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The American Journal of Managed Care August 2014
Personalized Preventive Care Reduces Healthcare Expenditures Among Medicare Advantage Beneficiaries
Shirley Musich, PhD; Andrea Klemes, DO, FACE; Michael A. Kubica, MBA, MS; Sara Wang, PhD; and Kevin Hawkins, PhD
Impact of Hypertension on Healthcare Costs Among Children
Todd P. Gilmer, PhD; Patrick J. O'Connor, MD, MPH; Alan R. Sinaiko, MD; Elyse O. Kharbanda, MD, MPH; David J. Magid, MD, MPH; Nancy E. Sherwood, PhD; Kenneth F. Adams, PhD; Emily D. Parker, MD, PhD; and Karen L. Margolis, MD, MPH
Tracking Spending Among Commercially Insured Beneficiaries Using a Distributed Data Model
Carrie H. Colla, PhD; William L. Schpero, MPH; Daniel J. Gottlieb, MS; Asha B. McClurg, BA; Peter G. Albert, MS; Nancy Baum, PhD; Karl Finison, MA; Luisa Franzini, PhD; Gary Kitching, BS; Sue Knudson, MA; Rohan Parikh, MS; Rebecca Symes, BS; and Elliott S. Fisher, MD
Potential Role of Network Meta-Analysis in Value-Based Insurance Design
James D. Chambers, PhD, MPharm, MSc; Aaron Winn, MPP; Yue Zhong, MD, PhD; Natalia Olchanski, MS; and Michael J. Cangelosi, MA, MPH
Massachusetts Health Reform and Veterans Affairs Health System Enrollment
Edwin S. Wong, PhD; Matthew L. Maciejewski, PhD; Paul L. Hebert, PhD; Christopher L. Bryson, MD, MS; and Chuan-Fen Liu, PhD, MPH
Contemporary Use of Dual Antiplatelet Therapy for Preventing Cardiovascular Events
Andrew M. Goldsweig, MD; Kimberly J. Reid, MS; Kensey Gosch, MS; Fengming Tang, MS; Margaret C. Fang, MD, MPH; Thomas M. Maddox, MD, MSc; Paul S. Chan, MD, MSc; David J. Cohen, MD, MSc; and Jersey Chen, MD, MPH
Potential Benefits of Increased Access to Doula Support During Childbirth
Katy B. Kozhimannil, PhD, MPA; Laura B. Attanasio, BA; Judy Jou, MPH; Lauren K. Joarnt; Pamela J. Johnson, PhD; and Dwenda K. Gjerdingen, MD
Currently Reading
Synchronization of Coverage, Benefits, and Payment to Drive Innovation
Annemarie V. Wouters, PhD; and Nancy McGee, JD, DrPH
Economic Implications of Weight Change in Patients With Type 2 Diabetes Mellitus
Kelly Bell, MSPhr; Shreekant Parasuraman, PhD; Manan Shah, PhD; Aditya Raju, MS; John Graham, PharmD; Lois Lamerato, PhD; and Anna D'Souza, PhD
Optimizing Enrollment in Employer Health Programs: A Comparison of Enrollment Strategies in the Diabetes Health Plan
Lindsay B. Kimbro, MPP; Jinnan Li, MPH; Norman Turk, MS; Susan L. Ettner, PhD; Tannaz Moin, MD, MBA, MSHS; Carol M. Mangione, MD; and O. Kenrik Duru, MD, MSHS
Does CAC Testing Alter Downstream Treatment Patterns for Cardiovascular Disease?
Winnie Chia-hsuan Chi, MS; Gosia Sylwestrzak, MA; John Barron, PharmD; Barsam Kasravi, MD, MPH; Thomas Power, MD; and Rita Redberg MD, MSc
Effects of Multidisciplinary Team Care on Utilization of Emergency Care for Patients With Lung Cancer
Shun-Mu Wang, MHA; Pei-Tseng Kung, ScD; Yueh-Hsin Wang, MHA; Kuang-Hua Huang, PhD; and Wen-Chen Tsai, DrPH
Health Economic Analysis of Breast Cancer Index in Patients With ER+, LN- Breast Cancer
Gary Gustavsen, MS; Brock Schroeder, PhD; Patrick Kennedy, BE; Kristin Ciriello Pothier, MS; Mark G. Erlander, PhD; Catherine A. Schnabel, PhD; and Haythem Ali, MD

