Today, the Centers for Medicare and Medicaid Services (CMS) announced a final implementation date for several bundled payment models that were finalized in December 2016. A final rule that included three new episode payment models (EPMs), plus an incentive payment model for cardiac rehabilitation services, and administrative changes to the Comprehensive Care for Joint Replacement (CJR) model was released in the final days of the Obama administration, and originally slated to become effective on February 18, 2017. Implementation was initially delayed until March 21, 2017, and then further delayed until May 20, 2017, under the government-wide regulatory freeze issued by President Trump on January 20, 2017.

This final rule delays implementation of the models until January 1, 2018. Perhaps surprisingly, CMS appears to intend to implement the models at that time. Secretary of Health and Human Services Tom Price was a vocal opponent of bundled payment models, especially the CJR, while he was a member of Congress. There was some speculation that the models might not be implemented at all. That does not appear to be the case.

Three New EPMs Will Become Active January 2018

CMS, via the Center for Medicare and Medicaid Innovation (CMMI) is launching three new acute-care EPMs. Under the models, hospitals in certain areas will be held responsible for all hospital and outpatient costs occurring between the date of admission and 90 days after discharge for the following:

• Acute myocardial infarction (AMI);
• Coronary artery bypass graft (CABG); and
• Surgical hip/femur fracture treatment (SHFFT).

Under the model, hospitals will be paid a fixed price, based on a target price, for each episode of care, including post-acute care received after discharge. The first performance year will run for a full 12 months, instead of the originally finalized six, from, January 1, 2018 – December 31, 2018.

CMS expects that approximately 1,120 hospitals will participate in the AMI and CAGB models and 860 hospitals will participate in the SHFFT model. Specific details on the models, including a listing of the geographic areas selected for the various models may be found here: AMI, CABG, and SHFFT.

Cardiac Rehabilitation Incentive Payment Model On Track

Under the Cardiac Rehabilitation Incentive Payment Model, hospitals in certain geographic areas will be eligible for retrospective incentive payments based on beneficiary utilization of cardiac rehabilitation services. Participants will be eligible for the following:

• Additional $25 payment per services for the initial 11 services; plus
• Additional $175 payment per service for sessions 12+.

Initially, services would be limited to two one-hour service per day for up to 36 sessions over 36 weeks. Medicare Administrative Contractors (MACs) will be authorized to approve up to an additional 36 sessions over an extended period of time. Intensive cardiac rehabilitation services will be limited to 72 one-hour sessions (no more than 6 per day) over 18 weeks.

The model will begin January 1, 2018 and will run for 5 years. More details, including which geographic areas will be included, may be found here. According to CMMI, 45 of the 90 geographic areas participating will also participate in the AMI and CABG EPMs.

Conforming Changes to CJR Delayed Until January 2018, but Orthopedic Surgeons Will be Able to Count 2017 Participation Towards QPP

The rule also includes conforming changes to the CJR model, which has been operational since July 1, 2016. Those changes have been delayed until January 1, 2018.

However, orthopedic surgeons at participating hospitals will be able to use CJR participation in 2017 towards the Advanced Alternative Payment Model (APM) option under the Quality Payment Program (QPP). More information on the CJR may be found here.

The final rule is expected to be published  in the Federal Register on Friday, May 19, 2017. If you would like assistance in evaluating the impact of these new payment models on your business or products, contact us at 202-558-5272 or e-mail us directly at jscott@appliedpolicy.com.