The Centers for Medicare & Medicaid Services (CMS) delayed the launch of a new episode payment model affecting three types of cardiac care, pushing the July 1 start date to 2018. That doesn’t mean providers and hospitals should throttle back on bundles’ preparations.
Launch in limbo
Its title reflects the CMS Innovation Center’s ambitious goal: Advancing Care Coordination Through Episode Payment Models. The rule, published at the beginning of 2017, requires acute care hospitals in 98 designated markets to participate in 90-day bundled payment programs for fee-for-service Medicare patients treated for an acute myocardial infarction or coronary artery graft bypass surgery. The rule includes a cardiac rehabilitation incentive program, a bundle for hip and femur procedures and an expansion of a joint replacement model.
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The episode payment models are designed to preserve or improve quality of care and lower costs by incentivizing hospitals to focus on outcomes beyond their institutional walls. Bundling puts them on the hook for costs that occur once the patient is discharged during a designated period. For participating hospitals, that downside risk begins in year three of the five-year test. CMS estimates the program will save $159 million after five years.
“Policymakers know that people in the hospitals don’t control all of the postacute care setting,” says Karen E. Joynt, MD, MPH, a health policy researcher and a cardiologist at Brigham and Women’s Hospital in Boston and the Boston VA Health System. “The point is that under the value-based payment models and alternative payment models, there is an incentive to bridge that gap. People have argued on both sides whether it is appropriate and fair.”
On March 21, CMS announced it was postponing the start of the test to Oct. 1, and possibly later. A final rule published in the Federal Register on May 19 rescheduled the launch for Jan. 1, 2018, to "ensure that CMS has adequate time to undertake notice and comment rulemaking, if modifications are warranted." The delays raised doubts about the fate of the program under the Trump administration and Health and Human Services Secretary Tom Price, MD, a former orthopedic surgeon who as a U.S. representative criticized the mandatory participation component.
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A chance to prepare
The delays also give hospitals and cardiologists more time to prepare for the challenging task of managing transitions of care, says Jason H. Wasfy, MD, MPhil, a cardiologist and director of quality and analytics at Massachusetts General Hospital in Boston. That includes establishing infrastructure, data gathering and analysis capability; coordinating systems of care among specialists; and building relationships with nursing homes, rehab centers and other postacute care facilities.
“Any time you have more time to prepare, that is better,” says Wasfy, who as a member of the Health Care Payment Learning & Action Network’s Clinical Episode Payment Work Group helped author recommendations in 2016 for a condition-level episode payment model for managing coronary artery disease. “But there is a broad variety of reasons why hospitals and providers should be preparing for value-oriented payment mechanisms, no matter what the timing of the bundled payments is.”
In a 2016 survey of 350 providers conducted by ORC International for McKesson Healthcare Solutions (now Change Healthcare), participating senior executives said that of all alternative payment models, they were least ready for bundles. Only 40 percent of providers considered themselves extremely or very ready to implement episode of care models. McKesson described the study sample, which also included 115 payers, as nationally representative.
Joynt also notes that the window between the announcement of the bundles and their scheduled implementation may be too narrow for some hospitals to accurately gauge their current performance and determine a strategy to improve care. Theoretically, making rushed decisions might lead to unintended consequences that paradoxically reduce the quality of care.
“We have to find the right balance of using enough postacute care that we help people regain their functional status and be independent, happy, healthy and out of the hospital, which is what we want and what this bundle wants,” she says. “It has to be done right. The extra time for hospitals to understand these patterns, where target interventions will be best for patients and the cost structure, is probably worth it.”
Left in the lurch
But the delay has potential disadvantages, too, points out Clare A. Wrobel, MHA, director of payment reform models at the Heath Care Transformation Task Force in Washington, D.C. The industry consortium includes payers, providers, patients and purchasers who commit to have 75 percent of their business in value-based payment methods by 2020. For instance, the CMS bundle model originally had allowed hospitals to assume downside risk for episodes ending on or after Jan. 1, 2018, and consequently be eligible for incentive payments. The delay may change the timeline and slow the transformation of those embracing the new payment model.
It also might give others pause.
“There are many providers that are at a tipping point or a decision point whether to invest in the infrastructure that is needed to be successful in value-based contracts,” Wrobel observes. “That includes technical infrastructure, data analytics capacities, staffing, workflow redesign and building effective networks to manage bundled payment, episode payment models. There may be some lost momentum there, which may be a real threat to the transformation efforts.”
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According to the McKesson survey, only 31 percent of providers said they were ahead of the industry in their transition to value-based reimbursement. Still, that was an improvement from 22 percent in 2014.
Providers have incentives beyond the Advancing Care Coordination Through Episode Payment Models program to position themselves for bundles. Even if the CMS initiative stalls, other payers are moving ahead with bundling.
“If you are functioning in a market in which not only Medicare but private payers and Medicaid are moving toward more value-based payment, more alternative payment models, it would behoove you to understand how to move in that direction,” Joynt says. “There are probably very few markets right now where people are all in. There are probably payers in every market who are pretty straightforward fee-for-service, but it is getting smaller and smaller.”
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Proactive & progressive
Both providers and payers in the McKesson survey viewed bundles as the fastest growing payment model in the U.S. Payers forecasted a 6 percent growth over five years, and providers estimated that bundling would account for 17 percent of reimbursement in five years, up from 13 percent today. By contrast, providers expected the presently dominant fee-for-service to drop to 39 percent in five years. Payers were more bullish, pegging fee-for-service at 35 percent.
Wrobel says the Health Care Transformation Task Force has not seen any slowdown in episode of care payment models among commercial payers, and some provider members indicated they are taking a proactive stance by moving ahead with infrastructure, data analytics, staffing, workflow redesigns and networking.
“What we have heard from a number of providers is that regardless of the start dates, the groundwork is being laid now to have a better understanding of their performance within clinical episode parameters,” she says. That work is “in anticipation of, if not a Medicare model, commercial models of Medicaid bundled payments, which are also being introduced in several states. That infrastructure will be utilized in various other payer contracts, if not Medicare.”
Wasfy makes a business case for hospitals and cardiologists to ready themselves for bundled payment schemes. “The financial roadmap to success going forward in general is very well aligned with excellent patient care,” he says, noting that preventing readmissions, managing relationships with postacute facilities, ensuring effective transitions of care and handoff are critical for a bundled payment but also other payment mechanisms. In addition, “if you are providing the best care that you can, patients will want to come to your hospital.”
The practices the bundles incentivize complement good doctoring, the cardiologists note. “If you are a patient, it makes a ton of sense,” Joynt says. Patients should expect and should receive seamless care no matter what the setting, payment model or health system, she argues. “Most of the U.S. healthcare system is not a system. These payment models are trying to force a system-ness, or connectedness, onto a disconnected system with all the growing pains that go with that. It is never a bad thing to think about ways to connect around the patient.”
“This stuff is good medical care,” Wasfy agrees, “so we should be doing it anyway. But bundling payments will emphasize these points.”