Five Things to Know about CMS’s New Proposed Bundles

Posted by: Larry Sobal on Thursday, August 4, 2016


Last week, CMS released a nearly 900-page proposed rule that would add incentives for hospitals to provide higher-quality care at a lower cost. It’s set to launch in July 2017. The proposed rule seeks to increase coordination of care and decrease costs for heart attack and bypass surgery patients. It creates a new Surgical Hip/Femur Fracture Treatment model (SHFFT) and outlines a path for individual participants to qualify for Advanced Alternative Payment Model (APM) status through MACRA.

For the new cardiac bundles, CMS would include acute care hospitals in 98 randomly-selected metropolitan statistical areas (MSAs). As the hip/femur fracture surgeries model builds upon the existing Comprehensive Care for Joint Replacement (CJR) model, CMS proposed to test these bundled payments in the same 67 MSAs that were selected for that existing model.

Comments on the proposal can be submitted to CMS for a 60-day period and are due to CMS by September 24th.

There are a number of interesting aspects of this proposed rule that are worth exploring.

  1. Mandatory versus Voluntary

This is clearly another step in CMS’s goal of having 50% of all payments tied to Alternative Payment Models (APM’s) by the end of 2018; however, the announcement may signal a more aggressive approach by CMS. Although the proposed rule document speaks to a new, voluntary bundled payment program that could begin in 2018, it potentially suggests an intention of shifting bundled payments from voluntary, as has been the case with the Bundled Payments for Care Improvement Initiative (BPCI), to mandatory participation.

It’s notable that the proposal to bundle payments for cardiac care is the third mandatory demonstration project from CMS in a little over a year. In addition, CMS is proposing to expand and further complicate the hip and knee program—less than four months after it began—and before evaluating its results. That’s a lot of new programs from a federal agency that has been criticized in the past for being slow-moving.

At best, this degree of change will challenge hospitals to figure out how to make these complex models work for patients and physicians, and may accelerate innovations and improvements. At worst, it may overwhelm hospitals and put the overall success of the APM programs at risk.

At best, this degree of change will challenge hospitals to figure out how to make these complex models work for patients and physicians, and may accelerate innovations and improvement. At worst, it may overwhelm hospitals and put the overall success of the APM programs at risk.

  1. Time to Transition

CMS recognizes that hospitals will need time to adapt to the new models and to establish processes to coordinate care. Therefore, the proposed rule includes a number of measures to ease the transition, including gradually phasing-in risk.

Downside risk (possible repayments to Medicare) would be phased-in as follows:

  • July 2017–March 2018 (performance year 1 and first quarter of performance year 2): No repayment
  • April 2018–December 2018 (quarters 2 through 4 of performance year 2): Capped at 5%
  • 2019 (performance year 3): Capped at 10%
  • 2020–2021 (performance years 4 and 5): Capped at 20%

Gains (payments from Medicare to hospitals) would be phased-in as follows:

  • July 2017–December 2018 (performance years 1 and 2): Capped at 5%
  • 2019 (performance year 3): Capped at 10%
  • 2020–2021 (performance years 4 and 5): Capped at 20%

The first performance period would run from July 1, 2017, to December 31, 2017. The second through fifth performance periods would align with calendar years 2018 through 2021.

  1. Coordinating with MACRA

The proposed rule is attempting to coordinate with the MACRA legislation. The new mandatory bundled payments for cardiac care and rehabilitation, as well as the comprehensive care for joint replacement model (which began this year), will reportedly qualify for incentive payments under MACRA's new beginning in 2018 (for physicians who collaborate with participating hospitals), according to CMS.

By allowing physicians to qualify for the more lucrative track under MACRA, which determines physicians' Medicare payment adjustments in place of the sustainable growth rate formula, the bundles could meet the requirements under the proposed rule for MACRA. That means physicians could earn an additional lump-sum bonus. This would be a tremendous benefit to specialty physicians, who otherwise appeared to have limited avenues to qualify for the APM track within MACRA.

  1. Incentivizing Cardiac Rehab

The cardiac bundle program includes a comparative test that promotes the use of cardiac rehabilitation during the 90-day period after discharge. CMS is also announcing a model testing the effects of payments that encourage the use of cardiac rehabilitation services.

The cardiac rehabilitation incentive payment model would test the impact of providing an incentive payment to hospitals, where beneficiaries are hospitalized for a heart attack or bypass surgery. It would be based on beneficiary utilization of cardiac rehabilitation and intensive cardiac rehabilitation services in the 90-day care period following hospital discharge. Hospitals may use this incentive payment to coordinate cardiac rehabilitation and support beneficiary adherence to the cardiac rehabilitation treatment plan to improve cardiovascular fitness. These payments would be available to hospital participants in 45 geographic areas that were not selected for the cardiac care bundled payment models, as well as to 45 geographic areas that were selected. This test will cover the same five-year period as the cardiac care bundled payment models.

  1. Loosening Medicare Requirements for Home Health Services

CMS notes in this announcement that chronic conditions resulting in hospitalizations—regardless of the reason for the hospitalization—often represent a common pathway that includes failure of outpatient care management and care coordination for the beneficiary with that chronic condition. One example of recognizing the value of non-hospital care is that CMS is proposing to loosen some of the strict Medicare requirements for home health services on providers taking part in the new episodic payment model. For instance, some beneficiaries who otherwise would be ineligible for home health services, would be allowed up to 13 home visits for an Acute Myocardial Infarction (AMI) diagnosis, or 9 visits during a Coronary Artery Bypass Graft (CABG) episode.

Any document of nearly 900 pages, even a proposed rule, contains a large number of interesting ideas and proposals. I thought these five were particularly intriguing. What most intrigues you about the proposed rule—and what changes would you suggest for CMS to consider in the 60-day comment period?

To learn more about cardiac bundles, don’t forget to register for CV Transforum Fall’16.


Larry SobalLarry Sobal is Executive Vice President of Business Development at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and insurance. As part of his current role, Larry consults, writes and presents on topics relevant to transforming physician practices and health systems.




Private comment posted on April 13, 2017

Thanks for spelling out the acronyms, it really helps
Posted by: brianlinek on August 10, 2016 @11:09:19 am

Thank you for your comment. Thus far, the (limited) initial data on the impact of bundles is mixed on whether they lower cost and improve outcomes. I am hopeful that they accomplish all the things you mention. Time will tell but it's clear CMS is committed to the concept - which means bundled payments will also begin to more aggressively migrate over to commercial payers as well.
Posted by: Larry Sobal on August 10, 2016 @5:37:54 am

I think what is happening is that we are changing the care rendering and payment incentive systems from a procedural approach to billing and healthcare treatment to a more positive outcome patient centered culture to a more holistic, positive outcomes based incentive system. While I think it is being done for money reasons, it will result in better care of each patient because it will be individualized to each patient. The bundling of the services rendered is just the icing on the cake in that it will make the process more efficient and faster to accomplish and invoice for the individual physician. The bundling approach is late to the party but definitely overdue.
Posted by: Ray Tuller 3 on August 7, 2016 @10:58:31 am

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