News Updates

CMS Delays Expansion of Bundled Payment Programs

On March 20, 2017, the Centers for Medicare & Medicaid Services (“CMS”) released an interim final rule (the “Interim Final Rule”) delaying the expansion of the Comprehensive Care for Joint Replacement (“CJR”) bundled payment program and the start date of its cardiac bundled payment program until October 1, 2017.

The Interim Final Rule postpones the expansion of the CJR model, which pays providers a single amount to cover all costs associated with a hip or knee replacement over a 90-day period. The expansion would include additional surgical treatments for hip and femur fractures. This rule also delays the start date of CMS’s bundled payment initiative for cardiac care, under which certain acute care hospitals will be accountable for the cost and quality of care provided to heart attack and coronary bypass patients, commencing with initial hospitalization and ending 90 days after discharge. Finally, the Interim Final Rule delays the start date of the cardiac rehabilitation (“CR”) incentive payment model, under which certain acute care hospitals will receive retrospective incentive payments for beneficiary utilization of CR services during the 90 days following discharge. The start date for these mandatory bundled payment programs and CR incentive payment model was July 1, 2017, but now will be delayed until October 1, 2017. CMS also sought comment on delaying even further, until January 1, 2018. The comment period on the Interim Final Rule closed April 19, 2017.

These delays have left the future of these bundled payment initiatives uncertain, particularly in light of opposition that the newly appointed Department of Health and Human Services Secretary, Tom Price, has publicly expressed of CMS’s mandatory bundled payment initiatives. Since the announcement, several hospitals have since asked CMS to turn these bundled payment initiatives into voluntary programs, stating that the programs pose a serious hardship for many hospitals. However, in light of the importance that the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) places on physicians’ ability to participate in qualifying alternative payment methodologies (“APMs”), strong industry interests remain in maintenance of the CJR and CR incentive payment models at least in a voluntary form.


Movements to Value-Based Care in the Orthopedic Space

Two announcements in the past few weeks reflect that, whatever the status of the Comprehensive Care for Joint Replacement (“CJR”) as a mandatory model nationally, there is strong industry interest in expanding innovative payment models for orthopedic care outside of the Medicare space.

In April 2017, Humana announced its collaboration with eight orthopedic specialty groups in Indiana and Kentucky on a value-based care model for Humana Medicare Advantage members undergoing total hip or knee joint replacement procedures. Under this Total Joint Replacement Episode-Based Model, Humana will provide the orthopedic groups with data and analytics necessary to manage patients’ care from diagnosis through recovery. 

Separately, a prominent orthopedic private practice group, the Centers for Advanced Orthopaedics, recently announced that it is working to develop seven bundles for various orthopedic surgeries, and is currently negotiating with payors in the region. The practice expects to have an agreement in place with Blue Cross and to begin bundled payments by the end of 2017. Under the bundled payment arrangement, the practice and payors will agree on the cost of these seven surgical-based episodes based on historical costs of care, with the physicians managing the care of the patient from admission through to rehabilitation for 90 days after surgery.


MedPAC Questions MACRA’s MIPS

In its January and March meetings, the Medicare Payment Advisory Commission (“MedPAC”), which advises Congress on Medicare’s reimbursement policies, considered a staff presentation recommending significant changes to the Merit-based Incentive Payment System (“MIPS”) and the Advanced Alternative Payment Model (“AAPM”) program. In the March presentation, MedPAC staff suggested that MIPS is unlikely to succeed at identifying or paying for clinicians' delivery of value to the Medicare program. According to the presentation, the problems with MIPS include the large number of quality measures; the lack of comparability across clinicians; the small numbers of cases for individual clinicians, which reduce the accuracy of quality scores; and electronic health record meaningful use and practice improvement data elements that have not been shown to correspond with high-value care. MedPAC staff recommended that the Centers for Medicare & Medicaid Services eliminate clinician measure reporting under MIPS and instead use claims data and patient experience reports to assess clinicians at an aggregate level. The presentation also recommended increased incentives to join AAPMs, and for primary care, the implementation of a partial capitation system that would give upfront payments to primary care physicians in risk-taking ACOs, to be financed by reducing fee-for-service reimbursement. 


