Updates
December 2017
CMS Terminates and Scales Back Mandatory Bundled Payment Models

The Centers for Medicare & Medicaid Services (CMS) recently published a final rule that cancels the Episode Payment Models (EPMs) and the Cardiac Rehabilitation (CR) incentive payment model, each of which were slated to begin on Jan. 1, 2018. The final rule, which was published Dec. 1, also finalizes CMS’ proposals to reduce the number of Metropolitan Statistical Areas (MSAs) where hospitals are required to participate in the Comprehensive Care for Joint Replacement (CJR) model from 67 to 34, and to make participation in the CJR model optional for certain low volume and rural hospitals. Hospitals in the 33 MSAs that are no longer required to participate in CJR will have a one-time opportunity to opt-in to the model on a voluntary basis.

In light of this rule, we advise that hospitals required to participate in the CJR model, or those considering opting in to the model, review existing CJR participation and gainsharing agreements to assess the impact of the polices of the final rule on hospital and physician business arrangements. Hospitals in Voluntary MSAs that do not elect to participate in CJR should also consider whether operational and governance changes which were made to facilitate participation in CJR, or to take advantage of available fraud and abuse waivers or CMS payment policy waivers in the CJR model, need to be unwound.


Like CJR, the EPMs would have involved mandatory bundled payment based programs, applied to episodes involving a variety of cardiac conditions, including acute myocardial infarction and coronary artery bypass grafts, and would have also expanded the CJR model to include certain fracture treatments. The CR model would have functioned purely as an incentive model, which would have made certain incentive payments available for provision of cardiac rehabilitation services. CMS explained as its rationale for the cancellation of these models that many hospitals would have insufficient time to fully plan for participation in the models. While CMS admitted that significant evidence-based research regarding the efficacy of CR exists, they believed it would be impossible to maintain the CR model without the EPM infrastructure. CMS left open the door to revisit this model and welcomed feedback related to this issue.

With regard to the CJR model, which involves a bundled payment based program related to total joint replacement episodes, the final rule scales back the model by establishing the following:
  • Except for low volume and rural hospitals, participation in CJR will be mandatory for hospitals located in the 34 MSAs selected for required participation. Hospitals are defined as “low volume hospitals” if they had fewer than 20 CJR episodes during three prior years.
  • Participation in CJR will be voluntary for all hospitals in the 33 MSAs no longer required to participate in the model (Voluntary MSAs).
  • Hospitals in the Voluntary MSAs will have a one-time opportunity to submit a participation election letter to CMS by Jan. 31, 2018, which will permit such hospitals to participate in full in CJR, along with hospitals in the 34 remaining mandatory MSAs. The participation election letter can be accessed here
  • Hospitals located in the Voluntary MSAs that do not submit a participation election will be withdrawn from CJR effective Feb. 1, 2018.
  • Clinicians that have not entered into CJR related gainsharing arrangements with participating hospitals (CJR Hospitals), but who have contractual relationships with CJR Hospitals, may still be considered Qualifying Advanced Payment Model (APM) Participants (QPs) for purposes of the Quality Payment Program, so long as those CJR Hospitals choose to participate in the Advanced APM track of the CJR model. The final rule allows a CJR Hospital to submit a clinical engagement list with information for each clinician who supported the CJR Hospital’s quality or cost goals under the CJR model, which may result in the clinician attaining QP status.

CMS also published an interim final rule with comment period, which proposes to alter the calculation of episode costs for CJR hospitals located in areas impacted by extreme and uncontrollable circumstances.
For CJR hospitals located in areas designated as a major disaster area, the actual episode payments will be capped at the target price for fracture and non-fracture episodes that occur within certain timeframes of the emergency period for performance years two through five. This means that for purposes of reconciliation, the maximum costs for those episodes will be the hospital’s target price.

More to Follow: Analysis of the model parameters for the next iteration of the Bundled Payments for Care Improvement (BPCI) initiative will follow as soon as they are released.

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