When the news last week broke that the Centers for Medicare and Medicaid (CMS) finalized a rule that will cancel mandatory hip fracture and cardiac bundled payment models, industry observers had mixed reactions, but given the current administration’s past sentiments on forcing providers into these initiatives, the rule did not come as a surprise to many.
Indeed, although it was just last year when federal officials under the Obama administration announced new mandatory bundled payment models for care for heart attacks and for cardiac bypass surgery, new health officials in the Trump administration were not keen on the “mandatory” aspect of the models. As such, in last week’s announcement, CMS Administrator Seema Verma said in a statement, “While CMS continues to believe that bundled payment models offer opportunities to improve quality and care coordination while lowering spending, we believe that focusing on developing different bundled payment models and engaging more providers is the best way to drive health system change while minimizing burden and maintaining access to care. We anticipate announcing new voluntary payment bundles soon.”
Some organizations, like the Charlotte, N.C.-based Premier, were unhappy with the ruling, pointing out that current bundled payment models are “actively transforming care, driving improved patient outcomes and reducing healthcare costs,” adding that CMS has decided to “pull the rug out from underneath providers without offering another avenue to participate and apply their significant investments to the benefit of patients.”
But for many others, the news came as a welcome relief. Mark Froimson, M.D., a longtime orthopedic surgeon and current president of the American Association of Hip and Knee Surgeons (AAHKS), says that he and his colleagues “were delighted that Medicare had pulled back on the mandatory bundled payments.” Froimson, who is also a principal at Riverside Health Advisors, and who works at San Francisco-based health IT vendor Clarify Health as a clinical consultant, says while there is general optimism around the episode-based payment concept, these current models that are being pulled back “would not have been effective and were filled with challenges for physicians, health systems, and patients.”
Mark Froimson, M.D.
Explaining further, Froimson feels that the “mandatory” aspect of the models meant that whether a hospital was prepared or not, whether it had invested the infrastructure or not, or had the clinical expertise or not, it would be thrust into these initiatives without choice. “Many hospitals are working on fairly thin margins and have to make tough decisions on where to invest resources. So for a number of them, this just didn’t rise up to their priority level, especially those who oversee safety-net populations, and weren’t equipped to invest. We thought it was not the right approach, to force with a broad brush all types of hospitals into a single model. These hospitals have very different patient populations, with different histories and different resources, so the fact that the models were mandatory and broad-brushed was not a good thing,” he says.
Chris Garcia, CEO of Remedy Partners, a Darien, Conn.-based company that helps hospitals and physicians with bundled payment programs, agrees with the ruling as well, noting that the voluntary nature of these programs “is critical and allows for much more rapid adoption.” He adds, “When you try to shove something down someone’s throat, they always try to figure out workarounds to make sure it doesn’t impact them negatively. The [mandatory] CJR [Comprehensive Care for Joint Replacement] Model had a detrimental impact on some and a positive impact on others. The government is moving away from anointing winners and losers, instead [focusing] on taking all interested parties. We think they can attract an extraordinary program on a voluntary basis rather than go on a mandatory route,” he says.
Garcia and Froimson both point to the government’s existing Bundled Payments for Care Improvement (BPCI) voluntary initiative, with four models of care, as proof that mandating participants is not necessary. Garcia attests that “There is very large pent-up demand right now for others to engage in this program.”
Remedy Partners is the largest awardee convener under the BPCI program, and according to Garcia, the company helps its clients manage more than $4 billion of Medicare spending per year, or about one-third of the total BPCI program spend. What’s more, he says that the private market has invested more than $300 million in this initiative. “This program is working; patients are recovering in lower-cost settings, having more successful outcomes, and staying home rather than being readmitted. So we don’t want to lose that momentum, and the [government] also knows that as they want to move away from fee-for-service and toward value.”
Froimson, meanwhile, points out that the BPCI model, unlike the two models that were cancelled, is not hospital-based, but rather allows for physicians to be conveners or initiators. He notes that the data generated from BPCI at this point in time shows that physician-led bundles “save more money and provide a more rapid improvement than hospital-initiated bundles. That lends support to the idea that CJR and these mandatory models that are primarily hospital-based are not the most effective way to achieve the promise and potential of episode-based payment models,” he says.
