Having initially been expected to come into effect in July 2017, the CMS’ Episode Payment Model (EPM)—including the Acute Myocardial Infraction and Coronary Artery Bypass Graft models as well as the Cardiac Rehabilitation Incentive Payment Model—has now been delayed, for the third time, till January 2018.
Under this model, hospitals are made accountable for the full episode of care for Medicare patients, with the bundled payment intended to cover costs beginning from the point of hospitalization till 90 days post-discharge; if a patient suffers from complications within 90 days following their discharge, the facility will be held responsible for any additional costs incurred. This model had been instituted to encourage facilities to focus on quality of care by removing incentives for rapid treatment turn-over and to cut costs by moving away from a fee-for-service model of payment; however, some industry leaders, such as HHS Secretary Tom Price, believe that such mandatory programs overstep on a patient’s agency in making a payment decision and restrict physicians and facilities in their “clinical decision-making”.
While the CMS has noted that this delay is intended to supply the Center with more time to look into potential modifications to the current rules and allow providers to better prepare for the requirements of the new model, several market analysts perceive the change to be part of a larger pattern under which the Trump administration may erode support for the shift towards value-based payment models—a hallmark of the Obama administration’s healthcare reform efforts. Having said that, however, some analysts believe that the inclination to postpone, not abandon, the program is indicative of the CMS’ intention to move forward with at least the fundamental aspects of the bundled payment models.
The general position of Trump administration healthcare officials, combined with these frequent delays, seem to indicate that the CMS may have some changes in the pipeline for the mandatory nature of the bundled payment model; both HHS Secretary Tom Price and CMS Head Seema Varma are vehemently opposed to any forcible implementation of compulsory payment models and appear adamant to stem the process; in fact, the CMS’ final rule on the Episode Payment Model indicated that the organization received many comments requesting the mandatory model be made voluntary, and the CMS has noted that it may take such demands “into consideration in future rulemaking”. Therefore, in January 2018, it is expected that the new bundled payment models will be put into effect with the added provision that participation is to be altogether noncompulsory.
In addition to the ramifications this may carry for the health care industry as a whole, these delays and potential changes will result in some specific outcomes for the cardiovascular space. Medtech market analysts Erik Bracciodieta, who specializes in cardiovascular spaces, and Zaid Siddiqui, who is focused on state-level regulations, had some opinions on the matter.
Q: In your opinion, Erik, what are the most favorable aspects of the bundled payment model?
EB: I don’t know if I would call it favorable, but the model would surely accelerate the trend of device companies offering risk-based purchasing models and focusing on offering a range of devices to treat the spectrum of a disease type. For example, a facility will need to have a tight relationship with the vendor for implantable devices if a patient experiences a complication soon after the procedure. The facility’s margin on the procedure is lost with these complications, so vendors may gain a competitive advantage if they can provide quality support-services or refund the facility for a portion of the device cost.
Q: So, if the CMS choose to ultimately make the EPM voluntary, how do you think this will impact the effectiveness of the model?
EB: I think facilities will still want to participate in the EPM if it is voluntary because it will likely become mandatory at some point (i.e. when the Democrats have more control in Washington). When it does become mandatory, facilities that have already adapted to the new system will have a competitive advantage—they will not struggle to catch up and will start earning higher payments over facilities that are less prepared.
ZS: I would disagree with Erik’s evaluation on this; I believe large-resource hospitals and facilities that are already well-prepared would be more likely to participate, whereas poorly managed providers would avoid having to implement the program for as long as it is not compulsory. Facilities that do not get on board now will certainly struggle to cope with mandatory EPM initiatives in the future, but I think it is unlikely that a future administration would punish cash-strapped facilities that did not shift to EPM during an environment of great uncertainty.
Q: Zaid, some analysts have indicated that making the program voluntary would diminish the robustness of data that shows its benefits, would you agree?
ZS: I believe a voluntary EPM would skew the data because, as mentioned, only capable hospitals would be willing to participate. This skewed data may be politically popular because it would make the program appear more successful than it is due to the lack of less affluent facilities and providers. Nonetheless, the data would not be as robust in terms of proving the effectiveness of such a model for different types of providers across the country. In brief, I think a voluntary provision would diminish care quality and heighten costs, but it would also provide less-prepared facilities with some breathing room to gradually move into a bundled payment model, without which many hospitals would not be able to keep their doors open.
Q: Erik, what outcomes (positive or negative) were expected in the vascular space prior to the announcement of the delay?
EB: Physician opinion of this program seems to trend negatively; they fear that device use and device choice will be eliminated as facilities focus more on cost control. For instance, electrophysiologists use intracardiac echocardiography (ICE), as well as fluoroscopy, during cardiac catheter ablation procedures to help visualize where catheters are in the heart. Under a bundled payment model, there would be pressure to avoid using this imaging technology since it is not essential to the procedure. In an intense twitter exchange, opinions on this were split among physicians; while some noted that ICE minimizes complications and boosts procedure success rates, others pointed out that point-of-care ultrasound-guided vascular access—which is much less costly—also “reduces vascular complications during ablations”, predicting that, similar to EU markets, the US will see ICE use plunge under a bundled payment model.
Of course, there are physicians that do see some value in bundled payments. For example, one electrophysiologist believes that bundled payments will cool down procedure volume growth for interventions that have unclear benefits, which would save patients from the risks of these procedures and reduce spending substantially.
Q: Now that the most recent delay has been announced, what are the expected ramifications on the vascular space?
EB: This is still unclear, but I think health care managers and physicians see bundled payments as a looming inevitability that will simply have to be embraced, analogous to the move to electronic medical records and the switch to ICD-10.