Synchronization of Coverage, Benefits, and Payment to Drive Innovation

Annemarie V. Wouters, PhD; and Nancy McGee, JD, DrPH
Implementation of payment reform, without a corresponding change to coverage, benefit, and other payment requirements, creates conflicting incentives that may nullify the intended aim of payment reform: to improve health outcomes, while saving costs.
In the BPCI initiative as in the MA program, CMS reviews and approves (or not) each request for a waiver of Medicare payment rules, referred to as “payment policy waivers.”38 CMS’s review criteria include an assessment of whether the waived requirement is integral to care redesign, leads to program success, and has the potential generate internal cost savings. Table 1 shows an illustrative list of waivers that BPCI applicants requested compared with waivers that already exist in the MA program, as well as those CMS has officially approved for all BPCI awardees. For example, a BPCI applicant requested a waiver of the “3-hour rule” for inpatient rehabilitation facilities (IRFs). The 3-hour rule states that IRF patientsgenerally require 3 hours of therapy for 5 days per week, unless the patient is unable to tolerate that level of therapy. Any patient in a post acute setting who is not able to tolerate 3 daily hours of therapy must be transferred to a sub-acute care facility. According to the applicant, this requirement may lead to potentially unnecessary readmissions to a skilled nursing facility, especially when the patient’s fragility is only temporary.39

Table 2 demonstrates that there is substantial variability in CMS’s payment policy waivers across payment models. CMS granted few waivers in the BPCI initiative. Those waivers that were granted may be attached to other requirements (eg, patients transferred from hospitals must go to high-quality SAFs).40 Examples of inconsistencies include: (i) the qualifying 72-hour rule before transfer to a covered skilled-nursing stay is waived for MA plans but waived only with the conditions in the BPCI initiative; (ii) pre-surgery home safety visits are waived for MA plans, while post discharge home visits are waived in the BPCI initiative; (iii) CMS does not waive conditions for Medicare’s traditional telehealth benefit for MA plans, but does expand the telehealth benefit for BPCI awardees; (iv) CMS allows some remote monitoring in MA plans, but not for BPCI awardees. CMS has not had a public discussion of the rationale behind these differing decisions.


This lack of public discussion contrasts sharply with 
the way CMS approached its 2003 change in payment methodology for IRFs from cost basis to prospective payment (IRF-PPS) and the subsequent revisions to the IRF coverage requirements. CMS made those changes through a multiyear rule making process that vetted the recommendations of a CMS internal working group through opportunities for public comment.41

As a result of the rulemaking process, CMS deleted the coverage guidance previously published in HCFAR 85-2-1 “to reflect changes that have occurred in medical practice during the past 25 years and the implementation of the IRF-PPS.”42


CMS has used various approaches to adapting coverage, benefit, or payment requirements in response to changes in payment methods. Examples are presented in Table 2.

In the MA program, which bases reimbursement on a capitated rate rather than on a fee-for-service amount, CMS has created supplemental benefits. For BPCI awardees, CMS has not relaxed coverage policy requirements. It has, however, granted payment policy waivers to remove certain site-specific payment requirements. When prospective payment was introduced for IRFs, CMS revised requirements for covered admissions through rule making. That is, to introduce a single policy change, CMS has engaged multiple mechanisms. For example, CMS relaxed the requirement to have a qualifying hospital stay of 72 hours before covering a skilled nursing admission as a “supplementary benefit” in the MA program, and as a payment policy waiver in the BPCI initiative.

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