Anthem Reports Near 60% Value-Based Care Spend

Fifty-eight percent of Anthem’s aggregate medical spend is now linked to value-based care models, seventy-five percent of which are shared savings, shared risk and population-based payment models, Anthem CEO Joseph Swedish reportedly said on the first-quarter earnings call. Swedish further stated that Anthem has approximately 159 Accountable Care Organization (“ACO”) agreements in place, with over 64,000 providers now engaged in ACOs and patient-centered medical homes.

By comparison, CMS aims to have fifty percent of Medicare payments linked to value-based care payment models by the end of 2018, having achieved a thirty percent goal in March 2016. Thus, like CMS, Anthem has been able to transition a large percentage of its spend to value-based care, reflecting how the commercial world has grabbed the value-based baton from CMS. This cross-payor correlation is consistent with the structure of the value-based care transition: much of value-based reimbursement requires crossing a threshold of having providers able to assume risk; once providers have the internal networks and data systems to assume risk, arrangements can proliferate.


CMS Proposes Socioeconomic Adjustments for Hospital Readmissions Reduction Program

On April 14, the Centers for Medicare & Medicaid Services (“CMS”) issued an Inpatient Prospective Payment System (“IPPS”) proposed rule that would implement a socioeconomic adjustment for the Hospital Readmissions Reduction Program (“HRRP”) by 2019. The HRRP currently imposes diagnoses-related group (“DRG”) payment penalties on hospitals based on excessive readmissions related to certain patient conditions. In accordance with the 21st Century Cures Act, the proposed rule requires assessment of DRG payment penalties based on a hospital’s performance relative to other hospitals with a similar proportion of low-income elderly patients who are dually eligible for both Medicare and Medicaid. The proposal includes a methodology for calculating the proportion of dual-eligible patients and a methodology for assigning hospitals to designated peer groups based on these proportions. CMS has also proposed a formula for calculating DRG payment adjustments among peer groups. The proposed rule comes in response to industry leaders’ urging Medicare to take patients’ social and demographic backgrounds into account when calculating hospital payment reductions, resulting in a level playing field for hospitals serving low-income patients. CMS is accepting comments on the proposed rule until June 13, 2017.

Many hospitals have praised this proposed rule, with some urging CMS to extend the approach to other quality programs. In a fact sheet on the rule, CMS emphasized its interest in prompting a national discussion about the myriad ways to improve the healthcare delivery system. This proposed rule is a discrete example of the healthcare industry’s continued development toward assessing how differences in patient populations can and should be addressed.


PTAC Recommends Two Physician-Focused Payment Models to DHHS Secretary

The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) transformed the way that Medicare will pay physicians by incorporating quality measurements and encouraging physician participation in value-based payment arrangements. To further this value-based initiative, MACRA created the Physician-Focused Payment Model Technical Advisory Committee (“PTAC”) to make recommendations to the Secretary of the Department of Health and Human Services (the “Secretary”) on physician-focused payment models (“PFPMs”) based on proposals submitted by individual and stakeholder entities. PFPMs are a form of alternative payment model in which Medicare is the payor, eligible professionals, as defined in Section 1848(k)(3)(B) of the Social Security Act, are the participants, and the primary targets are quality measures and costs of services that eligible professionals provide or can influence.  Individuals and stakeholder entities submitted proposed PFPMs in response to ten PFPM criteria published in the MACRA final rule on November 4, 2016. The ten criteria covered requirements ranging from quality and cost and value over volume to integration and care coordination.

