Understanding CMS’s Proposed Changes to CJR …...July 2015 CMS announces CJR, a mandatory...

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Understanding CMS’s Proposed Changes to

CJR and Cancellation of EPMs

Kristen Barlow, JD

Senior Consultant

Rob Lazerow

Managing Director

August 23, 2017

Megan Tooley

Practice Manager

©2016 Advisory Board • All Rights Reserved • advisory.com

66

Today’s Panel of Experts

Kristen Barlow, JD

Senior Consultant

[email protected]

Megan Tooley

Practice Manager

[email protected]

Rob Lazerow

Managing Director

[email protected]

7

2

3

1

Road Map


The State of Payment Reform

Overview of the Proposed Rule

Assessing the Impact and Next Steps


88

CMS Backpedals on Mandatory Payment Reform

After an Aggressive Push, CMS Proposes to Cancel EPMs, Modify CJR

Source: CMS; Advisory Board interviews and analysis.

Timeline of Mandatory Bundled Payment Programs

July 2015

CMS announces CJR,

a mandatory

orthopedic bundle

April 2016

CJR begins in 67 markets

across the country

July 25, 2016

CMS proposes three

new EPM bundles for

hip and cardiac

episodes

December 20, 2016

CMS finalizes rule for

three new EPM

bundles for hip and

cardiac episodes

May 19, 2017

CMS delays

implementation of the

EPMs

August 15, 2017

CMS proposes to

cancel the EPMs and

modify CJR


99

Bundles Only Part of CMS’s Payment Reform Portfolio

P4P Programs, Voluntary Risk Models Remain

Continuum of Medicare Risk Models

Bundled

Payments

Shared

Savings

Shared

Risk

Full

Risk

• Hospital VBP

Program

• Hospital

Readmissions

Reduction Program

• HAC Reduction

Program

• Merit-Based

Incentive Payment

System

• MSSP Track 1

(50% sharing)

• MSSP Track 2

(60% sharing)

• MSSP Track 3

(up to 75% sharing)

• Next Generation

ACO Model

(80-85% shared

savings option)

• Next Generation

ACO Model

(full risk option)

• Medicare

Advantage

(provider-sponsored)

Pay-for-

Performance

• Bundled Payments

for Care

Improvement

Initiative (BPCI)

• Comprehensive Care

for Joint

Replacement (CJR)

• EPMs for SHFFT,

AMI and CABG

Source: CMS, Advisory Board analysis.


1010

Payment Reform Marches On

1) Medicare Access and CHIP Reauthorization Act.

2) The Merit-based Incentive Payment System.

With MACRA1 Underway, 2017 a Pivotal Year

2017 MIPS2 Reporting Structure

1 Clinicians report all MIPS-required

data for at least 90 days and are

eligible to receive the full bonus

2 Clinicians report more than one

measure for at least 90 days and are

eligible to receive a smaller bonus

3 Clinicians report any data for any

period of time and receive no positive

or negative adjustment in payment

Source: Centers for Medicare and Medicaid Services; Dickson, V., “CMS will

give providers flexibility on MACRA requirements,” Modern Healthcare,

September 2016; Health Care Advisory Board interviews and analysis.

92-8

Bipartisan Support Guarantees

Continued Implementation

Senate vote

on MACRA

392-37House vote

on MACRA

[These] actions help give physicians a

fair shot in the first year of MACRA

implementation. This is the flexibility

that physicians were seeking all along.”

Dr. Andrew Gurman,

President of the AMA

Physician Leaders Praise

Transition Year


1111

0%

1%

2%

3%

4%

5%

6%

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

MACRA Dealing Physicians in on Risk

Greater Payment Updates, Bonuses Depend on Payment Migration

Source: The Medicare Access and CHIP Reauthorization Act of 2015; CMS, Merit-Based Incentive Payment

System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria

for Physician-Focused Payment Models, April 25, 2016; Health Care Advisory Board interviews and analysis.

1) Relative to 2015 payment.

