On August 15, the Centers for Medicare & Medicaid Services (CMS) announced a proposed rule to reduce the number of mandatory geographic areas participating in the Center for Medicare and Medicaid Innovation’s (Innovation Center) Comprehensive Care for Joint Replacement (CJR) model from 67 to 34. In addition, CMS proposes to allow CJR participants in the 33 remaining areas to participate on a voluntary basis. In this rule, CMS also proposes to make participation in the CJR model voluntary for all low volume and rural hospitals in all of the CJR geographic areas.
Mandatory Model Changes
CMS also proposes through this rule to cancel the Episode Payment Models (EPMs) and the Cardiac Rehabilitation (CR) incentive payment model, which were scheduled to begin on January 1, 2018. Eliminating these models would give CMS greater flexibility to design and test innovations that will improve quality and care coordination across the in-patient and post-acute-care spectrum.
“Changing the scope of these models allows CMS to test and evaluate improvements in care processes that will improve quality, reduce costs, and ease burdens on hospitals,” said CMS Administrator Seema Verma.
“Stakeholders have asked for more input on the design of these models. These changes make this possible and give CMS maximum flexibility to test other episode-based models that will bring about innovation and provide better care for Medicare beneficiaries.”
Moving forward, CMS expects to increase opportunities for providers to participate in voluntary initiatives rather than large mandatory episode payment model efforts. The changes in the proposed rule would allow the agency to engage providers in future voluntary efforts, including additional voluntary episode-based payment models.
The EPMs and the CR incentive models were designed as mandatory payment models and implemented via notice and comment rulemaking to test the effects of bundling cardiac and orthopedic care beginning in 2018. They were established by the Innovation Center under the authority of section 1115A of the Social Security Act (the Act).
Context for Proposed Rule
As described by Jordan Cohen and Kate Stewart, associates at Mintz Levin, the context of this proposed rule is important for two reasons:
First, the proposal follows an earlier proposed rule published by CMS earlier this summer that would allow Medicare to pay for hip and knee replacement surgeries performed in ambulatory surgical centers. The movement of these profitable surgeries out of hospitals and into ASCs could dampen hospitals’ bundled payment initiatives by discouraging hospitals from investing in the tools and resources to participate in the models.
Second, these changes come in the context of a radical revamping of the way in which Medicare pays physicians. MACRA incentivizes physicians to participate in value-based care models. While the most recognizable of these care models is the accountable care organization (ACO), removal of the targeted models will likely impact the industry’s participation in MACRA. The three EPMs are all considered to be “Advanced APMs” under MACRA–an important designation that makes its participants eligible for certain bonuses and reporting exemptions.
This point was not lost on CMS, as the agency states in its proposal that it expects to develop new voluntary bundled payment models during CY 2018 that would be designed to meet the Advanced APM criteria. The question is whether this movement from mandatory to voluntary models will limit the move away from fee-for-service care and toward value-based care.