Signals Trump Administration’s About-Face on Obama-Era Mandatory Innovation Models

The Centers for Medicare & Medicaid Services (CMS) has just released a proposed rule to cancel a significant — but still-pending — Obama Administration program that would require certain hospitals to participate in Medicare episode payment models (EPMs) for acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment (SHFFT) procedures furnished in designated areas of the country. Perhaps more surprisingly, CMS also would dramatically scale back mandatory participation in the ongoing Comprehensive Care for Joint Replacement (CJR) program, with an option for participating hospitals in about half of the current CJR locations to shift to voluntary participation.

As previously reported, the EPM and CJR programs were part of the Obama Administration’s high-profile efforts to move the Medicare system away from fee-for-service (FFS) payments and towards alternative payment models (APMs) that reward quality of care rather than volume of services. Although early APMs (e.g., the Bundled Payment for Care Initiative) were voluntary, CMS eventually shifted attention to mandatory models in order to broaden participation. President Trump’s Secretary of Health and Human Services, Tom Price, M.D., has long been critical of mandatory Medicare payment innovation models and has been contemplating changes to these programs.  It is now clear that the Trump Administration is reversing course and pulling back from mandatory models.  In fact, CMS stated in an announcement that it “expects to increase opportunities for providers to participate in voluntary initiatives rather than large mandatory episode payment model efforts” in the future.

EPM/CR Models Slated for Cancellation

CMS published a final rule in early 2017 to establish a mandatory EPM program for AMI and CABG cases in 98 metropolitan statistical areas (MSA), along with a mandatory EPM program for SHFFT procedures in 67 MSAs covered by the CJR program. In short, CMS planned to provide a bundled payment to hospitals in selected geographic areas for individual episodes, covering all services provided during the inpatient admission through 90 days post-discharge.  In such cases, the hospital would be held accountable for spending during the episode of care.  The bundled payment to the hospital would be paid retrospectively through a reconciliation process (hospitals and other providers and suppliers would continue to submit claims and receive payment via the usual Medicare FFS payment systems).  A participant hospital would receive a “reconciliation payment” if its actual episode payments (combined Medicare Part A and B claims payments for services furnished to the beneficiary during the episode) were below the target price for the episode, and certain quality thresholds were met.  Beginning with the second performance year, affected hospitals would be required to repay Medicare for a portion of spending that exceeded the target price (with limits on upward and downward adjustment). The rule also included provisions intended to promote the use of cardiac rehabilitation services through a Cardiac Rehabilitation (CR) Incentive Payment Model.

While the EPM programs originally were slated to begin July 1, 2017, the Trump Administration subsequently delayed implementation until January 1, 2018 while modifications were considered.

Under the August 15, 2017 proposed rule released by the Trump Administration, the EPM and CR models would be cancelled, and the implementing regulations rescinded before the programs began. According to the preamble to the rule, CMS “concluded that certain aspects of the design of the EPMs and the CR incentive payment model should be improved and more fully developed prior to the start of the models,” and stated that moving ahead with the current regulations “would not be in the best interest of beneficiaries or providers at this time.”   CMS notes that it expects to establish new voluntary bundled payment models during 2018.

CMS invites public comment on its proposal to cancel the EPMs and CR incentive payment models.

CMS Seeks to Cut Back, Revise Comprehensive Care for Joint Replacement Program

The CJR program went into effect April 1, 2016 in 67 MSAs, representing the first mandatory Medicare bundled payment program. In brief, under this model, CMS provides a “bundled” payment to impacted hospitals for an “episode of care” for lower extremity joint replacement (LEJR) surgery, covering all services provided during the inpatient admission through 90 days post-discharge (with certain exceptions).  The CJR bundled payment is paid retrospectively through a reconciliation process, with providers receiving regular FFS payments in the interim.  CMS intends for this initiative to improve quality of care and reduce costs associated with LEJR procedures by promoting coordination among hospitals, physicians, and post-acute care providers from the initial hospitalization through recovery – although hospitals ultimately are held responsible for the episode spending.  The CJR model is now in its second performance year; the fifth and last performance year runs through 2020.

The Trump Administration now proposes to change course abruptly: it would make CJR participation voluntary for eligible hospitals in 33 of the MSAs currently covered by the program, beginning in February 2018.  The CJR model would remain mandatory in the other 34 MSAs for the remainder of the program, with an exception for certain low volume and rural hospitals.  The mandatory MSAs generally have the highest average wage-adjusted historic LEJR episode payments, which CMS believes “are most likely to have significant room for improvement in creating efficiencies and greater variations in practice patterns.”  The list of proposed CJR mandatory participation MSAs is available here.  CMS expects the number of mandatory participating hospitals to decrease from about 700 to approximately 393 beginning in year 3 and beyond under its proposal.

CMS proposes to provide a one-time participation election period for hospitals located in the remaining voluntary participation MSAs, along with specified low-volume hospitals and rural hospitals in the mandatory participation MSAs. The deadline for submitting a participation election letter (in a form specified by CMS) would be January 31, 2018, and voluntary participation would begin February 1, 2018.  Hospitals that elect voluntary participation would continue in the CJR model without any disruption.  Eligible hospitals that do not elect voluntary participation would be withdrawn from the model effective February 1, 2018, and they would not be subject to a reconciliation payment or repayment amount for performance year 3.

While CMS is moving away from mandatory participation for many hospitals, the agency solicits comments on how “to further incentivize eligible hospitals to elect to continue participating in the CJR model for the remaining years of the model and to further incentivize all participant hospitals to advance care improvements, innovation, and quality for beneficiaries throughout LEJR episodes.”   CMS also solicits comments on current limitations on gainsharing within CJR and “any alternative gainsharing caps that may be appropriate to apply to physicians, non-physician practitioners, PGPs [physician group practices], and NPPGPs [non-physician practitioner group practices].”

In addition to the major changes to participation requirements, CMS proposes to clarify other CJR model payment, reconciliation, and quality provisions including:

  • Clarification of CJR reconciliation following hospital reorganization events;
  • Revision to the practice expense valuation for remote telehealth services under the CJR model;
  • Use of an amended composite quality score methodology during the “subsequent reconciliation calculation” for performance year 1 of the CJR model; and
  • Establishment of new clinician engagement list requirements to increase opportunities for eligible clinicians who are performing CJR model activities and who are affiliated with participant hospitals to be considered Qualifying APM Participants under the Quality Payment Program.

CMS will accept comments on the proposed rule until October 16, 2017.