2015 – 2019:

0.5% annual update

(both tracks)

2020 – 2025:

Payment rates frozen

(both tracks)

Annual Provider Payment Adjustments

2026 onward:

0.25% annual update (MIPS track)

0.75% annual update

(Advanced APM track)

Advanced

APM Track

MIPS Track

Baseline

payment

updates1:

APM Bonuses/PenaltiesMIPS Bonuses/Penalties

5%Annual lump-

sum bonus

from 2019-2024

+/-4%Maximum annual

adjustment, 2019

+/-9%Maximum annual

adjustment, 2022

$500MAdditional bonus pool

for high performers

(plus any bonuses/penalties

from Advanced Payment

Models themselves)


1212

CJR Still Creates Path for APM Qualification

Source: CMS, “Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the

Physician Fee Schedule, and Criteria for Physician-Focused Payment Models,” May 9, 2016, available at: https://s3.amazonaws.com/public-

inspection.federalregister.gov/2016-10032.pdf; Advisory Board Company interviews and analysis.

How CJR Originally Stacked Up

Against Advanced APM Criteria

A Two-Track Approach Within the Remaining Mandatory Bundle

Maximum possible loss at

least 4% of spending target

Threshold to trigger losses

no greater than 4%

Loss sharing at least 30%

Quality requirements

comparable to MIPS

Certified EHR use

1) End-stage renal disease.

2) Large dialysis organization.

3) Comprehensive Primary Care Plus.

4) Notice of intent to apply.

5) Letter of intent.

6) Application narrative due May 25, 2016.

Financial

Risk

Criteria

CMS Changed CJR to Satisfy Criteria

Beginning in 2018, hospitals participating in

CJR will be able to choose one of two tracks:

Track 1 would require

use of certified EHR

Track 2 would not require

use of certified EHR

Eligible

advanced APM

Not eligible

advanced APM

1

2

d

13

2

3

1

Road Map






1414

CMS’s Proposed Changes to Mandatory Bundles

CMS Poised to Iterate on Voluntary Programs

Source: Jankowski, G., “The New “Price” of U.S. Health Care: The Future of Value-based Reimbursement

Under President-elect Trump and Tom Price,” JDSUPRA, Jan. 10, 2017; Dickson, V., “Hospitals call on

Trump administration to end mandatory bundled pay programs,” Modern Healthcare, April 24, 2017;

Centers for Medicare and Medicaid Services; Health Care Advisory Board interviews and analysis.

1) Episode Payment Models.

2) Coronary artery bypass graft and acute myocardial infarction; MS-DRGs: 280-282; 246-251; 231-236

3) Comprehensive Joint Replacement.

4) Surgical hip/femur fracture treatment; MS-DRGs: 480-482.

5) Bundled Payments for Care improvement.

GOP Historically Opposed to CMS’s Mandatory Models

“CMMI has overstepped its authority and there are real-life implications—both medical and

constitutional. That’s why we’re demanding CMMI cease all current and future mandatory models.”

Letter from GOP Lawmakers, including current HHS

Sec. Tom Price to CMS, September 2016

• Mandatory bundling for CABG

and AMI2, slated to go into

effect January 1, 2018

• Proposed rule released on

August 15th would cancel

programs entirely

Cardiac EPMs1 Cancelled

• Mandatory bundling for hip

and knee replacements,

originally in 67 markets

• Proposed rule would make

participation in 33 markets

voluntary, cancel planned

expansion to SHFFT4

CJR3 Scaled Back What’s Next for BPCI1?

• Optional bundling program;

providers may opt into any of

48 different conditions across

four risk models

• Current Models 2, 3, and 4

extended through September

30th, 2018


1515

A Reprieve for CV Service Lines

Bypass, Heart Attack Would Have Been First Mandatory Cardiac Bundles

Cardiac EPMs Cancelled

Cardiac EPMs

CABG AMI• MS-DRGs 231-232

• All care during index hospitalization

through to 90-days post-discharge

• Hospital would be financially

responsible for cost, quality of the

episode

• MS-DRGs 280-282; 246-251

• All care during index hospitalization

through to 90-days post-discharge

• Hospital would be financially

responsible for cost, quality of the

episode

Estimate of cost savings to CMS over five

years for both cardiac EPMs$40M



1616

CMS Proposal Also Cancels Rehab Incentives

Program Would Have Rewarded Significant Cardiac Rehab Utilization

1) Proposed cardiac rehab HCPCS codes for inclusion:

G0422. 93797, 93798 and G0423.

