Opinions Differ on CMS' Delay of Bundled Payment Programs

Will bundled payments be implemented quickly or slowly? Will they be voluntary or mandatory? There's disagreement about what the ongoing movement toward accountable care should look like.

It wasn’t a surprise when CMS moved last month to delay a new cardiac bundled payment program, and to put off expansion on an existing bundled payment program for hip and knee replacements. Tom Price, MD, the orthopedic surgeon and former Congressman who now leads HHS, was a known skeptic. Hospitals had complained for months that bundled payment models were moving too quickly.

But now what? CMS has delayed the start of both payment models from July until at least October 1, 2017, and more likely until January 1, 2018. The extra time will allow hospitals, doctors, and CMS to be better prepared—and perhaps allow time for CMS to provide claims data to smooth the transition.

Much is unclear, and opinions vary on what’s next. Are bundled payments in Medicare merely delayed, or could they be scrapped? Will CMS continue to introduce mandatory models, or will future bundled programs be voluntary? Is the start of 2018 enough time for stakeholders to be ready, or should CMS wait even longer?

Reactions have poured in since CMS’ March 20, 2017, announcement. The American Hospital Association (AHA) weighed in last week, saying it supported starting the programs in January, but cautioned against further delays. The National Association of ACOs (NAACOS), which represents the accountable care organizations (ACOs) created by the Affordable Care Act (ACA), called for CMS to suspend the models until it resolves conflicts between how ACOs earn shared savings and how it rewards providers under episodes of care.

But at least one expert thinks letting hospitals dictate the pace of reform is a mistake. Michael Abrams, managing partner of Numerof and Associates, said hospital administrators are historically inclined to do what makes physicians happy, but payment reform is about making care patient-centered, not making providers comfortable.

“Physicians are certainly the least interested in seeing this change,” Abrams said in an interview with The American Journal of Managed Care® (AJMC®). “They like to retain all their prerogatives, and they don’t want any change in the rules that might change their prerogatives.”

Moving away from fee-for-service has been hard, and many physicians have pushed back, he said. But CMS, as the largest payer in the country, has no choice but to move healthcare away from the pricey “piecework” of fee-for-service to an accountable system. If change doesn’t come, Abrams said, “The cost of our healthcare delivery system will bankrupt us.”

On the day CMS announced the delays, Carolyn Magill, CEO of Remedy Partners, told AJMC® that it could signal a shift from mandatory bundled payment programs to voluntary bundles, and others agreed. But Abrams said this is a bad idea.

“Organizations will not change unless they have no choice,” he said. In early experiments with payment models, “hospitals mostly bailed when they were required to be fully accountable for cost and quality.”

Health systems that have pushed the envelope in accountable care agree with Abrams. Geisinger Health System, which operates across a broad suburban and rural area of Pennsylvania, has said it opposes voluntary programs because they discourage doctors from being responsible for the health of all patients—not just those they see. With voluntary models, it’s too tempting to “game the system” by directing the most complex cases to providers outside the system.

Teaching hospitals that treat high numbers of poor and previously uninsured patients say that models must recognize socioeconomic differences, and even former FDA Commissioner Robert Califf, MD, said recently the current system encourages health systems to locate clinics and resources away from patients most in need.

In its letter to CMS Administrator Seema Verma, AHA seems to assume that payment reform and bundles are coming—it’s a question of when. Among AHA’s requests:

  • CMS must make good on a plan to provide beneficiary data to providers, so they can develop better care pathways.
  • HHS should use the scope of its authority to waive portions of federal laws against fraud and kickbacks that make it hard for health systems to coordinate care.
  • Discount factors in the cardiac model should be different from the joint replacement model; the hospitals believe the opportunities for savings are not as great.
  • Hospitals want clinicians to have the ability to put Medicare patients in settings “that best serves their short- and long-term recovery goals.”
  • AHA wants to ensure that “downside risk continues to not be implemented until 18 months after the models begin,” according to the AHA letter.

As the fate of bundles plays out, Price must take a broader view beyond that of the practicing physician, Abrams said. The HHS secretary has said that the pace and structure of reforms that came from the Center for Medicare and Medicaid Innovation often threatened the “doctor-patient relationship.”

While Abrams said that “CMMI is not flawless by any means,” he said that for health systems and doctors that don’t want change, “any pace is too fast.”

“If we proceed with these changes at a pace that make all the players comfortable, then change will be so far out into the future it almost doesn’t matter,” he said.