Businesspeople Meeting with Doctor Charts on Screen

The new payment models continue to focus on care coordination, quality care, and lowering costs.

Navigating health reform

New Episodic Payment Models Encourage Provider Coordination

  • Deb Freeland
  • 2/10/2017

In late December 2016, the Centers for Medicare and Medicaid Services (CMS) released the new Advancing Care Coordination through Episode Payment Models (Cardiac and Orthopedic Bundles) (EPM) and Medicare ACO Track 1+ Model final rule. These models are a continuation of CMS’s efforts to shift Medicare payments from quantity to value-based payments that reward the delivery of better care at a lower cost by incentivizing physicians, hospitals, skilled nursing facilities, and all providers to work together to improve overall care. These models are scheduled to begin on July 1, 2017.

The new EPMs include bundles for acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip and femur fracture treatment for patients who receive surgery after a hip fracture. In addition, the EPMs include potential incentive payments for expanding the use of cardiac rehabilitation (CR) services provided to Medicare beneficiaries recovering from AMI or CABG.

Cardiac bundles

The CR incentive model will test if incentive payments to hospitals increase the utilization of CR services, which CMS believes are underutilized by Medicare beneficiaries. To test the effectiveness of CR incentives, CMS will implement the model in 90 different geographic areas — 45 that include the AMI and CABG EPMs, and 45 that do not.

Acute care hospitals in certain geographic areas will be required to participate in retrospective episode-based payments for items and services that are related to AMI and CABG, beginning with a hospitalization and extending for 90 days following hospital discharge.

Orthopedic bundle

The surgical hip and femur fracture treatment (SHFFT) model was also included in the final rule and is an addition to the existing comprehensive joint replacement (CJR) model that was implemented in April 2016. Under the new EPMs, hospitals are financially responsible for the quality and cost of an episode of care, and will be eligible to receive incentive payments of up to 20 percent of the quality adjusted target price for each bundle. In the first and second year of participation, there will be limited or no downside risk for hospitals. In subsequent years, hospitals will bear the financial risk for not meeting the bundled payment financial target.

The AMI and CABG models will be implemented in 98 geographic areas. The SHFFT and CJR models will be implemented in 67 geographic areas. CMS has released a table which identifies the EPMs in specific geographic areas.

EPM models going forward

Although the new administration has vowed to dismantle health reform, there is near universal agreement that care must be taken to ensure that health care organizations and patients are not harmed in the process. Recent history has illustrated that while there is strong division between political parties; one unifying idea has been that quality of health care must be improved, and the costs to provide it must be reduced. These models are aimed at accomplishing those objectives, and Congress will likely be reluctant to stop the progress that has been made. So providers must continue to plan for increased care coordination, improved quality, and reduced costs as the future foundation of health care.

How we can help

Understanding the nuances of these new EPMs will give you greater confidence in your planning efforts. CLA can help your organization understand the financial and reimbursement impacts of these EPMs and help you understand and craft your value proposition to payers and prospective partners as you negotiate partnerships and contracts. We can also work with you to develop a plan for reducing costs and improving quality through operational assessments so your organization can successfully navigate through these various payment models.