CMS Continues Advancement Towards Value-Based Payment Models

On July 25, 2016 the Department of Health and Human Services (HHS) released its Advancing Care Coordination Through Episode Payment Models Notice of Proposed Rule Making, marking its latest effort to reach the Centers for Medicare and Medicaid Services’ (CMS) goal of moving 50 percent of its Medicare payment to a pay-for-value model by 2018.  Under the proposed rule, CMS will identify acute care facilities in 98 randomly selected metropolitan statistical areas (MSAs) that will be mandated to participate in a new Medicare episode payment model.  The model represents an expansion of the current bundled payment model for hip replacements (Comprehensive Care for Joint Replacement – CCJR), and the addition of an episode payment model for acute myocardial infarction and coronary artery bypass graft episodes.  In addition, CMS shares its intention to continue a voluntary bundled payment model after its Bundled Payments for Care Improvement (BPCI) initiative officially ends. 

The rule would require the acute care facility to assume primary responsibility for the clinical and financial management of the patient beginning with the date of hospital admission through 90 days post-discharge.  It would reward those hospitals that work together with physicians and other providers to avoid complications, prevent hospital readmissions, and reduce recovery time.  It encourages affected hospitals to enter into financial arrangements with these providers to share in the financial risk associated with the model.

Within the language of the proposed rule CMS recognizes that "Limitations in the availability of health IT may pose a barrier to effective post-acute care provider collaboration and sharing of financial risk in episode payment models even when hospitals are the financially responsible entities under such models."¹  The mandatory nature of the rule and short implementation timeline (the proposed effective date is July 1, 2017) means that affected hospitals will be in varying stages of readiness to participate in the models.  Larger organizations may have the internal financial and personnel resources to develop the necessary accounting tools to track and manage new financial arrangements with provider partners and/or to begin creating automated communication tools to facilitate the sharing of financial and clinical data among providers involved in a single episode of care, but for many more it will be necessary to develop manual work-arounds, a costly and time-consuming alternative. 

If providers are to succeed in this new environment, it is incumbent upon health IT vendors to rise to the challenge and develop the software tools to help practice and hospitals estimate their true cost of delivering care and estimate their portion of the risk associated with these episode payment models.  They must create interfaces that allow two-way communication among all healthcare providers in an episode of care. 

Episode payment models offer great promise for reducing healthcare costs and improving outcomes, but realizing the full potential of these payment arrangements requires the health IT tools and resources to support the unprecedented levels of collaboration and coordination they demand.

About the author: Pam has more than 25 years' healthcare industry experience. As the Senior Director of Health Business Solutions for HIMSS, she oversees the overall management and strategy development for HIMSS Health Business Solutions initiatives.