Editorial: A backward move on value-based care

The Trump administration wants to dramatically scale back Medicare's bundled-payment program. It is the wrong move at the wrong time and should be opposed by all providers and insurers committed to moving from payment for volume to payment for value.

The CMS proposal would allow hospitals to opt out of mandatory bundled payments for replacing knees and hips in nearly half the 67 geographic markets currently in the program. It also eliminates the expansion of bundled episode payments to heart attacks, bypass surgery, hip and femur fractures, and cardiac rehabilitation, which had already been delayed until next January.

The proposed changes are in keeping with HHS Secretary Dr. Tom Price's frequently articulated aversion to mandatory programs. In her justification for the new rule, CMS Administrator Seema Verma suggested the changes were in response to stakeholders' requests to have more input into their design.

The American Hospital Association, which represents organizations most affected by the changes, said it continues to support bundled payments, but it did not immediately protest the rollback. Since the proposed rule would entirely eliminate an expansion of bundles to new categories-including on a voluntary basis-the AHA said that "cancellation of the cardiac and (hip and femur fracture) programs may be disruptive to providers who have expended valuable resources to put these programs in place."

The CMS highlighted the opposition to mandatory participation by "many commenters." It "would force many providers who lack familiarity, experience or proper infrastructure to quickly support care redesign efforts for a new bundled-payment system."

Yes, it would, and that's the point. A majority of providers in the U.S., whether hospitals or physician practices, will need to be dragged into a value-based payment world.

The delivery system reforms in the Affordable Care Act sought to create a learning environment conducive to making the change. It enabled creation of numerous payment reform pilot projects, such as the Bundled Payments for Care Improvement initiative. Successful pilots would lay the groundwork for more far-reaching changes, such as making bundled payments mandatory.

The results of the voluntary BPCI, which runs for another year and originally involved over 1,500 participants and 48 different medical conditions, are mixed. Preliminary data show orthopedic bundles and to a lesser extent cardiac bundles save Medicare money without sacrificing quality.

As I've noted before in this space (See "A bungled bundle," p. 24, Oct. 26, 2015), there are problems with the narrow design of the bundled-payment programs. Limiting them to what are essentially "super DRGs" could turn them into an incentive for some providers to needlessly pursue higher volumes because the highly efficient will make wider margins under the bundle.

To eliminate that threat, the CMS should create more-comprehensive bundles, not cut back the ones it has. Such "super bundles" could cover all necessary care from the onset of a patient condition, not just one particular procedure and set of ancillary services that happens within that broader disease episode.

Narrow bundles do incentivize efficiency in care delivery, a must if hospital providers are going to compete with ambulatory surgical centers. But broader bundles provide the unrestricted cash necessary to support aggressive management of the sickest patients. They lead providers toward taking on full financial risk for their patients' lives.

Healthcare is like every other high-tech endeavor. When it comes to innovations like payment reform, adoption has its early adopters, early majorities, late majorities and laggards. If adoption becomes strictly voluntary, the CMS will be open to the charge that only early adopters joined the pilots, thus skewing the results. Comprehensive reform will remain forever on the horizon.

The current administration at the CMS, with its proposed bundled-payment rule, would put the laggards in charge of payment reform. Those who support moving from volume to value have until mid-October to voice their concerns.