CMS Issues Final Rule to Cancel Mandatory Bundled Payments

Twice in 2017, the Centers for Medicare and Medicaid Services (CMS) delayed implementation of mandatory bundled payment models for certain cardiac and joint replacement procedures. Today, the agency issued a final rule to cancel the cardiac intervention bundles and limit the scope of the joint replacement program.

The Episode Payment Models were first announced in December 2016, during the final months of the Obama administration’s CMS regime. Set to take effect in January 2018, the rules were intended to “give clinicians additional opportunities to qualify for a 5 percent incentive payment through the Advanced Alternative Payment Model (APM) path under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and the Quality Payment Program.”

The plan was seen as a way of hastening the transition to value-based care for some common conditions. Hospitals would have been paid in a lump sum for a complete course of treatment, discouraging the traditional practice of billing for each patient visit and procedure. The bundled payment models covered acute myocardial infarction care, coronary bypass surgery, and rehabilitation after heart attacks. Those programs have been cancelled.

In addition, participation in the Comprehensive Joint Replacement (CJR) model will be made voluntary for almost half of the geographic areas that were supposed to participate. Originally, it was to be required in 67 geographic areas: Today’s rule reduces that to 34. In an official announcement, the agency says that the change is meant to meet the “unique needs” of low-volume and rural providers.

The rule acknowledges that the decision could end up costing the CMS money over the next 3 years: “We estimate that the total CJR model impact after the changes in this final rule will be $189 million, instead of $294 million ($106 million less in savings).”

CMS Administrator Seema Verma said that the agency “continues to believe that bundled payment models offer opportunities to improve quality and care coordination while lowering spending,” but that it prefers to pursue them on a voluntary basis going forward. She added that the CMS would seek to engage more providers in the development of future models, and that, “We anticipate announcing new voluntary payment bundles soon.”

Former Secretary of Health and Human Services Tom Price was a strong critic of mandatory bundled payments, once referring to them as “experimenting with Americans’ health.” Prior to his resignation in September, Price oversaw the 2 implementation delays that preceded today’s cancellation.