The Centers for Medicare and Medicaid Services (CMS) recently published a proposed rule (Proposed Rule) to scale back its mandatory bundled payment programs. Under the Proposed Rule, CMS would cancel the episode payment models (EPMs) and cardiac rehabilitation incentive payment model (CR), and it would also reduce the mandatory participation in the comprehensive care for joint replacement model (CJR). CMS stated that it believed the proposed changes are necessary because the continued mandatory participation in bundled payment models may impede CMS’s ability to engage providers in future, voluntary initiatives. CMS also stated that it anticipates testing future initiatives through applications and agreements with providers as opposed to additional rulemaking efforts.

Cancellation of EPMs & CR

Under the EPM and CR final rule, which was finalized in January 2017 and which was to begin in 2018, CMS introduced three bundled payment models to focus on complex cases of acute myocardial infarction, coronary artery bypass graft, surgical hip/femur fracture treatment and cardiac rehabilitation. In the Proposed Rule, CMS recognized many commenters’ concerns that the EMP and CR programs must be more fully developed, and as a result, CMS is proposing to rescind the EPMs and CR regulations. If the Proposed Rule is finalized, and as an alternative to the EMPs and CR programs, CMS’s Innovation Center would develop new voluntary bundled payment models in 2018 in order to meet MACRA’s requirement for an “Advanced APM.”

Revisions to the CJR Model

The CJR model, which is currently in its second performance year, is a bundled payment program designed to pay providers a single payment for an episode of care for a hip or knee replacement. The CJR regulations require that hospitals in 67 randomly selected metropolitan statistical areas (MSAs). In general, participation in the CJR model runs until January 1, 2021.

Under the Proposed Rule, the number of MSAs in which participation is mandatory would be reduced to 34. CMS is proposing to select the MSAs with the highest per episode cost of lower extremity joint replacement (LEJR) because such MSAs are most likely to show improvement by creating efficiencies in care. Therefore, unless an exception applied (i.e., the hospital is a low-volume or rural hospital or is participating in certain models of CMS’s Bundled Payments for Care Improvement program) all hospitals in the 34 MSAs listed in the Proposed Rule would continue to be required to participate in the CJR program. These “mandatory participation” MSAs include Los Angeles-Long Beach-Anaheim, CA; Miami-Fort Lauderdale-West Palm Beach, FL; New Haven-Milford, CT; New York-Newark-Jersey City, NY-NJ-PA; and Pittsburgh, PA.

Low-volume hospitals that are exempt from mandatory participation are those hospitals that have had fewer than 20 LEJR episodes across the three historical years used to calculate the performance year 1 CJR target prices. Rural hospitals that are exempt from mandatory participation are defined by location. Such exemptions would be effective February 1, 2018.

The Proposed Rule would give hospitals in the remaining 33 MSAs currently participating in the CJR, as well as low-volume and rural hospitals, a one-time option to elect to continue participating in the CJR for the remainder of the program (i.e., until January 1, 2021). If the Proposed Rule is finalized, any of these hospitals wishing to continue participation in the CJR must make such an election to participate between January 1, 2018 and January 31, 2018. Hospitals that choose not to continue participating in the CJR would be removed from the program effective February 1, 2018, and would not be subject to any reconciliation payments or repayments for performance year 3.

Comments on the proposed rule are due by October 15, 2017.