On Tuesday, August 15, 2017, CMS released a proposed rule that would cancel the planned Episode Payment and Cardiac Rehabilitation Incentive Payment Models, scheduled to begin January 1, 2018, and would make participation in the Comprehensive Care for Joint Replacement (CJR) model optional for hospitals located in some areas of the country.

These changes are not entirely unexpected: CMS has delayed implementation of the models, which were finalized in the final days of the Obama Administration, twice under the Trump Administration. However, hospitals were wary of the uncertainty, stating that many had used considerable resources to implement the CJR model, which began on April 1, 2016.

CMS will accept comments on the proposed rule through Monday, October 16, 2017.

If you have questions about how this proposal could impact your company or business, please contact us at 202-558-5272 or mandel@appliedpolicy.com.

Episode Payment Models and Cardiac Rehabilitation Models Cancelled

Under the proposal, Episode Payment Models (EPMs) for acute myocardial infarction (AMI), coronary artery bypass graft (CABG); and surgical hip/femur fracture treatment (SHFTT) would be cancelled. Under the EPM model, hospitals would have been paid a fixed price, based on a target price, for each episode of care, including post-acute care received after discharge.

Under the Cardiac Rehabilitation Incentive Payment Model, hospitals in certain geographic areas would have been 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+.

CMS states that this decision was made in order to place more emphasis on voluntary bundled payment initiatives for hospitals in other areas of care. The agency further states that the models may continue to be implemented on a voluntary basis in the future.

Joint Replacement Model Scaled Back

CMS is proposing to make participation in the CJR model, which has been in operation since April 1, 2016, voluntary for hospitals located in 33 of the 67 Metropolitan Statistical Areas (MSAs) included in the program. Initially, participation was mandatory for all hospitals located in the 67 identified MSAs. The voluntary participation would be on a prospective basis only; if finalized, participation would only be voluntary for performance years 3-5 (2018 – 2020). Additionally, CMS is proposing to allow low-volume and rural hospitals located in all 67 MSAs the opportunity to exercise a one-time opt-out of the CJR model. Again, this would be on a prospective basis.

The list of MSAs in which participation would be voluntary are listed in Table 2 of the proposed rule. The list of hospitals that meet the low-volume/rural criteria are listed in Table 3 of the proposed rule. CMS noted that the 33 “opt-out” MSAs were selected based on their lower wage-adjusted episode payments. In other words, of the 67 MSAs, participation will be mandatory in the MSAs with the highest wage-adjusted episode payments, including:

• Los Angeles-Long Beach-Anaheim, CA
• Miami-Fort Lauderdale-West Palm Beach, FL
• New York-Newark-Jersey City, NY-NJ-PA
• Orlando-Kissimmee-Sanford, FL
• Tampa-St. Petersburg-Clearwater, FL.

Notable MSAs proposed to shift to voluntary participation include:

• Charlotte-Concord-Gastonia, NC-SC
• Nashville-Davidson-Murfreesboro-Franklin, TN
• San Francisco-Oakland-Heyward, CA
• Seattle-Tacoma-Bellevue, WA

Under the model, hospitals continue to be paid under the usual Medicare Fee-for-Service (FFS) payment system. However, after the participating hospitals complete each performance year, CMS combines the claims for what it paid to participating hospitals for services the participating hospital furnished to each beneficiary during the episode, and calculates an actual CCJR episode payment. CMS then compares the actual episode payment against its established CCJR target price and adjusts the payment retroactively based on quality performance and post-episode spending. If the amount of this calculation is positive, then CMS will pay that amount to the participating hospital. If the calculation is negative, the hospital must repay CMS the difference between the actual episode payment and the CCJR target price.