Price’s Resignation Won’t Save Mandatory Bundled Payments

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By Mike Stankiewicz

Medicare’s mandatory bundled payments are unlikely to survive the chopping block despite the resignation of one of their harshest critics.

“Regardless of who becomes health and human services secretary, I don’t see any drastic change for the canceled bundles,” John Feore, a director at Avalere, a Washington-based consulting company, told Bloomberg Law Oct. 16. “I’m sure the cancellation was at Tom Price’s direction, but his resignation is unlikely to change anything.”

Feore’s comments are in response to an August proposed rule ( RIN:0938-AT16) that seeks to cancel Medicare episodic payment models and the cardiac rehabilitation incentive payment program, which would extend bundled payments to hospitals for some cardiac and orthopedic services. Price, who vocally opposed the mandatory nature of the bundles during his time in Congress, resigned as secretary of the Department of Health and Human Services in late September. Bundled payments are part of a larger value-based approach to lower health-care costs and improve patient outcomes.

“There likely won’t be a big change in the agency’s position on bundled payments once a new secretary is confirmed,” Mark Reagan, managing partner in the health-care law practice of Hooper, Lundy & Bookman PC in San Francisco, told Bloomberg Law Oct. 16. “Whoever is chosen will likely have the same position regarding the bundles.”

The proposal was published in the Aug. 17 Federal Register and comments were due Oct. 16. Some of the largest health-care companies that may be affected by the proposal include hospital corporations HCA Healthcare in Nashville, Tenn., and Tenet Healthcare in Dallas.

Cancellation and Changes

The Centers for Medicare & Medicaid Services launched the Comprehensive Care for Joint Replacement Program on April 1, 2016, under President Barack Obama. It requires 800 hospitals in 67 geographical areas to provide a bundled payment model for hip and knee replacements with the goal of improving coordination between hospitals and post-acute care providers to avoid complications and reduce readmission rates.

The program was scheduled to expand to include cardiac care and hip and femur fractures starting in early 2018, following multiple delays by the Trump administration. Under the expansion, doctors participating in the cardiac bundles would qualify for a 5 percent Medicare bonus under the Medicare Access and CHIP Reauthorization Act (MACRA).

The CMS also is proposing to reduce the number of mandatory geographic areas participating in the Comprehensive Care for Joint Replacement (CJR) model from 67 to 34 and proposed making participation in the model voluntary for all low volume and rural hospitals in all geographic areas.

Industry Supports Cancellation

One hospital group was generally supportive of the agency’s proposed cancellation, but stressed that many hospitals have already spent capital preparing for the bundles.

“Some hospitals have expressed concern about the proposed cancellation of the cardiac and [surgical hip and femur fracture treatment] models... because they have already expended valuable resources to put them in place,” Tom Nickels, executive vice president at the American Hospital Association, said in an Oct. 10 letter to the CMS. The group “previously urged CMS not to compel hospitals to expend resources to prepare for something that never came to fruition,” the letter said.

Physicians at the Mayo Clinic also supported the cancellation of the mandatory bundles but praised voluntary programs.

“We encourage CMS to maintain the cardiac rehabilitation incentive payment program as a means of promoting patient referrals for medically necessary cardiac rehabilitation,” the clinic said in an Oct. 2 letter to the CMS. “Studies suggest that innovative approaches, like incentive programs, help to improve the delivery of these important services, resulting in improved patient outcomes and reduced recurrent cardiovascular events.”

The CMS said in the proposal it expects to develop new voluntary bundled payment models next year.

Future of Alternative Payment Models

Feore said while cancellation of the bundles will slow the transition to value-based payments, the administration still seems committed to increasing the use of outcomes-based payments.

“I don’t think the proposal signals that the administration won’t pursue more value-based payments. I think their mandatory nature was the biggest concern,” he said.

Blair Childs, senior vice president of public affairs at Premier Inc., a group purchasing organization, told Bloomberg Law he doesn’t expect major changes in direction for alternative payment models.

“This is largely due to the success of these programs being a direct tie to the 5 percent physician payment bonuses under the MACRA Quality Payment Program,” he said Oct. 16

To contact the reporter on this story: Mike Stankiewicz in Washington at

To contact the editor responsible for this story: Brian Broderick at

For More Information

The proposed rule is at

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