Cardiac Rehab Incentive Payment System1

Normal FFS

Payment

First 11

sessions

Subsequent sessions, up to a

total of 362

$25/session $175/session

$4,625

Chosen by CMS based on

evidence that beneficiaries

who complete 12-23 cardiac

rehab sessions have lower

mortality rates

12-Session ThresholdAn Uncertain Financial Impact

Range of CMS’s estimate of the impact

of the program: it could have resulted in

additional spend or significant savings

+27M to -32M

Total available

incentive

payments

+ incentive

payments



1717

Half of CJR Markets Would Now Be Voluntary

Programs Would Decide Whether to Opt-In by February 1, 2018

CJR Scaled Back


1) Metropolitan statistical area.

Key Changes to CJR Market Definitions

• Originally implemented in 67 MSAs1 across the

country

• Proposal would continue mandatory

participation in 34 markets, with exclusions for

rural and low-volume hospitals

• 34 mandatory MSAs have the highest average

wage-adjusted historic episode costs

• 33 MSAs would no longer be required to

participate; hospitals would be presented with a

one-time “opt-in” period to continue participation

• Opt-in period would run January 1-31, 2018

• All opt-in decisions would be final February 1,

2018


1818

Mandatory and Voluntary Markets

Source: Center for Medicare and Medicaid Services;

Advisory Board interviews and analysis.

Mandatory MSAsAkron, OH Monroe, LA

Asheville, NC Montgomery, AL

Austin-Round Rock, TX New Haven-Milford, CT

Beaumont-Port Arthur, TX New Orleans-Metairie, LA

Cincinnati, OH-KY-INNew York-Newark-Jersey City,

NY-NJ-PA

Corpus Christi, TX Oklahoma City, OK

Dothan, ALOrlando-Kissimmee-Sanford,

FL

Florence, SCPensacola-Ferry Pass-Brent,

FL

Gainesville, FL Pittsburgh, PA

Greenville, NC Port St. Lucie, FL

Harrisburg-Carlisle, PA Provo-Orem, UT

Hot Springs, AR Reading, PA

Killeen-Temple, TX Sebastian-Vero Beach, FL

Los Angeles-Long Beach-Anaheim, CATampa-St. Petersburg-

Clearwater, FL

Lubbock, TX Toledo, OH

Memphis, TN-MS-AR Tuscaloosa, AL

Miami-Fort Lauderdale-West Palm

Beach, FLTyler, TX

Voluntary MSAsAlbuquerque, NM Madison, WI

Athens-Clarke County, GA Milwaukee-Waukesha-West Allis, WI

Bismarck, ND Modesto, CA

Boulder, CO Naples-Immokalee-Marco Island, FL

Buffalo-Cheektowaga-

Niagara Falls, NY

Nashville-Davidson—

Murfreesboro--Franklin, TN

Cape Girardeau, MO-IL Norwich-New London, CT

Carson City, NV Ogden-Clearfield, UT

Charlotte-Concord-Gastonia, NC-SCPortland-Vancouver-Hillsboro, OR-

WA

Columbia, MO Saginaw, MI

Decatur, IL St. Louis, MO-IL

Denver-Aurora-Lakewood, COSan Francisco-Oakland-Hayward,

CA

Durham-Chapel Hill, NC Seattle-Tacoma-Bellevue, WA

Flint, MI South Bend-Mishawaka, IN-MI

Gainesville, GA Staunton-Waynesboro, VA

Indianapolis-Carmel-Anderson, IN Topeka, KS

Kansas City, MO-KS Wichita, KS

Lincoln, NE

List of Mandatory and Voluntary CJR MSAs1


1919

CMS’s Rationale for Splitting CJR Markets

Voluntary in All 67 MSAs

If all 67 MSAs were

voluntary, CJR would no

longer show savings, and

would cost CMS money

No Voluntary Participation in 33 MSAs

If participation was limited to

only the 34 mandatory MSAs,

CMS would reduce the

estimated savings by $30M,

as opposed to the estimated

$90M reduction in savings as

proposed

CMS Weighed Alternative Changes to CJR….

