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Latest CMS Bundled Payment Strategies May Need Revision

Bundled payment strategies from CMS rely on Medical Severity Diagnosis-Related Groups, which the Health Care Incentives Improvement Institute finds problematic.

The Health Care Incentives Improvement Institute has found problems with some of the latest bundled payment strategies coming from the Centers for Medicare & Medicaid Services (CMS) including flaws surrounding clinic-centric control of the bundle and a lack of adjustment for patient characteristics.

Bundled Payment Models

Commercial health insurers will need to pay attention to the issues found in CMS bundled payment strategies, as many private payers are also jumping on the bandwagon of bundled payments in today’s value-based care environment.

CMS has been striving to expand the use of bundled payment strategies through the Comprehensive Care for Joint Replacement model and the Bundled Payment for Care Improvement initiative in recent years. The Comprehensive Care for Joint Replacement program is meant to cover the costs of Medicare beneficiaries receiving hip or knee joint replacement surgeries including post-operative rehabilitation.

The Medicare Bundled Payment for Care Improvement (BPCI) initiative incorporates hospitals, clinics, and other healthcare providers and covers costs of episodic care for Medicare beneficiaries beginning with an acute hospital stay.

This summer, the Department of Health & Human Services (HHS) introduced new bundled payment strategies for the Medicare program known as Episode Payment Models. The payment strategies are meant to push forward reimbursement based on quality instead of quantity and reduce costs along the way.

These bundled payment strategies would focus on treating patients who’ve had heart attacks or are in need of bypass surgery and/or hip and femur fracture surgery. The Episode Payment Models would begin with a hospital stay and continue for 90 days after discharge.

When it comes to the costs of medical services, CMS will set target prices for varying episodes of care based on historical data. Target prices would also be adjusted to account for the complexity of treating certain heart attacks or providing bypass surgery.

While advancing the use of bundled payment strategies is vital within the healthcare industry today, the Health Care Incentives Improvement Institute found some issues with the bundled payment models being touted by CMS, according to a letter from the organization.

The Health Care Incentives Improvement Institute sent a letter to CMS Acting Administrator Andy Slavitt stating its issues with the design of the Medicare Bundled Payment for Care Improvement program along with the Comprehensive Care for Joint Replacement initiative as well as the latest Episode Payment Models. In particular, the Institute found that the bundled payment strategies put the control in facilities and not in the physicians’ hands.

Doctors are a necessary part of changing healthcare delivery and improving quality as well as affordability. As such, bundled payment strategies will need to allow physicians to have more control over an episode of care in order to redesign treatment and diagnostics. The letter also states the importance of adjusting for patient characteristics including how severe a medical condition may be.

Members of the House of Representatives also sent a letter to CMS Acting Administrator Andy Slavitt in January 2016 outlining some of their issues with the joint replacement bundled payment model.

“We are concerned that patients requiring higher-cost complex surgeries (such as hip fractures and ankle replacement procedures) or who suffer from multiple chronic conditions may find it more difficult to find hospitals willing to serve them, since the greater risk of complications or the higher level of post-acute care associated with their condition would be logically viewed by hospitals as increasing their risk under the proposed CCJR model,” the letter from House members stated.

Additionally, the payment models’ reliance on Medical Severity Diagnosis-Related Groups (MS-DRGs) is problematic. Using Medical Severity Diagnosis-Related Groups or MS-DRGs to identify specific episodes is “counterproductive,” the organization explains, since it is not completely predictable when a patient is receiving hospital treatment and may even be inaccurate when it comes to patient diagnoses.

“We continue to have serious concerns about other elements of the CJR and BPCI designs, concerns that prevent us from supporting the Episode Payment Models (EPMs) outlined in the proposed rule. The rule’s revisions of BPCI and CJR do not alter those models’ reliance on Medical Severity Diagnosis-Related Groups (MS-DRGs), and indeed the rule builds the new EPMs upon MS-DRGs. Making MS-DRGs the basis for identifying episodes and for calculating episode budgets is counterproductive,” the letter states.

The Health Care Incentives Improvement Institute outlines that CMS should consider not implementing the new Episode Payment Models using the MS-DRGs as outlined in the proposed rule. The organization advises CMS to expand the use of the Episode Grouper for Medicare methodology instead.

 

Dig Deeper:

How Medicare, Medicaid, and CHIP Guide the Health Payer Industry

How to Overcome the Challenges of Bundled Payment Models

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