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Modest Impact Forecasted for Most Hospitals in CMS' Cardiac Bundled Payment Plan


A majority of hospitals that may be required to participate in the new Medicare cardiac bundled payment models would not experience losses or gains over $500,000 per year, according to a recent analysis by Avalere Health.

A majority of hospitals that may be required to participate in the new Medicare cardiac bundled payment models would not experience losses or gains over $500,000 per year, according to a recent analysis by Avalere Health.

The Centers for Medicare & Medicaid Innovation (CMMI) announced the bundled payment plan for Medicare patients admitted to hospitals for heart attack and cardiac bypass surgery.

The new cardiac bundled payment plan reimburses providers a fixed fee per episode of care, which includes an initial hospital stay and 90 days of care after discharge. Payments are to be based on historical spending levels on a hospital-by-hospital basis; eventually the plan will move toward average regional spending levels. The plan underscores CMS’ commitment to moving Medicare to a value-based environment and away from the fee-for-service model.

Avalere’s analysis finds that some hospitals could face significant penalties because their spending greatly exceeds average regional spending. These high-spending hospitals could be treating sicker patients who don’t have good support systems in place when they are discharged and end up back in the hospital for expensive follow up. Avalere Senior Vice President Josh Seidman noted that many hospitals need to develop a data-analysis infrastructure, cost management discipline, and care coordination capabilities in order to deliver efficient cardiac care.

“We’ve hit a tipping point,” he said, and healthcare executives recognize that CMMI is moving beyond the experimental phase with value-based payment.

CMMI expects to phase in the bundled cardiac payment models starting in July 2017 in 98 randomly selected markets for hospitals that admit Medicare fee-for-service patients who receive 3 types of cardiac care:

  • Coronary artery bypass surgery (CABG)
  • Heart attack patients who are medically managed with drugs and other noninterventional therapies
  • Heart attack patients getting percutaneous coronary intervention (PCI), including stents, angioplasty, or other interventions

Avalere’s analysis found significant differences in the distribution of spending across the 90-day episode between patients who undergo surgical intervention (CABG) and those who do not: 60% to 70% of spending for CABG and PCI episodes occur during the initial hospital stay, whereas only 35% of spending for heart attack patients managed with drugs are connected with the inpatient stay. In the medically managed heart attack patients, 47% of spending is associated with post-discharge care (which includes post-acute services and readmissions to acute care settings).

“There is no magic bullet to achieve savings,” said Fred Bentley, vice president at Avalere. “Participating hospitals will need to pull multiple levers to drive down costs.”

They will need to work even more closely with their physicians to streamline care and promote adherence to clinical guidelines, and accelerate development of high-performance post-acute networks to cut readmissions and achieve efficiencies for medically managed heart attack episodes, he advised.

CMMI is providing hospitals with greater flexibility in the types of arrangements they make with physicians and other provider organizations, so that arrangements allow providers to share in bonuses (as well as penalties) hospitals receive if they can keep spending per episode below the target price (gainsharing). This also allows hospitals to standardize medical devices and negotiate more favorable rates, according to Avalere. Many medical device manufacturers are thus reorienting their business around providing more comprehensive solutions to support more efficient, coordinated care, and are rethinking supply chain and hospital contracting to focus on paying for value over an episode of care.

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