“Models that have shown the most success are when physicians are in position to lead. But that was absent in these models [that were cancelled].” He further adds that hospital-based models that do not allow for physician conveners have created some poor conversations between hospitals and their physicians as a result. “There were some who recognized the importance of physician leadership and engaged their physician community, and others who felt this was the hospital’s purview and that they didn’t need physician buy-in or gainsharing to succeed. And we thought that was short-sighted of them,” Froimson says.
Garcia says that his company is seeing both hospital- and physician-based bundled payment models perform well, but does note that in the hospital-led CJR program, the government decided it was better for the hospital to own the bundle and the risk rather than the orthopedic surgeon. Says Garcia, “But it’s not the hospital’s patient even though he or she goes through the hospital; it’s the orthopedist’s patient. So a number of our orthopedic groups were upset that the control of the bundle was placed in the hands of the hospital rather than the physician who knows that patient better than anyone.”
A Shift Away from Value?
A concern from those who were in favor of the mandatory models was that this cancellation was one step toward the government perhaps pulling back from the continued momentum toward value-based care. But Garcia and Froimson do not agree with that sentiment whatsoever.
Garcia recalls that the bundled payment initiative was initially a George W. Bush administration project, which eventually moved forward under Obamacare. “This is a bipartisan initiative, and it is saving the Medicare Trust Fund, by our estimation, around $200 million a year just in its demonstration phase. So you can imagine when it gets rolled out in mass, what those savings [will be],” he says. “The Trust Fund economics run into trouble 11 years from now, so anything we can do to try to extend that and push it out is in everyone’s best interest. I don’t see these [cancellations] as a signaling that bundled payments are any less interesting to these folks.”
And regarding Administrator Verma’s previous comments on mandatory bundles, and more broadly, the authority of the CMS Innovation Center (CMMI), the center which develops these initiatives, Garcia says that he has had conversations with Congressmen from both the House and Senate, and with Verma, and the feeling is that while there is “agita” around the responsibilities of CMMI, “bundled payment programs are safe and are believed in.”
Froimson says his association has also had conversations with this administration, and the takeaway from those discussions is that the government is certainly “interested in the progression toward new payment models that can reward providers for improving the value of the care delivered.” He adds, “But they want to have a better match between providers who are ready and willing, and who are able to drive value, and Medicare’s agreement with them to allow that to proceed. I think this administration is appreciating that there is a wide variety of capabilities and circumstances that physicians and health systems face, and that a broad-brushed approach is not likely to strike the right balance between benefit and burden,” Froimson says.
In the end, both experts also wholeheartedly agree that participants in these models going forward will need to leverage data and analytics in ways they never have before. Garcia, who says that he “continues to be amazed with how little these organizations know about what the rest of their ecosystem is doing as it relates to economics,” suggests that the very first step for providers is to look at their historical data to understand where spending has developed.
One of the unique features of the [BPCI] program, says Garcia, is that for the first time, the provider is seeing the expenditures for a Medicare beneficiary across an entire 90-day period. “So a hospital can actually see what healthcare dollars are being consumed in a SNF [skilled nursing facility] for a patient that they sent there. Or they can see that for certain facilities, the incidence of readmission is significantly higher than it is for others. For the first time they are presented with extraordinary amounts of data that would allow for them to have visibility downstream in the healthcare delivery process,” he says. “Without the [analytics], you can’t have that view into this ecosystem that you need to identify where you can save money.”
And once that visibility is gained, the confluence of that, says Froimson, is putting all of this information into the hands of the practices who are accountable for a large section of these patients. “It’s almost like an air traffic controller who knows [the locations of] dozens or hundreds of patients, who are under the care of a practice or system at any given time and who has alerts as to which ones will require deployment of additional resources to get them back on track,” he says. “So I think there is a tremendous amount of new information and tools available to physician practices and health systems that provide better matching of patients’ needs to what we can offer them, which therefore means outcomes are [likely] to be improved.”