No More Guessing: CV Is Next for Mandatory Bundles

Over the last year, I have been asked many times to peek into my crystal ball to see where CMS will go next with bundled payments, or episode payment models (EPMs).  Well, the wait is over. Late last month, CMS not only proposed expanding its first mandatory bundles by adding hip and femur fractures to the Comprehensive Care for Joint Replacement EPM, it also laid out a plan to mandate cardiac bundles in select markets.

It should be no surprise that CMS has coronary artery disease (CAD) in its sights. Despite specialty societies’ ongoing investment in registries, appropriate use criteria and other data-driven initiatives, considerable work remains to improve the value of care provided to this highly complex patient population. And, as my colleague Michael Graham noted in his post earlier this year, high-cost, high-volume episodes with documented practice variation (likely most of what comprises your CV service line portfolio) are ripe for bundled payments.

CMS Homes in on AMI and CABG
CMS’s proposed mandatory bundle focuses on acute myocardial infarction (AMI), including both medical management and percutaneous coronary intervention (PCI), and coronary artery bypass grafting (CABG; with or without AMI). Both are triggered by an inpatient admission, with the bundle covering the entire inpatient stay and extending 90 days postdischarge. In total for AMI and CABG, that 90-day episode drives $6.4 billion annually in Medicare spend.

CMS purposefully proposed “random” selection of the 98 markets where the mandate would apply. That means systems in any of the 294 potential markets must begin to prepare now. In truth, though, no one taking a traditional approach to cardiac care is exempt. And this first proposed mandate for a chronic condition may portend a similar approach to congestive heart failure.

Don’t Simply React, Proactively Build Essential Skills
System executives should resist the reflex to redesign care around any specific bundle, including this new CV mandate. Rather, focus on building overall competency for value-based care. Engage key physicians to standardize care. Dig into episodic costs. Scrutinize current performance, and strengthen crucial partnerships. Quantify likely impact based on current payer mix, volumes and costs for these designated CV procedures as well as other potential bundles.

Four specific steps can help CV service line leaders both prepare for a possible mandate and position for long-term success under any value-based model.

  1. Understand total episode spend for specific clinical conditions and how it varies. For example, roughly half the spend for the AMI episode goes toward IP services vs 75% of the CABG episode (see below). Financial sustainability at a quality-adjusted target price will necessitate multifaceted efforts to improve value. Next, benchmark your costs to your region, not your market.
  2. Collaborate to ensure physician and patient compliance with evidence-based care. This latest proposal signals CMS’s intent to test if payment incentives can spur more rapid adoption of best practices. Mounting evidence supports the benefits of cardiac rehabilitation, but only about a third of eligible patients participate. This proposal gives providers good reason to ensure their patients obtain and stick with cardiac rehab by bumping initial per-session payments of $25 up to $175 after the first 11.
  3. Identify optimal post-acute partners. Sg2 has long advised tiering post-acute care (PAC) sites in your market to advance care coordination and reduce readmissions. This summer during, I shared with Sg2 clients results from systems that have taken this further. By tiering specifically for CV services, they have enhanced collaboration with skilled nursing facilities and improved outcomes for cardiac surgery patients.
  4. Strengthen your System of CARE. Beyond just PAC partners, put in place the infrastructure (including a gainsharing template) that aligns accountable care organizations, bundle awardees, transfer hospitals and physician group practices. Language in this proposed rule suggests rollout of outpatient bundles is also being considered. Clinical alignment and resource effectiveness will be essential across all care sites and clinicians, whether or not they are owned or employed by your health system.

Next Steps for CMS
CMS likely will press pause for now with mandatory bundles, taking stock of industry impact while still offering voluntary EPMs such as those featured in the new version of the BPCI initiative. That said, this latest move just strengthens the agency’s multifront assault on fee-for-service to speed the shift to value-based care. MACRA, the Medicare Access and CHIP Reauthorization Act, will accelerate voluntary initiatives as organizations look for ways to meet the new law’s incentives for alternative payment models. And that doesn’t even take into account growing experimentation among commercial payers and progressive provider systems willing to offer bundles as a way to expand share of care.

It’s clear the race to risk is on, regardless of the varied pace of payment evolution that Sg2 continues to track at the individual market level. Embrace this latest CMS proposal as justification for developing essential skills to succeed with bundles. Then consider the potential upside if you can scale up across a broad range of clinical conditions, incorporate it into your broader payer strategy and take it to market. As more systems see this as a strategic opportunity, there’s plenty of downside risk to go around for those who are complacent, regardless of whether they’ll face these current mandates or not.

Sg2 Fellow Valinda Rutledge and Sg2 Vice President Tawnya Bosko contributed to this post.

Sources: CMS. Proposed Rule: Medicare Program; Advancing Care Coordination Through Episode Payment Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and Changes to the Comprehensive Care for Joint Replacement Model (CJR). Federal Register. August 2, 2016; Sg2 Analysis, 2016.

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As of February 11, 2016, Vizient, Inc. has completed its purchase of MedAssets Sg2 and spend and clinical resource management segments from Pamplona Capital Management, LLC. MedAssets revenue cycle business will continue to operate as a wholly-owned subsidiary of Pamplona Capital Management LLP.

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