CMS to Cancel Mandatory Cardiac, Expanded Joint Replacement Bundles

This story was updated at 4:45 p.m.

CMS on Tuesday called for cancelling a pair of mandatory bundled payment programs and scaling back an existing one that bundles payments for hip and knee replacements. While some experts were surprised by the moves and others were not, the change represents an about-face from the Obama administration's aggressive pursuit of value-based care.

The 2 new mandatory programs, which had been delayed twice, were set to take effect January 1, 2018, The Comprehensive Joint Replacement Program (CJR), which has been in effect for more than a year, will be reduced from 67 mandatory geographic areas to 34, with the other 33 taking part on a voluntary basis, according to an announcement sent late Tuesday from CMS.

"In this rule, CMS .. proposes to make participation in the CJR model voluntary for all low-volume and rural hospitals in all of the CJR geographic areas," the statement said. The release went on to say that from here forward, the agency would promote voluntary programs over mandatory ones, a preference that HHS Secretary Tom Price, MD, has made clear since his days as a member of Congress.

The press release confirmed reports that came after a proposed rule, canceling the new mandatory programs was quietly sent August 10, 2017, to the Office of Mandatory and Budget. Experts who help doctors and hospitals make bundled payment programs work said Monday that all signs point to CMS issuing a new rule to continue the Bundled Payments for Care Improvement (BPCI) initiative, a voluntary program that had been scheduled to end in 2018. This new version of BPCI would have tweaks to let it qualify as an Advanced Alternative Payment Model (APM) under the Medicare Access and CHIP Reauthorization Act (MACRA).

Last summer, hospital groups said the Center for Medicare and Medicaid Innovation (CMMI) was moving too quickly, having just implemented the initial CJR program for hip and knee replacements. But others said that Medicare had to press ahead with value-based models, even if it made some uncomfortable.

Chris Garcia, CEO of Remedy Partners, a firm that provides software and support for providers taking on risk in episode-of-care programs, said CMS’ move to cancel the mandatory programs was something of a surprise given the amount of time spent on the rule. But he believes that CMS heard the feedback: why go to mandatory bundles when there was so much success with the voluntary bundle?

“The government has switched to using a carrot rather than a stick,” Garcia said.

For the CJR program he believes this is a positive development—the expanded program under discussion would have “anointed the hospital as the owner of the episodes,” when in fact the orthopedic group, and the surgeon especially, is crucial in a patient’s success. Cardiac care presents a different challenge, Garcia said, since so many different team members have a role in a patient’s health outcome.

He predicts that more providers will participate in BPCI going forward, because they see that value-based care is where healthcare is headed. More commercial payers are demanding value-based contracts, and more doctors will gravitate to hospitals and health systems with these opportunities. In the past year, the possibility of more mandatory programs caused many providers to sit up and take notice, he said.

Darcie Hurteau, director at the healthcare data analytics and policy firm DataGen, said that CMS’ change of direction was not surprising, and a positive change for providers. She agreed that the momentum was building to continue the voluntary program.

“Providers like the ability to pick and choose what they participate in,” she said.

Garcia said he understands the argument that without mandatory bundles, the health systems that most need to change will not be forced to do so. He believes that the pendulum has swung too far in the direction of value-based care, that there’s no going back. Hospitals and doctors that think they can stick with fee-for-service will learn that failing to change brings a high cost. It’s not just Medicare—commercial payers are forcing the issue. “Those conversations are alive and well and very active,” he said.

Michael Abrams, a principal with Numerof & Associates who has advocated for mandatory programs, told The American Journal of Managed Care that he was not completely surprised, especially given Price's previous stands. He said that in the past, however, hospitals that took part in voluntary programs have dropped out when they reached the point of two-sided risk, even though the experience of learning about value-based programs was still meaningful.

"We need to keep in mind, bundled pricing is not the end goal here. We need to drive down the cost of care," he said. "Bundled pricing seems to have the potential to do that."

He's encouraged by the fact that conversations about providers taking on risk are taking place that would have been unthinkable 7 years ago. For those hospitals and practices willing to assume risk, there could be a real competitive edge and more to offer to the healthcare decision makers. "Employers are increasingly the loudest voice," Abrams said.