60 to 80Estimated number of hospitals

CMS expects to opt-in to CJR in

the 33 voluntary MSAs



2020

CJR Markets No Longer Taking on Hip Episodes

Hospitals Would Have Added Hip/Femur Repair Episode


Current CJR Program SHFFT EPM

Hospitals within 67

geographically defined MSAs1

Medicare enrollees with

parts A and B, discharged

with LEJR (DRG 469 or

470)

Medicare enrollees with

parts A and B, discharged

with SHFFT (DRGs 480-482)

CJR Changes by the Numbers

Estimated episodic cost

savings under CJR for the

remaining 3 year period

$294MEstimated additional

episodic cost savings from

the SHFFT EPM

$130MRevised estimated savings

under proposed changes to CJR

for the remaining 3 year period

$204M


2121

Outpatient Shift a Major Impact on CJR

TKA Proposed to Exit IPO List in CY 2018

1)

• Source: CMS; Advisory Board

analysis.

• 27447: Total Knee

Arthroplasty (TKA)

• 55866:

Laparoscopy,

surgical

prostatectomy,

retropubic radical,

including nerve

sparing; includes

robotic assistance

Assignment:

C-APC 5115

Level 5 MSK

Procedures

Assignment:

C-APC 5362

Level 2 Laparoscopy

& Related Services

Procedure New APC

$9,912.69

$12,380.78

HOPD reimbursement

APC 5115

Inpatient reimbursement

MS-DRG 4702

Proposed 2018 TKA Reimbursement

Two-Year RAC Delay

CMS has proposed to ease any transition

by prohibiting RAC review for any inpatient

TKA procedures for two years if the rule is

finalized.

Possible Future Addition to ASC List

CMS is seeking comments on potential

future inclusion of TKA on ASC Covered

Services list, allowing Medicare to

reimburse TKA in the ASC setting as well

Related TKA Proposals

• These procedures would be eligible for reimbursement in the

outpatient setting. Clinically appropriate procedures would still be

reimbursed in the inpatient setting.

• Lower extremity joint replacement without major complications and

comorbidities.


2222

The Consequences of a TKA Outpatient Shift

Select Implications

20% Difference in reimbursement

between the inpatient and

outpatient setting1

Any significant shift of TKAs

to the outpatient setting would

effectively reduce eligible volumes

for these bundled payment

programs, unless CMS adjusts

current program methodology

Payment Rate Reduction

CJR/BPCI Interactive Effects

Clinical Documentation

Competitive Landscape

Diligent documentation will be

necessary to demonstrate:

• Medical appropriateness of

outpatient procedure

• Medical appropriateness of

short-stay inpatient procedures

Providers will need to strengthen

physician relationships and employ

consumer engagement strategies

to capture outpatient TKA volumes


2323

Expanding APM Eligibility under CJR

Proposal Would Increase Opportunities for APM Qualifying Participants

• Physicians, nonphysician

practitioners,

or therapists

Eligible Clinicians Under CJR

Proposed Changes to Eligibility

• Must be in a sharing arrangement,

distribution arrangement, or downstream

distribution arrangement

• Physicians, nonphysician

practitioners, or therapists who do

not have a sharing/distribution

arrangement but who have a

contractual relationship with the

CJR hospital

• Contractual relationship

must be based at least in

part on supporting the CJR

hospital’s quality or cost

goals



2424

CMS to Announce New Program for 2018

A Voluntary Bundled Payment Program Would Qualify for APM Track

What’s Next for BPCI?

The program would be designed to meet the

criteria for an Advanced APM under MACRA

As a program that would “build upon” the BPCI

program, likely to be broad and offer participants

multiple DRGs as bundled payment options

Entirely voluntary, will test CMS’s position that

providers will elect to take on episodic risk in the

absence of current or future mandatory programs



2525

Phase II (risk)Phase I (non-risk)

66%

Lessons from BPCI 1.0

In the Past, Voluntary Participation Dropped Once Risk Was Added

Source: “Bundled Payments for Care Improvement Initiative: Archived Materials,” Centers for

Medicare & Medicaid Services, https://innovation.cms.gov/initiatives/Bundled-

Payments/Archived-Materials.html; Post Acute Care Collaborative interviews and analysis.

