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research technology consulting
Understanding CMS’s Proposed Changes to
CJR and Cancellation of EPMs
Kristen Barlow, JD
Senior Consultant
Rob Lazerow
Managing Director
August 23, 2017
Megan Tooley
Practice Manager
©2016 Advisory Board • All Rights Reserved • advisory.com
66
Today’s Panel of Experts
Kristen Barlow, JD
Senior Consultant
Megan Tooley
Practice Manager
Rob Lazerow
Managing Director
7
2
3
1
Road Map
©2016 Advisory Board • All Rights Reserved • advisory.com
The State of Payment Reform
Overview of the Proposed Rule
Assessing the Impact and Next Steps
©2016 Advisory Board • All Rights Reserved • advisory.com
88
CMS Backpedals on Mandatory Payment Reform
After an Aggressive Push, CMS Proposes to Cancel EPMs, Modify CJR
Source: CMS; Advisory Board interviews and analysis.
Timeline of Mandatory Bundled Payment Programs
July 2015
CMS announces CJR,
a mandatory
orthopedic bundle
April 2016
CJR begins in 67 markets
across the country
July 25, 2016
CMS proposes three
new EPM bundles for
hip and cardiac
episodes
December 20, 2016
CMS finalizes rule for
three new EPM
bundles for hip and
cardiac episodes
May 19, 2017
CMS delays
implementation of the
EPMs
August 15, 2017
CMS proposes to
cancel the EPMs and
modify CJR
©2016 Advisory Board • All Rights Reserved • advisory.com
99
Bundles Only Part of CMS’s Payment Reform Portfolio
P4P Programs, Voluntary Risk Models Remain
Continuum of Medicare Risk Models
Bundled
Payments
Shared
Savings
Shared
Risk
Full
Risk
• Hospital VBP
Program
• Hospital
Readmissions
Reduction Program
• HAC Reduction
Program
• Merit-Based
Incentive Payment
System
• MSSP Track 1
(50% sharing)
• MSSP Track 2
(60% sharing)
• MSSP Track 3
(up to 75% sharing)
• Next Generation
ACO Model
(80-85% shared
savings option)
• Next Generation
ACO Model
(full risk option)
• Medicare
Advantage
(provider-sponsored)
Pay-for-
Performance
• Bundled Payments
for Care
Improvement
Initiative (BPCI)
• Comprehensive Care
for Joint
Replacement (CJR)
• EPMs for SHFFT,
AMI and CABG
Source: CMS, Advisory Board analysis.
©2016 Advisory Board • All Rights Reserved • advisory.com
1010
Payment Reform Marches On
1) Medicare Access and CHIP Reauthorization Act.
2) The Merit-based Incentive Payment System.
With MACRA1 Underway, 2017 a Pivotal Year
2017 MIPS2 Reporting Structure
1 Clinicians report all MIPS-required
data for at least 90 days and are
eligible to receive the full bonus
2 Clinicians report more than one
measure for at least 90 days and are
eligible to receive a smaller bonus
3 Clinicians report any data for any
period of time and receive no positive
or negative adjustment in payment
Source: Centers for Medicare and Medicaid Services; Dickson, V., “CMS will
give providers flexibility on MACRA requirements,” Modern Healthcare,
September 2016; Health Care Advisory Board interviews and analysis.
92-8
Bipartisan Support Guarantees
Continued Implementation
Senate vote
on MACRA
392-37House vote
on MACRA
[These] actions help give physicians a
fair shot in the first year of MACRA
implementation. This is the flexibility
that physicians were seeking all along.”
Dr. Andrew Gurman,
President of the AMA
Physician Leaders Praise
Transition Year
©2016 Advisory Board • All Rights Reserved • advisory.com
1111
0%
1%
2%
3%
4%
5%
6%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
MACRA Dealing Physicians in on Risk
Greater Payment Updates, Bonuses Depend on Payment Migration
Source: The Medicare Access and CHIP Reauthorization Act of 2015; CMS, Merit-Based Incentive Payment
System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria
for Physician-Focused Payment Models, April 25, 2016; Health Care Advisory Board interviews and analysis.
1) Relative to 2015 payment.
