CMS wants to re­quire hos­pi­tals to par­tic­i­pate in bundling demo

Modern Healthcare - - NEWS - By Vir­gil Dick­son and Me­lanie Evans

For the first time, the Obama ad­min­is­tra­tion is propos­ing to re­quire hos­pi­tals to par­tic­i­pate in a Medi­care demon­stra­tion of an al­ter­na­tive pay­ment model, a recog­ni­tion that the vol­un­tary ap­proach isn’t go­ing to achieve the rapid shift it seeks away from fee-for-ser­vice.

Last week, the CMS iden­ti­fied 75 ge­o­graphic ar­eas, in­clud­ing Los An­ge­les and New York City, it plans to in­clude in a manda­tory test of bun­dled pay­ments for hip and knee re­place­ments, start­ing Jan. 1, 2016. More than 800 hos­pi­tals would be sub­ject to the rule. Crit­i­cal-ac­cess hos­pi­tals would be ex­cluded.

Hos­pi­tals would con­tinue to get paid for their ser­vices un­der Medi­care’s fee-for-ser­vice sys­tem. At the end of the year, how­ever, there would be a bun­dled-pay­ment rec­on­cil­i­a­tion based on a hos­pi­tal’s qual­ity and cost per­for­mance. The fa­cil­ity ei­ther would re­ceive an ad­di­tional pay­ment or be re­quired to re­pay Medi­care for a por­tion of care episode costs. Hos­pi­tals would not be at risk in the first year.

The CMS said the pro­gram would give hos­pi­tals an in­cen­tive to work with physi­cians and post- acute providers to im­prove care co­or­di­na­tion and re­duce avoid­able hos­pi­tal­iza­tions and com­pli­ca­tions. It would in­clude qual­ity mea­sures for com­pli­ca­tions, read­mis­sions and pa­tient ex­pe­ri­ence.

“We’re do­ing this be­cause we be­lieve there’s an op­por­tu­nity to im­prove care for Medi­care ben­e­fi­cia­ries who are un­der­go­ing hip and knee re­place­ments,” said Dr. Pa­trick Con­way, deputy CMS ad­min­is­tra­tor for in­no­va­tion and qual­ity.

Two prom­i­nent ad­vo­cates of bun­dled pay­ment ap­plauded the an­nounce­ment but urged the CMS to go fur­ther. Bun­dles should be used for spine surgery and other pro­ce­dures, and the or­tho­pe­dic bun­dles should be “the stan­dard method of pay­ment na­tion­wide,” Dr. Ezekiel Emanuel, chair- man of the depart­ment of med­i­cal ethics and health pol­icy at the Univer­sity of Penn­syl­va­nia, and To­pher Spiro, vice pres­i­dent for health pol­icy at the Cen­ter for Amer­i­can Progress, said in a writ­ten state­ment.

But Premier, the hos­pi­tal pur­chas­ing, con­sult­ing and per­for­mance im­prove­ment com­pany, said rolling out manda­tory bun­dled pay­ment was “too much, too fast.” Se­nior Vice Pres­i­dent Blair Childs said a vol­un­tary, na­tional pro­gram would be bet­ter.

The Amer­i­can Hos­pi­tal As­so­ci­a­tion said it “looks for­ward to work­ing with CMS to en­sure the pro­posed rule meets the needs of our pa­tients and in­di­vid­ual com­mu­ni­ties.”

The CMS’ manda­tory bundling ini­tia­tive could pose a chal­lenge for hos­pi­tals that haven’t made the nec­es­sary in­vest­ments in data in­fra­struc­ture or care co­or­di­na­tion, said Brian Fuller, a vice pres­i­dent with con­sult­ing firm Avalere Health.

Hip and knee re­place­ments are among the most com­mon pro­ce­dures that Medi­care ben­e­fi­cia­ries re­ceive but prices vary sharply. The av­er­age Medi­care pay­ment for surgery, hos­pi­tal­iza­tion and re­cov­ery ranges from $16,500 to $33,000, the CMS said.

The demon­stra­tion would be ad­min­is­tered by the CMS In­no­va­tion Cen­ter and would run for five years. The CMS es­ti­mates that the new bun­dled-pay­ment test would cover about 25% of the hip and knee re­place­ments that Medi­care pays for.

The pro­gram would put about $2.2 bil­lion in Medi­care spend­ing on the new bun­dles in 2016; that fig­ure would grow to $2.7 bil­lion in 2020. The agency projects the model would yield $153 mil­lion in net sav­ings dur­ing its five-year run.

In 2014, about 430,000 Medi­care ben­e­fi­cia­ries had dis­charges for lower-ex­trem­ity joint re­place­ments, cost­ing Medi­care more than $7 bil­lion in the hos­pi­tal­iza­tions alone.

Hip and knee re­place­ments are in­cluded in Medi­care’s vol­un­tary Bun­dled Pay­ments for Care Im­prove­ment ini­tia­tive. But the CMS has found that cer­tain types of hos­pi­tals aren’t sign­ing up. The new pro­gram, the agency said, would cap­ture hos­pi­tals with a va­ri­ety of uti­liza­tion pat­terns and other char­ac­ter­is­tics.

The al­ter­na­tive pay­ment ini­tia­tive demon­strates that the Obama ad­min­is­tra­tion is se­ri­ous about rapidly mov­ing away from the fee-for-ser­vice model and that it rec­og­nizes vol­un­tary ef­forts aren’t enough, Fuller said.

Un­der the pro­posal, the pay­ment bun­dle would in­clude hos­pi­tal ad­mis­sion and end 90 days af­ter dis­charge. The hos­pi­tals would bear fi­nan­cial risk for the pro­ce­dure, the in­pa­tient stay and all care re­lated to the pa­tient’s re­cov­ery. The ge­o­graphic ar­eas cho­sen for the pro­gram range from ma­jor ur­ban mar­kets to smaller ones such as Flint, Mich.

In a re­cent Wall Street Jour­nal op-ed, Emanuel and Spiro ar­gued that ef­forts to ex­pand ac­count­able care or­ga­ni­za­tions can­not be de­ployed as read­ily as bun­dles.

An early test of bun­dles from the Medi­care Acute Care Episode Demon­stra­tion found the model saved Medi­care $319 per episode dur­ing a three-year pro­gram, with the largest sav­ings from ortho­pe­dics. But the CMS has ac­knowl­edged a lack of pub­lished data from its Bun­dled Pay­ments for Care Im­prove­ment Ini­tia­tive.

Com­ments on the pro­posal are due Sept. 8.

“A vol­un­tary, na­tional pro­gram would en­sure that only providers who are ready to take on this chal­lenge en­ter the pro­gram, avoid­ing un­in­tended con­se­quences.” Blair Childs Se­nior vice pres­i­dent Premier

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