repayment losses would be capped at five percent for the second year, ten percent in year three, and twenty percent in the final two years. Rewards would follow a similar schedule, with hospitals keeping as much as five percent in the first two years.
Currently, there is no nationally-defined bundled payment methodology. Bundled payment targets, which vary across national regions, are presently determined based on a combination of hospital-specific factors and geographic considerations designed to help account for high-risk patient populations. CMS plans to eventually move to a strictly geography-based approach to payment targets.
CMS Acting Administrator Andy Slavitt sees growth in bundled payments as a potential tipping point in healthcare’s shift to value-based care. Providers will undoubtedly anticipate additional bundled payment roll-outs given the recent MACRA development.
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