2015 – 2019:
0.5% annual update
(both tracks)
2020 – 2025:
Payment rates frozen
(both tracks)
Annual Provider Payment Adjustments
2026 onward:
0.25% annual update (MIPS track)
0.75% annual update
(Advanced APM track)
Advanced
APM Track
MIPS Track
Baseline
payment
updates1:
APM Bonuses/PenaltiesMIPS Bonuses/Penalties
5%Annual lump-
sum bonus
from 2019-2024
+/-4%Maximum annual
adjustment, 2019
+/-9%Maximum annual
adjustment, 2022
$500MAdditional bonus pool
for high performers
(plus any bonuses/penalties
from Advanced Payment
Models themselves)
©2016 Advisory Board • All Rights Reserved • advisory.com
1212
CJR Still Creates Path for APM Qualification
Source: CMS, “Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the
Physician Fee Schedule, and Criteria for Physician-Focused Payment Models,” May 9, 2016, available at: https://s3.amazonaws.com/public-
inspection.federalregister.gov/2016-10032.pdf; Advisory Board Company interviews and analysis.
How CJR Originally Stacked Up
Against Advanced APM Criteria
A Two-Track Approach Within the Remaining Mandatory Bundle
Maximum possible loss at
least 4% of spending target
Threshold to trigger losses
no greater than 4%
Loss sharing at least 30%
Quality requirements
comparable to MIPS
Certified EHR use
1) End-stage renal disease.
2) Large dialysis organization.
3) Comprehensive Primary Care Plus.
4) Notice of intent to apply.
5) Letter of intent.
6) Application narrative due May 25, 2016.
Financial
Risk
Criteria
CMS Changed CJR to Satisfy Criteria
Beginning in 2018, hospitals participating in
CJR will be able to choose one of two tracks:
Track 1 would require
use of certified EHR
Track 2 would not require
use of certified EHR
Eligible
advanced APM
Not eligible
advanced APM
1
2
d
13
2
3
1
Road Map
©2016 Advisory Board • All Rights Reserved • advisory.com
The State of Payment Reform
Overview of the Proposed Rule
Assessing the Impact and Next Steps
©2016 Advisory Board • All Rights Reserved • advisory.com
1414
CMS’s Proposed Changes to Mandatory Bundles
CMS Poised to Iterate on Voluntary Programs
Source: Jankowski, G., “The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement
Under President-elect Trump and Tom Price,” JDSUPRA, Jan. 10, 2017; Dickson, V., “Hospitals call on
Trump administration to end mandatory bundled pay programs,” Modern Healthcare, April 24, 2017;
Centers for Medicare and Medicaid Services; Health Care Advisory Board interviews and analysis.
1) Episode Payment Models.
2) Coronary artery bypass graft and acute myocardial infarction; MS-DRGs: 280-282; 246-251; 231-236
3) Comprehensive Joint Replacement.
4) Surgical hip/femur fracture treatment; MS-DRGs: 480-482.
5) Bundled Payments for Care improvement.
GOP Historically Opposed to CMS’s Mandatory Models
“CMMI has overstepped its authority and there are real-life implications—both medical and
constitutional. That’s why we’re demanding CMMI cease all current and future mandatory models.”
Letter from GOP Lawmakers, including current HHS
Sec. Tom Price to CMS, September 2016
• Mandatory bundling for CABG
and AMI2, slated to go into
effect January 1, 2018
• Proposed rule released on
August 15th would cancel
programs entirely
Cardiac EPMs1 Cancelled
• Mandatory bundling for hip
and knee replacements,
originally in 67 markets
• Proposed rule would make
participation in 33 markets
voluntary, cancel planned
expansion to SHFFT4
CJR3 Scaled Back What’s Next for BPCI1?
• Optional bundling program;
providers may opt into any of
48 different conditions across
four risk models
• Current Models 2, 3, and 4
extended through September
30th, 2018
©2016 Advisory Board • All Rights Reserved • advisory.com
1515
A Reprieve for CV Service Lines
Bypass, Heart Attack Would Have Been First Mandatory Cardiac Bundles
Cardiac EPMs Cancelled
Cardiac EPMs
CABG AMI• MS-DRGs 231-232
• All care during index hospitalization
through to 90-days post-discharge
• Hospital would be financially
responsible for cost, quality of the
episode
• MS-DRGs 280-282; 246-251
• All care during index hospitalization
through to 90-days post-discharge
• Hospital would be financially
responsible for cost, quality of the
episode
Estimate of cost savings to CMS over five
years for both cardiac EPMs$40M
Source: CMS, Advisory Board analysis.
©2016 Advisory Board • All Rights Reserved • advisory.com
1616
CMS Proposal Also Cancels Rehab Incentives
Program Would Have Rewarded Significant Cardiac Rehab Utilization
1) Proposed cardiac rehab HCPCS codes for inclusion:
G0422. 93797, 93798 and G0423.
