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February 14, 2018

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CMS to Test Payment Model for AMI, CABG, Hip/Femur Fractures

March 15, 2017:

In February 2017, the Centers for Medicare and Medicaid Services (CMS) released Change Request 9916 to prepare Medicare’s claims processing systems to handle episode payment models (EPMs). These models are part of a payment system CMS is testing for acute myocardial infarction, coronary artery bypass graft, and surgical hip and femur fracture treatment for five years beginning in 2017. The end goal is to promote the delivery of efficient, high-quality care for these conditions by rewarding hospitals that work with other providers to prevent readmissions and speed recovery without complications.

The final rule establishing the models was published in the Federal Register January 3, 2017. According to the rule, the first performance period will begin July 1, 2017. From this date until December 31, 2021, Medicare administrative contractors (MACs) will be expected to ascertain whether beneficiaries are eligible for EPMs and for related services such as home visits after discharge. All acute care hospitals in selected metropolitan statistical areas (MSA) that are paid under the inpatient prospective payment system (IPPS) will participate in the EPMs with just a few exceptions. For example, those facilities participating in BPCI model 2 or 4 for the same clinical episodes will be exempt.

EPMs have similar features to the comprehensive care for joint replacement (CJR) model that is testing bundling payment for lower-extremity joint replacement. Only acute care hospitals in certain selected geographic areas will qualify to take part in the models by assuming accountability for quality of care and receiving bundled payments for AMI, CABG, and/or SHFFT episodes. The payments, which will be calculated retrospectively, will include all related care within 90 days of hospital discharge. It is important to note that, under these models, the hospital bears the financial responsibility for the entire episode of care and will be rewarded or penalized accordingly.

AMI, CABG, and SHFFT hospitalizations are currently paid based on Medicare severity diagnosis-related groups (MS-DRGs) under the inpatient prospective payment system (IPPS). Under the new payment model, claims for patients discharged from an acute care hospital that are assigned to an MS-DRG, paid under IPPS, and included in one of the EPMs noted above will be paid retrospectively. Payment will encompass the episode of care beginning on the date of admission and ending 90 days after discharge from the acute care hospital, including the inpatient hospitalization; post-acute care services such as skilled nursing facility, home health, long-term care hospital, or inpatient rehabilitation facility; physician services; and all related care covered under Parts A and B, with the exception of certain excluded services that are clinically unrelated to the episode.

During each performance year, hospitals and other providers and suppliers will be paid for the services that fall into the episodes as they currently are paid under the usual payment system. At the end of the year, however, the actual spending for episodes that qualify for the EPMs will be aggregated to determine what was paid for each episode. The total figure for the episode will then be compared against a target price calculated based on a combination of three years of historical data, regional episode data, and episode data specific to each hospital. Whether each hospital receives an additional reconciliation payment or must give Medicare a recoupment payment will depend on this information, together with the quality-adjusted target prices based on composite quality score calculated for each hospital year under Medicare’s Quality Payment Program.

As the entities financially responsible for the entire episode of care, hospitals can choose to share gains and losses with collaborators in care. Doing so can motivate everyone caring for the patient to improve quality while keeping costs down. The models also allow hospitals to provide non-monetary incentives to beneficiaries to encourage them to comply with care and reach clinical goals.

Key to the success of this payment model is waiving the current requirement that Medicare beneficiaries with AMIs that fall into MS-DRGs 231-236, 246-251, and 280-282 be inpatients for three days before being eligible to receive skilled nursing facility (SNF) services. Claims for EPM episodes that start on or after the third year of the model, beginning January 1, 2019, will be flagged using the demonstration code 79.3. The thinking is that, with this waiver, participating hospitals can work together with providers to ensure more comprehensive post-acute care in different settings and better coordinate that care.

For more information on the payment model and its requirements, see https://www.federalregister.gov/documents/2017/01/03/2016-30746/medicare-program-advancing-care-coordination-through-episode-payment-models-epms-cardiac


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