(Story updated at 7 p.m. ET)
The CMS is moving forward with a new mandatory initiative that would make hospitals in 98 markets financially accountable for the cost and quality of all care associated with bypass surgery and heart attacks.
The final regulations issued Tuesday came just days after the agency announced it was junking a proposed mandatory demonstration that would have tested new ways of paying for outpatient drugs under Medicare Part B in an effort to bring those prices down.
Both models have drawn criticism that the Center for Medicare & Medicaid Innovation is overreaching its mandate by compelling participation, including from President-elect Donald Trump's nominee for HHS secretary, Rep. Tom Price (R-Ga.). Price is likely to pull the plug on the five-year demonstration, which is now scheduled to take effect July 1, 2017, in 98 randomly selected metropolitan areas.
“Until recently, the tests and models developed by CMMI were implemented as intended, on a voluntary, limited-scale basis where no state, healthcare provider, or health insurer had any obligation to participate,” Price and other lawmakers wrote in a letter to acting CMS Administrator Andy Slavitt. “These mandatory models overhaul major payment systems, commandeer clinical decisionmaking and dramatically alter the delivery of care.”
The CMS said in the regulations that the mandatory component of the bundled-payment initiatives was necessary “to generate statistically reliable estimates of the impact as well as to be able to understand how well the models operate in a variety of circumstances.”
During a call with reporters Tuesday, Dr. Patrick Conway, CMS' acting principal deputy administrator, declined to speculate what Price may do once he takes on his new role. He did however defend the model, saying it would yield better care and save money.
In the final rule, the CMS also expanded its first mandatory bundled-payment model—which took effect in January and covers total hip and knee replacements—to include surgeries repairing hip and femur fractures.
The agency expects that the various provisions in the rule will result in net federal savings of $159 million between 2017 and 2021.
But policy experts aren't counting on the initiative surviving. “Expect anything CMS does at the eleventh hour to be on a list for Price to consider killing upon confirmation,” said Terry Haines, managing director and head of political analysis at Evercore ISI, an economic research firm.
The healthcare industry had a mixed reaction to the Innovation Center's newest bundled-payment experiments. They supported the goals of improving care and helping providers transition to value-based care, but many were concerned by their mandatory structure.
“The bundled-payment model for cardiac care is the second mandatory demonstration project the agency has finalized in just the past 15 months,” Tom Nickels, executive vice president for government relations and public policy at the American Hospital Association, said in a statement Tuesday. “This is too much, too soon. Regrettably, at the same time, the agency finalized its plans to expand and further complicate its existing mandatory hip and knee bundled-payment model less than a year after it began, and before fully evaluating its results.”
In 2014, hospitalizations for heart attacks for more than 200,000 beneficiaries cost Medicare over $6 billion, the CMS said. Yet for every treatment, the cost could vary by as much as 50%, the agency said.
The CMS said about 1,120 hospitals will participate in the cardiac models, and 860 hospitals will be in the new hip and femur fracture bundles rolled into the existing Comprehensive Care for Joint Replacement program.
The CMS did make several changes to the program in response to industry concerns.
Hospitals, for example, feared they would be financially responsible for the total episode of care if they began treating a heart attack victim under a bundled-payment model and then the patient was transferred to another hospital. Under the final rule, they will not be.
The CMS is also giving hospitals an additional nine months before they are required to assume downside risk—that is, risk losing money if the costs of care exceed the target price.
Under the final rule, they will assume downside risk for episodes ending on or after Jan. 1, 2019. The change was made because hospitals said they needed more time to develop infrastructure and expertise with the models.
However, participants may choose to accept downside risk earlier—for episodes ending on or after Jan. 1, 2018—which would allow other providers involved in the care episode to qualify as participating in an advanced alternative payment model under the Medicare Access and CHIP Reauthorization Act.
Providers have been pressing the CMS to create more avenues for providers to participate in models deemed advanced alternative payment models because that will allow them to circumvent the reporting and performance requirements under MACRA's new incentive-payment framework.
In the same regulations, the CMS unveiled a new track in the Medicare Shared Savings Program that will help more ACOs duck MACRA's incentive payment system.
The new Track 1+ model will count as an advanced alternative payment model because participants would assume some risk of having to return money to the government if they fail to control costs. But there's less downside risk than in the program's more advanced tracks, which the CMS hopes will help more providers transition to more robust value-based models.
The Track 1+ model will begin in 2018.
The CMS also said the cardiac bundled payments will exclude care for beneficiaries who are also assigned to ACOs participating in the most advanced track of the Shared Savings Program. The agency was wary of discouraging providers from participating in the model.