Cardiac Rehab Incentive Payment System1
Normal FFS
Payment
First 11
sessions
Subsequent sessions, up to a
total of 362
$25/session $175/session
$4,625
Chosen by CMS based on
evidence that beneficiaries
who complete 12-23 cardiac
rehab sessions have lower
mortality rates
12-Session ThresholdAn Uncertain Financial Impact
Range of CMS’s estimate of the impact
of the program: it could have resulted in
additional spend or significant savings
+27M to -32M
Total available
incentive
payments
+ incentive
payments
Source: CMS, Advisory Board analysis.
©2016 Advisory Board • All Rights Reserved • advisory.com
1717
Half of CJR Markets Would Now Be Voluntary
Programs Would Decide Whether to Opt-In by February 1, 2018
CJR Scaled Back
Source: CMS, Advisory Board analysis.
1) Metropolitan statistical area.
Key Changes to CJR Market Definitions
• Originally implemented in 67 MSAs1 across the
country
• Proposal would continue mandatory
participation in 34 markets, with exclusions for
rural and low-volume hospitals
• 34 mandatory MSAs have the highest average
wage-adjusted historic episode costs
• 33 MSAs would no longer be required to
participate; hospitals would be presented with a
one-time “opt-in” period to continue participation
• Opt-in period would run January 1-31, 2018
• All opt-in decisions would be final February 1,
2018
©2016 Advisory Board • All Rights Reserved • advisory.com
1818
Mandatory and Voluntary Markets
Source: Center for Medicare and Medicaid Services;
Advisory Board interviews and analysis.
Mandatory MSAsAkron, OH Monroe, LA
Asheville, NC Montgomery, AL
Austin-Round Rock, TX New Haven-Milford, CT
Beaumont-Port Arthur, TX New Orleans-Metairie, LA
Cincinnati, OH-KY-INNew York-Newark-Jersey City,
NY-NJ-PA
Corpus Christi, TX Oklahoma City, OK
Dothan, ALOrlando-Kissimmee-Sanford,
FL
Florence, SCPensacola-Ferry Pass-Brent,
FL
Gainesville, FL Pittsburgh, PA
Greenville, NC Port St. Lucie, FL
Harrisburg-Carlisle, PA Provo-Orem, UT
Hot Springs, AR Reading, PA
Killeen-Temple, TX Sebastian-Vero Beach, FL
Los Angeles-Long Beach-Anaheim, CATampa-St. Petersburg-
Clearwater, FL
Lubbock, TX Toledo, OH
Memphis, TN-MS-AR Tuscaloosa, AL
Miami-Fort Lauderdale-West Palm
Beach, FLTyler, TX
Voluntary MSAsAlbuquerque, NM Madison, WI
Athens-Clarke County, GA Milwaukee-Waukesha-West Allis, WI
Bismarck, ND Modesto, CA
Boulder, CO Naples-Immokalee-Marco Island, FL
Buffalo-Cheektowaga-
Niagara Falls, NY
Nashville-Davidson—
Murfreesboro--Franklin, TN
Cape Girardeau, MO-IL Norwich-New London, CT
Carson City, NV Ogden-Clearfield, UT
Charlotte-Concord-Gastonia, NC-SCPortland-Vancouver-Hillsboro, OR-
WA
Columbia, MO Saginaw, MI
Decatur, IL St. Louis, MO-IL
Denver-Aurora-Lakewood, COSan Francisco-Oakland-Hayward,
CA
Durham-Chapel Hill, NC Seattle-Tacoma-Bellevue, WA
Flint, MI South Bend-Mishawaka, IN-MI
Gainesville, GA Staunton-Waynesboro, VA
Indianapolis-Carmel-Anderson, IN Topeka, KS
Kansas City, MO-KS Wichita, KS
Lincoln, NE
List of Mandatory and Voluntary CJR MSAs1
©2016 Advisory Board • All Rights Reserved • advisory.com
1919
CMS’s Rationale for Splitting CJR Markets
Voluntary in All 67 MSAs
If all 67 MSAs were
voluntary, CJR would no
longer show savings, and
would cost CMS money
No Voluntary Participation in 33 MSAs
If participation was limited to
only the 34 mandatory MSAs,
CMS would reduce the
estimated savings by $30M,
as opposed to the estimated
$90M reduction in savings as
proposed
CMS Weighed Alternative Changes to CJR….
60 to 80Estimated number of hospitals
CMS expects to opt-in to CJR in
the 33 voluntary MSAs
Source: CMS, Advisory Board analysis.
©2016 Advisory Board • All Rights Reserved • advisory.com
2020
CJR Markets No Longer Taking on Hip Episodes
Hospitals Would Have Added Hip/Femur Repair Episode
Source: CMS, Advisory Board analysis.
