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HHS Finalizes New Medicare Alternative Payment Models

December 21, 2016
by Rajiv Leventhal
| Reprints
Federal officials have finalized cardiac and orthopedic episode payment models, as well as Medicare’s ACO Track 1+ Model, but questions do linger on how this all falls with President-elect Trump’s new administration

The Department of Health & Human Services (HHS) has finalized new Medicare alternative payment models around cardiac and orthopedic care, as well as the agency’s Medicare accountable care organization (ACO) Track 1+ Model.

 In a Dec. 20 press release, HHS said “These models will reward hospitals that work together with physicians and other providers to avoid complications, prevent hospital readmissions, and speed recovery.” The announcement finalizes significant new policies that:

  • Improve cardiac care: Three new payment models will support clinicians in providing care to patients who receive treatment for heart attacks, heart surgery to bypass blocked coronary arteries, or cardiac rehabilitation.
  • Improve orthopedic care: One new payment model will support clinicians in providing care to patients who receive surgery after a hip fracture beyond hip replacement. In addition, HHS is finalizing updates to the Comprehensive Care for Joint Replacement Model, which began in April 2016.
  • Provides an Accountable Care Organization opportunity for small practices: The new Medicare ACO Track 1+ Model will have more limited downside risk than Tracks 2 or 3 of the Medicare Shared Savings Program in order to encourage more practices, especially small practices, to advance to performance-based risk. This approach will provide opportunities for an estimated 70,000 clinicians to qualify for Advanced Alternative Payment Model (APM) incentive payments in 2018.

“Today, we’re proud to continue progress strengthening Medicare for beneficiaries, providers, and taxpayers with alternative payment models that reward the quality of care over quantity of services,” said HHS Secretary Sylvia M. Burwell. “These models give providers and hospitals the tools they need to provide the kind of high-quality patient-centered care we all want for our own families, while also driving down costs for the nation.”

HHS officials said that the cardiac and orthopedic episode payment models being finalized provide opportunities to improve care coordination and quality. In 2014, more than 200,000 Medicare beneficiaries were hospitalized for heart attack treatment or underwent bypass surgery, costing Medicare over $6 billion.

But the cost of treating patients for bypass surgery, hospitalization, and recovery varied by 50 percent across hospitals, and the share of heart attack patients readmitted to the hospital within 30 days varied by more than 50 percent. In addition, only 15 percent of heart attack patients receive cardiac rehabilitation, even though clinical studies have found that completing a rehabilitation program can lower the risk of a second heart attack or death, HHS officials noted.

Under the new approaches, the hospital in which a Medicare patient is admitted for care for a heart attack, bypass surgery, or a hip or femur procedure will be accountable for the quality and cost of care provided to Medicare fee-for-service beneficiaries during the inpatient stay and for 90 days after discharge. The new models will operate over a period of five years beginning July 1, 2017. The cardiac models will apply to hospitals located in the 98 metro areas participating in the model (about one-quarter of all metro areas in the nation). The surgical hip fracture treatment model will apply to hospitals in 67 metro areas, which are the same metro areas currently included in the Comprehensive Care for Joint Replacement Model.

The cardiac rehabilitation incentive payment model will test the impact of providing payment to hospitals to incentivize referral and coordination of cardiac rehabilitation following discharge from the hospital for a heart attack or bypass surgery. These payments will cover the same five-year period as the cardiac care bundled payment models and will be available to hospital participants in 45 geographic areas that were not selected for the cardiac care bundled payment models, and 45 geographic areas that were selected for the cardiac care bundled payment models.

Under all of these approaches, beneficiaries retain their freedom to choose services and their hospital or physician. The Centers for Medicare & Medicaid Services (CMS) will monitor and evaluate the impact of the approaches on care quality and value. An ombudsman will also be monitoring the models and be available for beneficiaries.

Nonetheless, there is uncertainty in the industry in regards to how this all falls with President-elect Donald Trump’s new administration. Expected new HHS Secretary, Congressmen Tom Price, M.D (R-GA), headed a letter to CMS in September questioning the Center for Medicare and Medicaid Innovation (CMMI) for overstepping its authority by proposing mandatory healthcare payment and service delivery models. In the letter, Price and other legislators stated that these models would negatively impact patients. "We ask that your cease all current and future planned mandatory initiatives under the CMMI,” the legislators wrote.

