As the industry continues to move away from some of the Medicare programs that were created during the Obama presidency, the Centers for Medicare & Medicaid Services (CMS) is also pulling away from specific value-based initiatives, such as mandatory bundled payments. Just recently, CMS officially canceled two of the models that were included in the Bundled Payments for Care Improvement (BPCI) Initiative.

two bundled payment models are canceled

CMS recently canceled two bundled payment models set to begin the first of 2018, but there’s currently still a future for bundled payments in healthcare.

The final rule was released by CMS towards the end of November 2017, which confirmed that CMS has officially canceled the mandatory bundled payments. In addition, CMS also enacted new changes to the Comprehensive Care for Joint Replacement (CJR) Model.

Cardiac Rehabilitation Incentive Payment Model and the Episode Payment Model (both now canceled), were scheduled to begin in January 2018. Changes that were made to the CJR includes a reduction in the amount of mandatory geographic areas included from 67 to 34. Furthermore, for the areas that have low patient volumes and rural hospitals, participation in the CJR will be voluntary.

Individuals working in the healthcare industry were not exactly shocked by this announcement, because, the CMS had previously stated that there may be new changes in a previously proposed rule. According to the CMS, the new rule will provide more flexibility to construct and test other initiatives that could improve the coordination and quality of care while also lowering healthcare costs.

They also offer hospitals greater flexibility and the ability to choose what’s best for them rather than being required to participate in bundled payment programs. This announcement came at a time where CMS has been purposely trending away from the mandatory program and moving towards voluntary initiatives. According to an article in Healthcare Dive, this vision aligns with that of former HHS Secretary Tom Price’s stance.

Providers are Divided on the Issue of Bundled Payment Models

Even though CMS is moving towards initiatives that are voluntary and not mandatory, the feeling among other healthcare experts lands on either one side of the fence or the other. Among provider groups – the opinions are divided.

  • Providers in support of voluntary programs believe that hospitals should be allowed to choose which programs are a good option for their organization.
  • Providers that support the mandatory bundled payment initiatives, such as the American Hospital Association (AHA), favor this system over concerns that the programs would be canceled. Those against voluntary programs say that mandatory programs are needed to make improvements in patient care.

As stated by Ashley Thompson, AHA senior vice president for public policy analysis and development, in August 2017:

“We are concerned that a mandatory cancellation of the cardiac and (surgical hip and femur fracture treatment) programs may be disruptive to providers who have expended valuable resources to put these programs in place.”

However, recently the statements from the AHA makes it clear that they generally support the initiatives by CMS and look forward to the upcoming changes. As said by the AHA Executive Vice President Tom Nickels, “We are pleased that CMS has signaled that it will soon announce new voluntary payment bundles that will qualify as advanced alternative payment models. Doing so will allow hospitals to not only capitalize on the work many of them already have done to prepare for such models but also partner with clinicians to provide better, more efficient care.”

The Brookings Institute supports the mandate of these programs because they feel that the voluntary models will not be able to generate a large enough amount of data in order to determine the effectiveness of these initiatives.

Will Bundled Payments have a Future in Healthcare?

While CMS has dropped two of the BCPI payment models, in the near future, a new program may emerge in order to reignite the effort towards value-based care. As reported by Health Leaders Media, new bundled payment models will be intended to appeal to the physicians that were not in favor of the current BPCI models. New programs should increase momentum towards value-based care, according to Keely Macmillan, general manager of BPCI with Archway Health. Macmillan explains:

“The BPCI Advanced program will be a major catalyst for the adoption of value-based payments because it will bring so many new participants to the market. There is a lot of pent up demand because at first physicians weren’t ready for BCPI and now it’s been several years. There is a better understanding of the program and a recognition of the outside revenue that can be earned.”

As the changes and developments to CMS’ initiatives, such as bundled payments models, continue to unfold – we will monitor and report on the industry updates that matter to hospitals and healthcare organizations’ financial teams. Follow our blog to stay up to date.