Current CJR Program SHFFT EPM
Hospitals within 67
geographically defined MSAs1
Medicare enrollees with
parts A and B, discharged
with LEJR (DRG 469 or
470)
Medicare enrollees with
parts A and B, discharged
with SHFFT (DRGs 480-482)
CJR Changes by the Numbers
Estimated episodic cost
savings under CJR for the
remaining 3 year period
$294MEstimated additional
episodic cost savings from
the SHFFT EPM
$130MRevised estimated savings
under proposed changes to CJR
for the remaining 3 year period
$204M
©2016 Advisory Board • All Rights Reserved • advisory.com
2121
Outpatient Shift a Major Impact on CJR
TKA Proposed to Exit IPO List in CY 2018
1)
• Source: CMS; Advisory Board
analysis.
• 27447: Total Knee
Arthroplasty (TKA)
• 55866:
Laparoscopy,
surgical
prostatectomy,
retropubic radical,
including nerve
sparing; includes
robotic assistance
Assignment:
C-APC 5115
Level 5 MSK
Procedures
Assignment:
C-APC 5362
Level 2 Laparoscopy
& Related Services
Procedure New APC
$9,912.69
$12,380.78
HOPD reimbursement
APC 5115
Inpatient reimbursement
MS-DRG 4702
Proposed 2018 TKA Reimbursement
Two-Year RAC Delay
CMS has proposed to ease any transition
by prohibiting RAC review for any inpatient
TKA procedures for two years if the rule is
finalized.
Possible Future Addition to ASC List
CMS is seeking comments on potential
future inclusion of TKA on ASC Covered
Services list, allowing Medicare to
reimburse TKA in the ASC setting as well
Related TKA Proposals
• These procedures would be eligible for reimbursement in the
outpatient setting. Clinically appropriate procedures would still be
reimbursed in the inpatient setting.
• Lower extremity joint replacement without major complications and
comorbidities.
©2016 Advisory Board • All Rights Reserved • advisory.com
2222
The Consequences of a TKA Outpatient Shift
Select Implications
20% Difference in reimbursement
between the inpatient and
outpatient setting1
Any significant shift of TKAs
to the outpatient setting would
effectively reduce eligible volumes
for these bundled payment
programs, unless CMS adjusts
current program methodology
Payment Rate Reduction
CJR/BPCI Interactive Effects
Clinical Documentation
Competitive Landscape
Diligent documentation will be
necessary to demonstrate:
• Medical appropriateness of
outpatient procedure
• Medical appropriateness of
short-stay inpatient procedures
Providers will need to strengthen
physician relationships and employ
consumer engagement strategies
to capture outpatient TKA volumes
©2016 Advisory Board • All Rights Reserved • advisory.com
2323
Expanding APM Eligibility under CJR
Proposal Would Increase Opportunities for APM Qualifying Participants
• Physicians, nonphysician
practitioners,
or therapists
Eligible Clinicians Under CJR
Proposed Changes to Eligibility
• Must be in a sharing arrangement,
distribution arrangement, or downstream
distribution arrangement
• Physicians, nonphysician
practitioners, or therapists who do
not have a sharing/distribution
arrangement but who have a
contractual relationship with the
CJR hospital
• Contractual relationship
must be based at least in
part on supporting the CJR
hospital’s quality or cost
goals
Source: CMS, Advisory Board analysis.
©2016 Advisory Board • All Rights Reserved • advisory.com
2424
CMS to Announce New Program for 2018
A Voluntary Bundled Payment Program Would Qualify for APM Track
What’s Next for BPCI?
The program would be designed to meet the
criteria for an Advanced APM under MACRA
As a program that would “build upon” the BPCI
program, likely to be broad and offer participants
multiple DRGs as bundled payment options
Entirely voluntary, will test CMS’s position that
providers will elect to take on episodic risk in the
absence of current or future mandatory programs
Source: CMS, Advisory Board analysis.
©2016 Advisory Board • All Rights Reserved • advisory.com
2525
Phase II (risk)Phase I (non-risk)
66%
Lessons from BPCI 1.0
In the Past, Voluntary Participation Dropped Once Risk Was Added
Source: “Bundled Payments for Care Improvement Initiative: Archived Materials,” Centers for
Medicare & Medicaid Services, https://innovation.cms.gov/initiatives/Bundled-
Payments/Archived-Materials.html; Post Acute Care Collaborative interviews and analysis.