1) Participants here are measured as unique organizations

enrolled in at least one of the 48 episodes of care covered

under BPCI Models 2, 3 or 4. Participant organizations are

comprised of all eligible providers such as acute care

hospitals, physician groups, or skilled nursing facilities.

Number of BPCI Participants Over Time1

BPCI’s Two Phase Implementation Timeline

July 2015

Last date for providers to

transition at least one

episode bundle to Phase II

drop off in enrollment once

mandatory risk kicked in

April 2013

BPCI Model

2, 3 and 4

enrollment

begins

2,603

6,652 6,293

2,093

1,239

Q2 2014 Q3 2014 Q2 2015 Q3 2015 Q2 2017

26

2

3

1

Road Map






2727

The Future Outlook for Payment Reform

Source: Advisory Board interviews and analysis.

CMS unlikely to announce new mandatory bundled payment

programs in the near-term; results from CJR will be closely

scrutinized for cost-savings and quality outcomes

Options for voluntary episodic payment models will continue to

grow in Medicare; likely participation levels are unclear

1

2

3

Four Implications of the Proposed Rule for the Future

Direction of Payment Reform

Providers still need to develop and execute an intentional

Medicare risk strategy4

EPM and CJR represent one portion of the payment reform

landscape, P4P and other voluntary risk models will continue

to play important roles in payment reform


2828

Key Takeaways for CV Service Line Leaders

Cancellation of the mandatory cardiac bundles will be a relief

to some programs; however, CV leaders must now consider

MACRA strategy in the absence of EPMs that would have

classified as Advanced APMs

CV leaders will need to consider whether participation in the

new voluntary bundle will benefit their program, and if they are

prepared to be successful under CV bundles

Episodic cost scrutiny for CV will continue to increase,

regardless: both MACRA tracks, P4P programs (e.g., Value-

Based Purchasing), and private payers are increasingly

focusing on episodic cost measures

1

2

3

4

Implications of the Proposed Rule for CV Leaders


Cancellation of the cardiac rehab incentive payment model is a

disappointment for many, although CMS may revisit this model

in the future; CV leaders should still focus on increasing

utilization of rehab to reduce readmissions and additional costs


2929

Key Questions for Providers Across the Continuum


What factors should I consider when deciding to participate in

a voluntary bundled payment program?

What are the implications of CMS’s proposal for post-acute

care providers?

1

2

3

Three Key Questions

How does this proposal fit into CMS’s broader approach to

payment reform going forward?


3030

How Can We Help You Prepare?

Key Advisory Board Resources

Data and

Analytics

Request a tailored

discussion with our

team, where we can

use our analytics to

identify opportunities

Technologies

Our Dedicated Advisors

will help you harness and

optimize the value of your

current technologies

Executive

Education

Stay tuned for future

webinars,

publications, and best

practice guides on

EPM payments

To set up time with our experts or for more

information, please complete the survey

question at the end of this section or email

[email protected]

Consulting

Services

We have decades of

experience in

managing costs and

utilization to help you

win under EPM

Source: Advisory Board analysis.

mailto:[email protected]


3131

Analytical Resources Available

• Organization-specific

data relative to national

benchmarks for

orthopedic and cardiac

complications,

readmissions and

HCAHPS

• National and

Customized Episodes

available for MS-

DRGs.

• Episodes include

average index

hospitalization, post

acute care spending,

physician and

outpatient care over

30, 60 and 90 days

• View episodic

spending allocation at

specific locations and

time intervals following

anchor discharge

• Modify view in

intervals of 5 days (up

to 90) following anchor

hospitalization

The Hospital

Benchmark Generator

Episodic Cost

ProfilerCare Coordination

Episode Profiler

Source: Advisory Board analysis.


3232

Introducing the Post-Acute Pathways Explorer

Market-Level Insights At Your Fingertips

Source: Post-Acute Care Collaborative.

The Post-Acute Pathways Explorer

1 2 3Key Use Cases

Size your

Medicare Market

Identify Provider

Relationships

Assess Care Quality

and Efficiency

Understanding CMS’s Proposed Changes to CJR …...July 2015 CMS announces CJR, a mandatory...

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