CMS Rolls Back Mandatory Bundled Payment Programs

The Trump administration is putting the brakes on a payment model that gained steam across the health care industry under the Obama administration.

The Centers for Medicare & Medicaid Services announced yesterday it is rolling back mandatory bundled payment programs for hip and knee replacements covered by Medicare, and it’s canceling hip fracture and cardiac bundled payment models that would’ve become mandatory on January 1. This announcement affects health systems, hospitals, nursing homes, and home health agencies across the country.

“While CMS continues to believe that bundled payment models offer opportunities to improve quality and care coordination while lowering spending, we believe that focusing on developing different bundled payment models and engaging more providers is the best way to drive health system change while minimizing burden and maintaining access to care,” CMS Administrator Seema Verma said in a press release. “We anticipate announcing new voluntary payment bundles soon.”

The bundled payment model is essentially a way to create one price for all of the elements related to a surgery, including the operation itself, physical therapy, and complications within a certain time frame. Hospitals and doctor’s offices are involved when they operate, and nursing homes and home health agencies are involved in the rehabilitation.

Under the Obama administration, CMS made bundled payments mandatory for Medicare hip and knee replacements in 67 metro areas on April 1, 2016. The program was called the Comprehensive Care for Joint Replacement Model (CJR). CMS had also planned to make hip fracture and cardiac bundled payments mandatory under the Episode Payment Models and the Cardiac Rehabilitation Incentive Payment Model.

Health leaders under the new administration had already indicated their concern about those programs being mandatory rather than voluntary. Under the revised rule for CJR, the hip and knee replacement program will be mandatory in about half as many metro areas: 34. In addition, CMS is making participation voluntary for all low-volume and rural hospitals. And CMS is canceling the Episode Payment Models and the Cardiac Rehabilitation Incentive Payment Model.

A new comment period is also part of the changes. CMS is seeking input from providers “located in areas impacted by extreme and uncontrollable circumstances, such as the hurricanes of 2017.”

You can find a fact sheet about the changes and the comment period here. For more information, please contact me or your regular Parker Poe contact.

Matt Wolfe

Matt Wolfe

Matt Wolfe concentrates his practice in the areas of administrative litigation, government relations, and other regulatory matters. Matt formulates comprehensive political and public relations strategies on a broad range of federal and state policies. He drafts and monitors legislation, intervenes directly with legislative, executive, and local officials, and appears before state and federal executive agencies. Within his administrative litigation practice, Matt advises and counsels health care providers subject to federal and state regulatory actions.

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