1) Participants here are measured as unique organizations
enrolled in at least one of the 48 episodes of care covered
under BPCI Models 2, 3 or 4. Participant organizations are
comprised of all eligible providers such as acute care
hospitals, physician groups, or skilled nursing facilities.
Number of BPCI Participants Over Time1
BPCI’s Two Phase Implementation Timeline
July 2015
Last date for providers to
transition at least one
episode bundle to Phase II
drop off in enrollment once
mandatory risk kicked in
April 2013
BPCI Model
2, 3 and 4
enrollment
begins
2,603
6,652 6,293
2,093
1,239
Q2 2014 Q3 2014 Q2 2015 Q3 2015 Q2 2017
26
2
3
1
Road Map
©2016 Advisory Board • All Rights Reserved • advisory.com
Overview of the Proposed Rule
Assessing the Impact and Next Steps
The State of Payment Reform
©2016 Advisory Board • All Rights Reserved • advisory.com
2727
The Future Outlook for Payment Reform
Source: Advisory Board interviews and analysis.
CMS unlikely to announce new mandatory bundled payment
programs in the near-term; results from CJR will be closely
scrutinized for cost-savings and quality outcomes
Options for voluntary episodic payment models will continue to
grow in Medicare; likely participation levels are unclear
1
2
3
Four Implications of the Proposed Rule for the Future
Direction of Payment Reform
Providers still need to develop and execute an intentional
Medicare risk strategy4
EPM and CJR represent one portion of the payment reform
landscape, P4P and other voluntary risk models will continue
to play important roles in payment reform
©2016 Advisory Board • All Rights Reserved • advisory.com
2828
Key Takeaways for CV Service Line Leaders
Cancellation of the mandatory cardiac bundles will be a relief
to some programs; however, CV leaders must now consider
MACRA strategy in the absence of EPMs that would have
classified as Advanced APMs
CV leaders will need to consider whether participation in the
new voluntary bundle will benefit their program, and if they are
prepared to be successful under CV bundles
Episodic cost scrutiny for CV will continue to increase,
regardless: both MACRA tracks, P4P programs (e.g., Value-
Based Purchasing), and private payers are increasingly
focusing on episodic cost measures
1
2
3
4
Implications of the Proposed Rule for CV Leaders
Source: Advisory Board interviews and analysis.
Cancellation of the cardiac rehab incentive payment model is a
disappointment for many, although CMS may revisit this model
in the future; CV leaders should still focus on increasing
utilization of rehab to reduce readmissions and additional costs
©2016 Advisory Board • All Rights Reserved • advisory.com
2929
Key Questions for Providers Across the Continuum
Source: Advisory Board interviews and analysis.
What factors should I consider when deciding to participate in
a voluntary bundled payment program?
What are the implications of CMS’s proposal for post-acute
care providers?
1
2
3
Three Key Questions
How does this proposal fit into CMS’s broader approach to
payment reform going forward?
©2016 Advisory Board • All Rights Reserved • advisory.com
3030
How Can We Help You Prepare?
Key Advisory Board Resources
Data and
Analytics
Request a tailored
discussion with our
team, where we can
use our analytics to
identify opportunities
Technologies
Our Dedicated Advisors
will help you harness and
optimize the value of your
current technologies
Executive
Education
Stay tuned for future
webinars,
publications, and best
practice guides on
EPM payments
To set up time with our experts or for more
information, please complete the survey
question at the end of this section or email
Consulting
Services
We have decades of
experience in
managing costs and
utilization to help you
win under EPM
Source: Advisory Board analysis.
©2016 Advisory Board • All Rights Reserved • advisory.com
3131
Analytical Resources Available
• Organization-specific
data relative to national
benchmarks for
orthopedic and cardiac
complications,
readmissions and
HCAHPS
• National and
Customized Episodes
available for MS-
DRGs.
• Episodes include
average index
hospitalization, post
acute care spending,
physician and
outpatient care over
30, 60 and 90 days
• View episodic
spending allocation at
specific locations and
time intervals following
anchor discharge
• Modify view in
intervals of 5 days (up
to 90) following anchor
hospitalization
The Hospital
Benchmark Generator
Episodic Cost
ProfilerCare Coordination
Episode Profiler
Source: Advisory Board analysis.
©2016 Advisory Board • All Rights Reserved • advisory.com
3232
Introducing the Post-Acute Pathways Explorer
Market-Level Insights At Your Fingertips
Source: Post-Acute Care Collaborative.
The Post-Acute Pathways Explorer
1 2 3Key Use Cases
Size your
Medicare Market
Identify Provider
Relationships
Assess Care Quality
and Efficiency