On July 25, 2016, the Centers for Medicare and Medicaid Services (CMS) proposed three new models that continue the trend of episodic payment demonstrations for Medicare reimbursement. The three models are two new cardiac conditions, heart attack and bypass surgery, and expand the previously established hip and knee joint replacement by adding hip and femur fracture surgeries to the Comprehensive Care for Joint Replacement (CCJR) Model. View the full text of the proposed rule.
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This is an attempt by CMS to continue to move payment from quantity to quality by creating financial incentives for hospitals to deliver better care at a lower cost. The idea being these models reward hospitals that work together with physicians and other providers, including our post-acute care members, to avoid complications, prevent hospital readmissions, and speed recovery.
When:
The new models would begin in July 2017 and run for five years with the amount of potential savings and losses increasing over the period. Also, the target pricing would be based on a blend of hospital specific and regional performance with the emphasis on regional performance growing over time.
Where:
The cardiac bundles will be implemented in 98 randomly selected metropolitan statistical areas (MSAs). The hip/femur fracture model will be implemented in the existing 67 MSAs required in the CCJR model. Of particular note, rural counties are excluded from the models. In addition, CMS proposes to limit financial risk for the remaining rural hospitals that are located in participating MSAs, such as sole community hospitals, Medicare-dependent hospitals, and rural referral centers. Specifically, these hospitals’ total losses are limited to 3 percent for the second through fourth quarters of 2018 and 5 percent for 2019 through 2021.
How:
Each year, CMS would set target prices for different episodes based on historical data on total costs related to the episode for Medicare fee-for-service beneficiaries admitted for heart attacks, bypass surgery, or surgical hip/femur fracture treatment, beginning with the hospitalization and extending 90 days following discharge. Target prices would be adjusted based on the complexity of treating a heart attack or providing bypass surgery. For example, CMS proposes to adjust prices upwards for those heart attack patients who need to be transferred to a different hospital during their care to reflect the most resource-intensive cardiac care provided during the hospitalization. For heart attack patients, target prices would also differ depending on whether the patient was treated with surgery or medical management.
Under the proposed bundled payment models, hospitals that delivered higher-quality care would be eligible to be paid a higher amount of savings than those with lower quality performance. Specifically, an individual hospital’s quality-adjusted target price would be based on a 1.5 to 3 percent discount rate relative to historical spending, with the lowest discount percentage for those hospitals providing the highest-quality care. Payments would be based on a quality-first principle: only hospitals meeting quality standards would be paid the savings from providing care for less than the quality-adjusted target price.
Why:
While once again, post-acute and long-term services and supports providers are not in a position to lead the participation in the demonstration, nonetheless CMS is proposing to allow hospital participants to enter into financial arrangements with other types of providers (for example, skilled nursing facilities and physicians), as well as with Medicare Shared Savings Program Accountable Care Organizations (ACOs). Those arrangements would allow hospital participants to share reconciliation payments, internal cost savings, and the responsibility for repayment to Medicare with other providers and entities that choose to enter into these arrangements, subject to the limitations outlined in the proposed rule.
For purposes of this rule, the existing CCJR MSAs will be impacted by the addition of the hip/femur fracture model. It is proposed that the 98 MSAs required to participate in the cardiac bundles be randomly selected from the possible list of included MSAs listed in the proposed rule. This proposed rule might foreshadow future bundling rules to be promulgated before the end of the current administration. The proposed rule indicates that CMS plans to build on its Bundled Payments for Care Improvement (BPCI) Initiative. This includes a new voluntary bundled payment program that would begin in 2018, and could also potentially qualify as an Advanced APM under MACRA.
All post-acute and long-term services and supports members that deal with Medicare have the potential to be impacted either directly by being included in a selected MSA or through the growth of commercial or other public bundled payment models.
CMS is taking feedback on the proposals for 60 days, until September 24th. LeadingAge will be preparing comments on the proposed rule and asks for your input to be sent to Aaron Tripp, Director of Long-Term Care Policy and Analytics.
