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CMS Announces Final Rule for Episode Payment Models

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Today the Centers for Medicare & Medicaid Services (CMS) announced the final rule for Episode Payment Models (EPMs). In doing so, CMS identified the 98 markets that will be mandated to participate in a bundled payment program for cardiac care, as well as surgical hip and femur fracture care.

CMS first announced the 5-year demonstration in July 2016. The new care models include:

  • The Acute Myocardial Infarction (AMI) Model
  • The Coronary Artery Bypass Graft (CABG) Model
  • The Surgical Hip and Femur Fracture Treatment (SHFFT) Model
  • The Cardiac Rehabilitation (CR) Incentive Payment Model

The new payment models will make hospitals financially accountable for the cost and quality of care for AMI, CABG, and SHFFT during inpatient stays and for 90 days following discharge. The EPMs are designed to incentivize tight care coordination among hospitals, physicians, and post-acute care providers.

The payment models are scheduled to go into effect on July 1, 2017 (delayed to October 1, 2017). In all, CMS estimates that “1,120 hospitals will participate in the AMI and CABG models, 860 hospitals in the SHFFT Model and 1,320 hospitals in the CR Incentive Payment Model.” This is more hospitals than originally expected.

The EPMs reaffirm CMS’s commitment to shifting reimbursement away from fee-for-service structures and into alternative payment models. They represent the payor’s second foray into mandatory bundles, following the launch of the Comprehensive Care for Joint Replacement (CJR) program this past April. CMS also announced the expansion of the Bundled Payments for Care (BPCI) initiative that same month.

Bundled payments are part of a broader effort on the part of CMS to tie 90% all traditional Medicare payments to alternative payment models by 2018. The Congressional Budget Office has estimated that bundled payments could save CMS approximately $19 billion between 2010 and 2019. The CJR program alone is expected to save $343 million over the course of the 5-year demonstration.

Lowering the Cost of Cardiac Care

Given the high volumes and high costs of AMI and CABG, it’s easy to see why CMS is targeting cardiac care.

  • AMI episodes have an average 20% readmission rate.
  • Nearly 75% of costs for CABG episodes are hospital-based, and the majority of the post-discharge costs are related to readmissions.

But AMI and CABG bundles are trickier than those for orthopedic procedures under CJR. Joint replacements are elective procedures planned weeks ahead of time, enabling providers to predict and minimize clinical variation.

Heart attacks, by contrast, are unpredictable and require immediate treatment. Ambulance drivers and EMTs rush chest pain patients to the nearest ER, and there’s little chance that a patient suffering chest pains in the days or weeks following a cardiac procedure will be taken to the same hospital that performed that initial procedure.

New Terrain

The effectiveness of bundles for emergent procedures has not been well studied, making the 98 markets named in today’s announcement a testing ground for CMS. Despite a lack of historical data to rely on, hospitals preparing for cardiac EPMs should:

  • Emphasize care coordination and post-discharge follow-up.
  • Manage and minimize care transitions during the post-acute period.
  • Improve communication between the ER and the surgeons, physicians, and clinical team members who are going to be taking care of cardiac patients.

Organizations also need to gather and review data – internal data, system data, and national benchmark data. By quantifying volume and determining the biggest drivers of cost in an episode, organizations can work to minimize clinical variation and identify avoidable readmissions.

The Good News

Despite some uncertainty about the effectiveness of bundling emergent procedures, bundled payments are generally a safe bet. They are one of the few reimbursement approaches that benefit all stakeholders. With EPMs, CMS clearly sees an opportunity to reduce costs and improve outcomes, benefiting providers and patients alike.

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