On April 10, 2017, PTAC recommended two PFPM proposals to the Secretary for limited-scale testing: Project Sonar, proposed by the Illinois Gastroenterology Group and SolarMD, LLC, and the ACS-Brandeis Advanced Alternative Payment Model (“APM”) proposed by the American College of Surgeons. Project Sonar is a health care management program aimed at improving clinical management of patients with chronic diseases, starting with Crohn’s disease. Project Sonar developed a team-based approach for clinical decision making, utilizing nurse care managers for managing patients. After four years of testing, Project Sonar resulted in lower hospitalization rates and a decrease in inpatient, emergency department, and injectable biologic costs. ACS-Brandeis Advanced APM improves upon the Episode Grouper for Medicare software currently used by CMS to evaluate its resource use. The improvements include financial risk assessments and a quality measurement framework that can aid in adjusting payments based on the quality of health care services.

PTAC began accepting proposals on December 1, 2016, and will continue accepting submissions on an ongoing basis. Although the Secretary is not required to accept PTAC’s recommendations, the Secretary must review and post a “detailed response” to those recommendations on CMS’s website. As stated in the comments to the final MACRA rule, CMS has chosen not to set a deadline via regulation for the Secretary’s review of PTAC’s comments and recommendations. The continued development of PFPMs is of significant importance to physicians in light of the fact that their choices under MACRA are either to succeed under the MIPS or to participate in APMs.


CMS Proposes New Rules for SNF Value-Based Purchasing Program

Recently, the Centers for Medicare & Medicaid Service (“CMS”) released a proposed rule that contains provisions affecting the Skilled Nursing Facility (“SNF”) Value-Based Purchasing Program (“VBP”). The proposed rule, available here, is open for comments until June 26, 2017, and affects multiple areas of the SNF VBP Program:

1.      Timeframe for Transitioning from 30-Day-All-Cause Readmission Measure

Previously, CMS finalized the Skilled Nursing Facility 30-Day-All-Cause Readmission Measure (“SNFRM”) to use for the SNF VBP Program. Shortly afterwards, the Skilled Nursing Facility 30-Day Potentially Preventable Readmission Measure (“SNFPPR”) was developed to replace SNFRM, but the replacement measure did not come with a concrete timeline for transitioning from SNFRM to SNFPPR. This proposed rule schedules the transition for Fiscal Year (“FY”) 2021, but leaves open the possibility of using a different time if FY 2021 is not practicable.

2.      Proposed FY 2020 Performance Standards

In the FY 2017 SNF PPS final rule, CMS defined the achievement performance standard for quality measures identified in the SNF VBP Program as the “achievement threshold.” CMS proposes to provide estimates of the numerical values of the achievement threshold and the benchmark for the FY 2020 program year, and to adopt a baseline and performance period for the FY 2020 program year based on the federal fiscal year instead of the calendar year.  CMS solicited public comment on the estimated achievement threshold and benchmark values.

3.      Proposed FY 2020 Performance Period and Baseline Period

CMS established a 12-month performance and baseline period for the Program that was tied to the calendar year. However, CMS determined that the claims run out period and the time required for statistical modeling would prevent CMS from adhering to the statute’s timeline for notifying SNFs of their value-based incentive payment percentages. To avoid this risk, CMS intends to transition from a strict adherence to the calendar year, which will result in counting SNFs' Q4 performance twice. CMS has requested industry comments for solutions.

4.      SNF VBP Reporting

Under the SNF VBP Program, SNF performance information will be published on Nursing Home Compare by October 1, 2017, after SNFs have had the opportunity to review and submit corrections. Additionally, rankings for the SNFs for FY 2019 program year are to be published by August 1, 2018. Rankings will include rank, provider ID, facility name, address, baseline period (CY 2015) risk standardized readmission rate, performance period (CY 2017) risk-standardized readmission rate, achievement score, improvement score, and SNF performance score.  CMS believes this information is necessary for consumers and stakeholders to evaluate SNFs’ performance effectively, which fits with CMS’ recent transition to greater transparency and quality reporting.