Hospitals call on Trump administration to end mandatory bundled pay programs

Several hospitals have called on the CMS to turn Obama-era bundled-payment initiatives for cardiac and orthopedic care into voluntary programs, as they don't have the financial resources to invest in the changes.

The CMS last month delayed the effective dates of four new payment models for certain cardiac and orthopedic conditions from July 1 until Oct. 1, 2017, and asked for input on whether they should be delayed even further until Jan. 1, 2018.

Since then, hospitals around the country have asked the CMS to turn bundled payments into voluntary initiatives because many health systems do not have the resources to take on additional financial risk or invest in the care-management services and health information technology the models require. The bundled-payment initiatives pose a serious hardship for safety net hospitals that rely mostly on the Medicare, Medicaid and disproportionate-share hospital payments, according to the Greater New York Hospital Association.

"Medicare and Medicaid rates no longer cover an adequate level of operating and capital costs, and the resulting lack of margins for safety net hospitals does not allow for capital investment," the trade group said in an April 19 comment letter.

Several other hospital groups echoed that sentiment. The California Hospital Association and the Missouri Hospital Association echoed that sentiment in their own comment letters. THE MHA asked the CMS to cancel any mandatory pay models outright because they threaten providers' financial stability.

"It treats the nation's hospitals as lab rats in the experimentation, with hospitals randomly assigned to implement components of a growing number of complex CMS initiatives," the MHA said in an April 17 comment letter. "CMS' assignments and their unforeseen outcomes can affect a hospital's ability to survive or thrive."

But Pennsylvania-based Geisinger Health System said it is against making the models voluntary, as some hospitals may game the system by selectively referring or transferring complex patients to providers not participating in the model.

The American Hospital Association said it supported the models' overall goal to make providers more accountable for coordinating patients' care. However, it has voiced concerns in the past over the CMS' pace of rolling out the models. The AHA supports an implementation delay through Jan. 1, 2018. However, the agency should not delay the models beyond that, the group said.

Any further delays "would effectively turn the start date for these programs into a moving target—hospitals and health systems would continue to expend resources to prepare for something that we fear would never come to fruition," the AHA said in an April 19 comment letter.

The CMS said it was delaying the models developed during the Obama administration in order to evaluate the programs. The delay will give the agency time to undertake notice and comment rulemaking and implement any necessary changes.

The agency first introduced the bundled-payment models in July, and the rulemaking was finalized in December. One of the models would make hospitals in 98 markets financially accountable for the cost and quality of all care associated with bypass surgery and heart attacks.

The rule also expanded the CMS' 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. While that expansion has been delayed, the Comprehensive Care for Joint Replacement Model is now in effect in 67 markets.

The CMS also said the delay would give participants more time to prepare for these models, noting it would be preferable for provider payment periods to align with the calendar year.

The comment period on the bundled-payment delay closed April 19, and the agency received 47 comments.

Experts expected many more comments after the March delay notice panicked healthcare industry stakeholders that worried the CMS was backing off its plans to embrace value-based payment reforms. The payment models aimed to shift the industry away from a fee-for-service Medicare program, according to the law firm Sheppard Mullin Richter & Hampton.

HHS Secretary Tom Price has staunchly opposed the CMS' mandatory initiatives. When he served in Congress, he criticized the Center for Medicare & Medicaid Innovation, which develops and pilots value-based payment models. In September, Price was one of 179 lawmakers who called on the CMS to "cease all current and future planned mandatory initiatives under the CMMI," including bundles.