CMS finalizes changes to bundled payment models

The Centers for Medicare and Medicaid Services (CMS) on Thursday, November 30, 2017, released a final rule, reducing the number of geographic areas where participation in bundled payments for certain knee and hip replacements would be mandatory and canceling other orthopedic and cardiac bundled payment models that had been slated to begin January 1, 2018. In general, the final rule codifies policies that CMS put forward in a proposed rule in August.

The cancellation or ending of mandatory participation in certain payment models is part of a larger change in thinking at CMS, moving in favor of a more voluntary approach to provider participation.

CJR model

The Comprehensive Care for Joint Replacement (CJR) model began April 1, 2016, with hospitals in 67 metropolitan statistical areas (MSAs) that generally were required to participate. Under the proposed rule, CMS would reduce the number of MSAs where hospitals would be required to participate in the model to the 34 MSAs with the highest average wage-adjusted payments for lower extremity joint replacements. In addition, CMS is proposing to remove rural hospitals and certain hospitals that perform a low volume of joint replacements from the CJR model in the 34 MSAs where participation would continue to be required, effective February 1, 2018.

Hospitals in the 33 MSAs where participation in the CJR model will be voluntary, as well as rural and low-volume hospitals in the 34 MSAs where participation continues to be required, would be able to opt in to continue to participate in the model. The voluntary participation election period will begin January 1, 2018, and end January 31, 2018, to allow for hospitals to opt in to continue to participate in the CJR model without interrupting performance year 3 beginning January 1, 2018. The performance period for hospitals that opt in to the model will begin February 1, 2018, rather than January 1, 2018, for hospitals that must participate.

The final rule states that CMS believes the remaining mandatory participation levels will be sufficient to assess the value of the program, leaving the door open to expanding mandatory payment models in future years.

In addition, the final rule includes provisions intended to make it easier for additional eligible clinician types to be considered Qualifying Participants (QPs) in Advanced Alternative Payment Models (AAPMs) under the Medicare Access and CHIP Reauthorization Act (MACRA). The final rule includes other technical changes related to the quality-adjustment of price targets and policies for hospitals reorganizations/mergers.

The CJR model is scheduled to run through December 31, 2020.

Canceled bundles

The final rule cancels bundles payment models focused on acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment (SHFFT), as well as a cardiac rehabilitation incentive program. In the final rule, CMS states that the agency considered shifting towards voluntary participation but that technical changes needed to make the programs voluntary would not have been feasible by January 1, 2018.

Interactions with MACRA

CMS had included these bundled payment initiatives on the list of payment models expected to be considered AAPMs under MACRA for 2018. Although the cancellation of the cardiac and other orthopedic bundled payment models in the near term will reduce the number of AAPM options available to clinicians, CMS has restated its commitment to putting forward additional AAPM options that clinicians could opt into on a voluntary basis.



Anne Phelps
Principal | Deloitte Risk and Financial Advisory
US Health Care Regulatory Leader
Deloitte & Touche LLP
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Daniel Esquibel
Senior Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

Ethan Joselow
Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

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