The letter specifically cited the CMS final rule requiring at least 800 hospitals in 67 geographical areas selected by CMS to participate in a new bundled payment model for hip and knee replacements, the Comprehensive Care Joint Replacement (CJR) Model. It also cited the cardiac bundled payment model CMS announced in July that requires some providers to participate in bundled payments for certain cardiac conditions and the expansion of the CJR model. “Until recently the tests and models developed by CMMI were implemented on a voluntary, limited-scale basis where no state, healthcare provider or health insurer had any obligation to participate,” the letter said.

Further speculation on what impact President-elect Trump and a Republican-controlled Congress could have on value-based purchasing came in a recent perspective from The Advisory Board, a Washington, D.C.-based healthcare consulting firm and technology company shortly after Trump’s election victory last month. That perspective noted, "While some Republicans have expressed discomfort with the mandatory Comprehensive Care for Joint Replacement (CJR) and proposed Episode-Based Payment Model (EPM) programs, that has had more to do with the mandates emanating from the ACA-created Centers for Medicare and Medicaid Innovation (CMMI) rather than from Congress. But as with bundled payments, there currently is no proposed replacement for alternative payment models (such as MSSP) per se, and little near-term indication that they would be targeted in more specific repeal efforts, though the situation bears watching.”

Price’s nomination as HHS Secretary is expected to be approved by the Senate early next year, as is Seema Verma’s appointment as new CMS Administrator.

But for now, HHS said that these new payment models and the updated Comprehensive Care for Joint Replacement Model give clinicians additional opportunities to qualify for a 5 percent incentive payment through the Advanced APM path under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and the Quality Payment Program.

For the new cardiac and orthopedic payment models, clinicians may potentially earn the incentive payment beginning in performance year 2019 or potentially as early as performance year 2018 if they collaborate with participant hospitals that choose the Advanced APM path. For the Comprehensive Care for Joint Replacement model, clinicians may potentially earn the incentive payment beginning in performance year 2017. For the Track 1+ Model, which was announced with the MACRA final rule in October, clinicians may potentially earn the incentive payment beginning in performance year 2018, and the application cycle will align with the other Shared Savings Program tracks.

Industry reaction to the government’s finalization of these new alternative payment models has already started to come in. Blair Childs, senior vice president of public affairs at the Charlotte, N.C.-based Premier, Inc., said in a statement that “Bundled payment models have been shown to incent care coordination, quality improvement and cost containment. Moreover, we commend CMS for recognizing that these models need to conform with the definition of advanced alternative payment models, as outlined in MACRA, for the purposes of allowing qualified professionals to earn a 5 percent bonus.”

Childs added, “We also applaud CMS for taking another step toward testing an MSSP Track 1+ Advanced APM model, including many structural elements advocated for by Premier, such as an ability to move into Track 1+ mid-contract, an option to use a 3-day stay waiver, and asymmetrical risk and reward sharing. Despite this, we are disappointed by CMS’s requirements for risk. Rather than follow the MACRA final rule, which reduced the nominal risk level from 4 to 3 percent of total expenditures, this proposal increases it again to 4 percent.  For health systems that by and large will rely on the total cost of care threshold for nominal risk, we continue to believe that this level of risk is excessive and will discourage many qualified providers from moving into Advanced APMs”

Farzad Mostashari, M.D. former National Coordinator for Health IT and current CEO and co-founder of ACO company Aledade, added, “In the giant healthcare market, it's the small practices and solo doctors that are key to protecting patient care while stewarding healthcare dollars. CMS recognized that today by making Advanced Alternative Payment Models more accessible to small physician groups. They right-sized the risk and opened the door for thousands of physicians to join in value-based care. While there is still more work to be done to put smaller practices on a level playing field, I applaud CMS for getting this critical piece of reform done. It's a welcome Christmas gift for small, independent practices and their patients."

On Twitter, however, Travis Broome, Aledade’s healthcare policy lead, did write to CMS Acting Administrator Andy Slavitt, “Not sure I am going to be able to sell docs on taking risk when there is no reward.”

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