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HHS Finalizes New Medicare Alternative Payment Models

December 21, 2016
by Rajiv Leventhal
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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.

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