CMS makes it official: Two mandatory bundled-pay models canceled

The CMS has finalized its decision to toss two mandatory bundled-payment models and cut down the number of providers required to participate in a third.

Only 34 geographic areas will be required to participate in the Comprehensive Care for Joint Replacement Model, or CJR, according to a rulemaking released Thursday. Initially, 67 geographic areas were supposed to participate.

Up to 470 hospitals are expected to continue to operate under the model. That includes the CMS' estimate that 60 to 80 hospitals will voluntarily participate in CJR. Originally, 800 acute-care hospitals would have participated under the program.

With so many hospitals getting a reprieve, the CMS estimates the model will save $106 million less over the next three years versus what it would have saved if CJR had remained mandatory for all 67 geographic areas. The model is now expected to save $189 million over those years instead of $295 million.

The rule comes weeks after the CMS finalized a proposal to allow knee-replacement surgeries to take place in outpatient settings. When the proposal was released in July, some questioned if it was an attempt to undermine the CJR model.

The CMS has also finalized plans to cancel the Episode Payment Models and the Cardiac Rehabilitation Incentive Payment Model, which were scheduled to begin on Jan. 1, 2018. Eliminating these models gives the CMS greater flexibility to design and test innovations that will improve quality and care coordination across the inpatient and post-acute-care spectrum, the agency said.

These cardiac pay models were estimated to save Medicare $170 million collectively over five years.

The agency acknowledged that some hospitals wanted the models to continue on a voluntary basis, as they had already invested resources to launch them, but said those arguments were not detailed enough for the agency to do so.

"We note that commenters did not provide enough detail about the hiring status or educational and licensing requirements of any care coordinator positions they may have created and filled for us to quantify an economic impact for these case coordination investments," the CMS said.

On average, hospitals have five full-time employees, including clinical staff, tracking and reporting quality measures under value-based models, according to the AHA. They are also spending approximately $709,000 annually on the administrative aspects of quality reporting.

More broadly, the average community hospital spends $7.6 million annually on administrative costs to meet a subset of federal mandates that cut across quality reporting, record-keeping and meaningful use compliance, according to the trade group.

Ultimately, the CMS decided to not alter the design of these models to allow for voluntary participation since that would potentially involve restructuring the model, payment methodologies, financial arrangement provisions and quality measures, and it did not believe that such alterations would offer providers enough time to prepare for the changes before the planned Jan. 1, 2018 start date.

The CMS acknowledged that hospitals and other stakeholders have voiced concerns that the Trump administration may not be as committed to value-based care as the Obama administration, but it insists that's not true. The CMS said the Trump administration just believes voluntary models are the better way to go.

"We take seriously the commenters' concerns about the urgency of continuing our movement toward value-based care in order to accommodate an aging population with increasing levels of chronic conditions," the agency said in the rule. "We continue to believe that value-based payment methodologies will play an essential role in lowering costs and improving quality of care, which will be necessary in order to maintain Medicare's fiscal solvency."

An edited version of this story can also be found in Modern Healthcare's Dec. 4 print edition.