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Reimbursement Feature

Source: Pixabay and RRY Publications, LLC

Making Bundled Payments Voluntary

Walter Eisner • Mon, August 28th, 2017

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"Capturing the Bundle" has been a strategic aim of orthopedic providers since 2013 when the Ortho Forum started enrolling in the Bundled Payments for Care Improvement (BPCI) program. Then, in 2015, came the mandatory Comprehensive Care for Joint Replacement (CJR) payment model.

The mandatory CJR program was rolled out in April 2016 to 800 hospitals in 67 metropolitan areas. Under the model, Medicare pays providers a single amount to cover all the costs associated with a hip or knee replacement over a 90-day period.

HHS (Health and Human Services) Secretary Tom Price, M.D. has made no secret of wanting to scrap mandatory bundled payment models and replace them with voluntary initiatives.

So now the Trump administration starts walking back the Obama-era mandatory payment model.

Mandatory to Voluntary

On August 15, 2017, Centers for Medicare and Medicaid Services (CMS) published a proposed rule which would reduce the number of mandatory geographic areas participating in the CJR model from 67 to 34.

The proposed rule also allows CJR participants in the 34 remaining areas to participate on a voluntary basis.

CMS also proposes to make CJR participation voluntary for all low volume (fewer than 20 joint replacements over 3 years) and rural hospitals in all of the CJR geographic areas. The agency is proposing to cancel the Surgical Hip and Femur Fracture Treatment (SHFFT) payment model and others that were scheduled to begin on January 1, 2018.

Finally, the CMS proposed rule also plans to cancel the Episode Payment Models and the Cardiac Rehabilitation incentive payment model.

Fewer Savings

Modern Healthcare reports that up to 470 hospitals are expected to continue to operate under the model. That number includes a CMS' estimate that 60 to 80 hospitals would choose to voluntarily participate. That total number is down from the 800 acute-care hospitals that would have participated under the program had no change been made.

CMS estimates that with fewer participants, the model will save $90 million less over the next three years versus what it would have saved had no changes been made. The model is now expected to save $204 million over those years instead of $294 million.

AAOS Applauds

William Maloney, M.D., president of the American Academy of Orthopaedic Surgeons applauded CMS for "clearly hearing concerns” of orthopedic surgeons related to these mandatory payment models.

“As we have said before, AAOS strongly supports the develop[ment] of payment models that incentivize care coordination. Additionally, appropriate alternative payment models are a necessary component of the current Quality Payment Program. However, imposing mandatory models on surgeons and facilities that lack the familiarity, experience, or infrastructure required has serious unintended consequences. Reducing the geographic area for CJR while still leaving a voluntary option significantly remedies this issue."

Will Providers Participate

Will voluntary participation in alternative payment models work?

Kate Goodrich, M.D., chief medical officer at the CMS, told Modern Healthcare that the CMS is aware of arguments that no real progress can be made in bettering quality and cost trends in Medicare without mandatory models, but said the agency has also seen evidence that well-designed voluntary models also drive participation.

For instance, last year the agency estimated that more than 125,000 clinicians would participate in advanced alternative payment models under Medicare Access and CHIP Reauthorization Act MACRA for the 2018 performance year. Now, it's estimating anywhere from 180,000 to 245,000 clinicians will do so. CMS says that's because more doctors will be participating in Accountable Care Organizations (ACOs), the Primary Care Plus model and other new pay models.

Future of Value-Based Care

During an August 22, 2017 quarterly conference call with Wall Street analysts, Omar Ishrak, the chairman and CEO of Medtronic plc, said he thinks there's general encouragement to move more towards value-based payments.

Image of Omar Ishrak from files

“And I think it's not only CMS but the commercial payers are also looking at it in that dimension. At the end of the day, value-based health care is around improving outcomes at a lower cost, and I think that trajectory is not going to change. I think there's good realization of that.”

He said operationalizing value-based health care requires granular work, and the company is in the middle of driving that, partnering with both providers and payers and CMS to come up with the right models.

“There's no real change in philosophy about the value of bundled payments and the importance of outcomes measurements.”

With respect to the industry, Ishrak said value-based care is where the industry has to move.

“Consolidation gives you a capability to have a seat at the table. It gives you more assets to use to deliver value-based health care because you probably need a variety of capabilities to do so.

“But at the end of the day, innovation in this industry that's relevant for patients is never going to go away. And let's not confuse getting broader in some ways with a lack of focus in specific physician partnerships and, therefore, driving innovation, which will then result in higher value. That's what med tech does, and that is not going to go away.”

Making Bundled Payments Great Again

Dave Terry, whose Boston-based Archway Health helps providers design bundled payment programs, says while the news has left some questioning the future of value-based care, the proposed cancellation of these mandatory bundled payment programs is a favorable indication of the future of voluntary reimbursement programs.

Dave Terry / Courtesy of Archway Health

“It may seem that bundled payments have been through the fire in just a few short days, but two voluntary models that have seen much success among providers have emerged unscathed: the Bundled Payments for Care Improvement (BPCI) initiative and Oncology Care Model (OCM),” wrote Terry in a blog.

Results from those voluntary programs, wrote Terry, have shown greater engagement and increased savings among providers who are eager to improve quality and reduce costs in a pressured health care environment. As success of the voluntary models continues, he expects the adoption of these programs will only continue to grow.

He told us that after helping orthopedic providers design bundled programs over the past two years, voluntary programs will have a bigger and more rapid impact on the shift from volume to value.

He cites three reasons for this:

First, is the willingness of providers to commit to payment reform. “Because they have signed up, provider organizations participating in the voluntary programs are more engaged and motivated to change processes, improve care, and reduce costs. As a result, the improvements are more significant and the adoption occurs more rapidly.”

Second, is that voluntary programs don’t have to appeal to all providers. “To make mandatory programs palatable to reluctant participants, the rules tend to be watered down compared to the rules within the voluntary programs. As a result, there is less urgency to change behavior, and the improvements in care and cost are not as substantial.”

Third, Terry says many specialty groups, hospitals and post-acute providers want to participate in bundled payments for a specific clinical episode. “But there has not been the opportunity with recent bundled payment programs. The last voluntary open enrollment period for these providers was BPCI in 2014, and there is significant pent up demand among providers that are ready and willing to participate in payment reform.

With this proposal, Secretary Price and the Trump Administration have taken ownership of bundled payment programs. Now that the strategy to move reimbursements to value-based payments has been agreed to, the question is now only over logistics.

For more information on the Comprehensive Care for Joint Replacement Model, please visit:

For more information on the models proposed for rescission, please visit:

The proposed rule (CMS-5524-P) can be downloaded from the Federal Register at:

Public comments are due by October 16 at 11:59 pm EST.

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