CMS announced on December 20th that they are moving forward with the mandatory Medicare cardiac bundled pricing model by issuing final regulations. 

 While CMS proceeds, there is serious conjecture that President-Elect Trump’s choice for HHS Director, Rep. Tom Price (R-GA), will, if confirmed, cancel the project.  

While CMS is officially defending the model and its implementation in July 2017, Dr. Price has publicly criticized the mandatory model as going too far, too fast and …”dramatically altering the delivery of care.”

While CFA is no more prescient than anyone else in the industry, not knowing with any certainty if the mandatory model will be implemented on schedule, made voluntary, scaled back or even cancelled, we do know that this situation should not lure hospitals into thinking they will not eventually be held accountable for building value into these (and other) targeted cardiac procedures.  Financial accountability to Medicare for a bundled price may be in question; but clinical quality outcomes and process of care accountability is not contingent on model implementation and never will be.

Final Pre-Published Regulations

First, all affected parties should look over the final regulations as published online on December 20.  A prepublication copy is available at https://federalregister.gov/d/2016-30746 and on FDsys.gov.  The regs are scheduled for official publication in the Federal Register on January 3, 2017.  The final regulations reflect the provisional regulations published in July except for a few small changes made to reflect healthcare industry concerns.  These include:

• Relief from financial responsibility for caring for a heart attack victim for an entire episode of care by the receiving hospital if the patient was subsequently transferred to another hospital for definitive care.
• Giving the hospital an additional nine months before they will be required to assume the downside risk – losing money if the cost of care exceeds the target price.
• Downside risk will not commence until January 1, 2019 to give hospitals more time to develop the appropriate experience and infrastructure to manage under the new model.
• Participants can now choose to accept downside risk earlier, for episodes of care ending on or after January 1, 2018, which would allow them to qualify as participating in advanced alternative payment models under MACRA.
• Retains the cardiac rehabilitation incentive payment model to test potential increased usage of rehab for impacting 1,320 hospitals in 90 MSA’s.

CMS has stated that they estimate that 1,120 hospitals in 98 randomly selected MSA’s will participate in the cardiac model.  That is a lot of hospitals and potentially a significant impact.

Implications

CFA firmly believes that hospital cardiac programs need to prepare for bundled pricing assuming that Medicare will implement the new model on schedule and as stipulated in the final regulations.  We feel that this hospital commitment to a process and an outcome that may not actually come to pass as a Medicare model is nonetheless justifiable based on the value of the work necessary to address the underlying financial, quality outcome, process improvement, cost reduction and care coordination issues that currently exist in every hospital.  We have proposed a methodology and approach to the model (refer to the Diagnostic Angiography and Interventional Cardiology article ) that can get you started.  Unless and until the model is officially implemented, the hospital financial responsibility for ninety-day post-acute care for these patients will not be an issue except from an overall care coordination perspective.

One Recommended Approach

While addressing the underlying issues associated with all types of cardiac patients is appropriate and necessary, prioritizing patient groups is appropriate when beginning to address quality outcomes, process improvement, cost reduction and care coordination issues.  Of the two categories of potentially impacted patients, CABG surgery and AMI, we offer the following prioritized approach if the hospital is starting from a position of relative inexperience:

• CABG surgery patients first.  Relative to AMI patients, they can be characterized as more elective/scheduled, less clinically complex, not as prone to readmission or requiring institutionalization post-acute hospitalization.  As a surgical patient, their ALOS is longer and their overall cost of care is higher thus leading to more opportunity to streamline care processes, decrease unnecessary variation and positively impact costs.  Care coordination, while still an issue, is relatively straightforward.  Note that so-called “low volume” surgical programs have an added incentive to successfully address financial and performance-based issues as a hedge against the low volume/low quality argument.  Refer to CFA’s Low Volume Cardiac Surgery Programs:  The Need for Next Generation Assessment  for a further discussion of this issue.
• AMI patients second.  Relative to CABG surgery patients, they can be characterized as emergent based, frequently very clinically complex and variable, often challenging to diagnose quickly and cost effectively, subject to a higher rate of readmission, but requiring less post-acute care institutionalization.  These patients can be seen in the ED, observation unit, the cath lab, and various nursing units during a course of diagnosis and treatment.  Some receiving hospitals will transfer AMI cases out for definitive care.  ALOS can vary widely depending upon speed of diagnosis, case type and outcome.  These can be challenging cases requiring multiple practitioner input into best practice determination.

Conclusion

Hospital cardiac program preparation for value-based purchasing needs to be an ongoing and continuous endeavor.  To the extent that the Medicare cardiac bundle becomes reality, this factor alone should spur on all hospitals to plan for and initiate performance improvement activities to address foundational financial, quality outcome, process improvement, cost reduction and care coordination issues associated with all patient populations, but particularly the two groups singled out by Medicare – CABG surgery and AMI.  If the Medicare model is implemented, changed, or cancelled, the challenge of addressing the evolving needs of these patients in an increasingly competitive and value-conscious market remains the same.

As always, CFA invites your comments, suggestions and questions.  For additional information, including blog posts specific to bundled pricing and Medicare’s new cardiac bundle, please refer to the CFA Perspective Blog