Could HHS and CMS Shift Direction on Mandatory Bundled Payments? It’s an Intriguing Prospect | Mark Hagland | Healthcare Blogs Skip to content Skip to navigation

Could HHS and CMS Shift Direction on Mandatory Bundled Payments? It’s an Intriguing Prospect

January 11, 2018
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Might Alex Azar’s comments about mandatory bundled payments represent a potential strategic change at HHS?

From time to time, something happens in the healthcare policy world that really is surprising. Such was the case this Tuesday (Jan. 9), when Alex Azar, President Trump’s nominee for Secretary of Health and Human Services, made comments indicating his openness to mandatory bundled payments, during a Senate Finance Committee hearing on his nomination. That openness to mandatory bundles would represent a strong about-face in administration policy, as Associate Editor Heather Landi noted in a news story that day, as former HHS Secretary Tom Price, M.D. had strongly opposed mandatory bundles, going so far as to direct the end of two mandatory bundled payment programs—one existing and one previously announced.

Here’s an excerpt of the Jan. 9 exchange between Azar and Senator Mark Warner (D.-Va.), as seen on C-SPAN:

“Warner: I’d like to get to two other items [after a lengthy discussion between the two on federal drug pricing issues]. In your statement, you said, part of the power of Medicare[is] to shift the focus in our system is to shift from paying for procedures and sickness, to paying for health and outcomes… One of the things that came out of the Affordable Care Act is CMMI [the Center for Medicare and Medicaid Innovation]. And I hope that, while it’s not been as productive as I would like to have seen at all times, I think it is still a tool that is useful, and would like to hear your comments about the role of CMMI going forward.

Azar: I completely agree with you, and believe that CMMI is going to be one of the very important legs we have to drive this type of transformation in our healthcare system, through Medicare. We need to ideate, to pilot, to test, and then generalize.


Alex Azar testifying to the Senate Finance Committee on Jan. 9

Warner: And I would hope that we would realize that some of those pilots may—and I know you might have a disagreement on this one—might include mandatory pilots, because, too often, those who are in the voluntary system, are the ones who have already been able to bring about efficiencies, and we need to force more [innovation] into the system.

Azar: Senator, we actually don’t disagree there. I believe that we need to be able to test hypotheses, and if we have to test a hypothesis, I want to be a reliable partner, I want to be collaborative in doing this, I want to be transparent, and follow appropriate procedures; but if to test a hypothesis there around changing our healthcare system, it needs to be mandatory there as opposed to voluntary, then so be it.”

So, that was quite a moment, when it comes to the already-long saga around CMMI and its history of bundled payment model development.

You’ll recall that on November 30 of last year, CMS (the Centers for Medicare and Medicaid Services) announced the cancelling of two mandatory bundled payment programs—one already in existence, the other, which had been previously announced. As Managing Editor Rajiv Leventhal noted in an article on that date, “The Centers for Medicare and Medicaid (CMS) has finalized a rule that will cancel mandatory hip fracture and cardiac bundled payment models. In August, the Department of Health and Human Services (HHS) issued a proposed rule that would cancel these mandatory bundled payment models—initiatives that were delayed twice before that point in time by then-HHS Secretary Tom Price, M.D.—once in March and again in May. Now, in a Nov. 30 press release, CMS officials said it is finalizing the cancellation of the Episode Payment Models (EPMs) and the Cardiac Rehabilitation (CR) Incentive Payment Model that were to begin on January 1, 2018 and will also implement changes to the Comprehensive Care for Joint Replacement (CJR) Model. The motivation behind the ruling, CMS senior officials said, was to ‘offer greater flexibility and choice for hospitals in providing care to Medicare patients.’”

Already prior to the Nov. 30 announcement, Leventhal noted, “CMS Administrator Seema Verma has said in the past that she doesn’t think these bundled payment models should be mandatory. Verma added in a statement today, ‘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.’”

So what Mr. Azar said on Tuesday could potentially represent a sweeping volte-face of White House policy around mandatory bundled payment programs… or perhaps not. Only time will tell.

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