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HHS Announces New Mandatory Bundled Payment Models for Cardiac Care, Focusing on MI and CABG

July 25, 2016
by Mark Hagland
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FFS Medicare payment for cardiac care will soon be transformed by the imposition of mandatory bundled payment

Senior federal healthcare officials took a major step in forcing reimbursement forward into value-based purchasing on Monday, when they announced the introduction of mandatory bundled payment for care for heart attacks and for cardiac bypass surgery.

In an announcement posted on the website of the Department of Health and Human Services (HHS), Health and Human Services Secretary Sylvia Mathews Burwell announced the change. As the announcement noted, “Today, the Department of Health & Human Services proposed new models that continue the Administration’s progress to shift Medicare payments from quantity to quality by creating strong incentives for hospitals to deliver better care to patients at a lower cost. These models would reward hospitals that work together with physicians and other providers to avoid complications, prevent hospital readmissions, and speed recovery.”

As the announcement said, “Today’s proposal contains three new significant policies:

>  New bundled payment models for cardiac care and an extension of the existing bundled payment model for hip replacements to other hip surgeries;

>  A new model to increase cardiac rehabilitation utilization; and

>  A proposed pathway for physicians with significant participation in bundled payment models to qualify for payment incentives under the proposed Quality Payment Program.”

Secretary Burwell was quoted in the announcement as saying, “Having a heart attack or undergoing heart surgery is scary and stressful for patients and their families. Today’s proposal,” Ms. Burwell said, “is an important step to improving the quality of care Americans receive and driving down costs. By focusing on episodes of care and rewarding successful recoveries, bundled payments encourage hospitals to coordinate care to achieve the best outcomes possible for patients.”

Meanwhile, Patrick Conway, M.D. Principal Deputy Administrator and Chief Medical Officer in the Centers for Medicare & Medicaid Services (CMS), was quoted in the announcement as saying, “Patients want the peace of mind of knowing they will receive high-quality, coordinated care from the minute they’re admitted to the hospital through their recovery. The variation in cost and quality for the same surgery at different hospitals,” he added, “shows there are major opportunities for hospitals included in today’s models to reduce costs, improve care, and receive additional payments by improving patient outcomes.”

So what exactly is being proposed? “Under the new models in today’s rules,” the HHS announcement said, “the hospital in which a Medicare patient is admitted for care for a heart attack or bypass surgery would be accountable for the cost and quality of care provided to Medicare fee-for-service beneficiaries during the inpatient stay and for 90 days after discharge. The proposed cardiac care policies would be phased in over a period of five years, but would begin July 1, 2017 for hospitals located in the 98 metro areas participating in the model (about one-quarter of all metro areas in the nation).”

Today’s announcement came in the form of a formal Notice of Proposed Rulemaking (NPRM). According to the fact sheet for the announcement—found here—the following changes would take place:

“Under the proposed episode payment models, the hospital in which a patient is admitted for care for a heart attack, bypass surgery, or surgical hip/femur fracture treatment would be accountable for the cost and quality of care provided to Medicare fee-for-service beneficiaries during the inpatient stay and for 90 days after discharge. Specifically, once the models are fully in effect, participating hospitals would be paid a fixed target price for each care episode, with hospitals that deliver higher-quality care receiving a higher target price. At the end of a model performance year, actual spending for the episode (total expenditures for related services under Medicare Parts A and B) would be compared to the target price that reflects episode quality for the responsible hospital. Hospitals that work with physicians and other providers to deliver the needed care for less than the quality-adjusted target price, while meeting or exceeding quality standards, would be paid the savings achieved. Hospitals with costs exceeding the quality-adjusted target price would be required to repay Medicare.”

According to the proposed rule, “Each year, CMS would set target prices for different episodes based on historical data on total costs related to the episode of care for Medicare fee-for-service beneficiaries admitted for heart attacks, bypass surgery, or surgical hip/femur fracture treatment, beginning with the hospitalization and extending 90 days following discharge. Target prices would be adjusted based on the complexity of treating a heart attack or providing bypass surgery. For example, CMS proposes to adjust prices upwards for those heart attack patients who need to be transferred to a different hospital during their care to reflect the most resource-intensive cardiac care provided during the hospitalization. For heart attack patients, target prices would also differ depending on whether the patient was treated with surgery or medical management.”


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