United States: Year Of The Bundle: CMS Proposes New Mandatory Cardiac Bundles And Expansion Of CCJR

CMS is building momentum with its bundled payment programs and upping the stakes for hospitals.

The Centers for Medicare & Medicaid Services (CMS) recently published a proposed rulethat furthers the U.S. Department of Health and Human Services' goal to promote cooperative, value-based care and tie at least 50 percent of Medicare payments to quality or value through alternative payment models by the end of 2018. The proposed rule builds on prior experiments with episode-based payment models (EPM) and confirms predictions that bundled payments will become a broader reality and a mandatory reimbursement framework for hospitals – whether they are ready or not.

The proposed rule would impact hospitals in the mandatory Comprehensive Care for Joint Replacement (CCJR) program that began April 1, 2016, by adding a bundle for certain surgical hip/femur fracture treatments. It would also mandate that 98 randomly selected metropolitan statistical areas (MSAs) participate in new bundled payment models for cardiac care, including acute myocardial infarction (AMI) and coronary artery bypass graft (CABG). CMS has identified 294 MSAs eligible to be drafted into the cardiac bundles, which means hospitals in one-third of the eligible MSAs would be subject to the rule's retrospective payment adjustments for AMI and CABG for performance years beginning July 1, 2017 through December 31, 2021.

Without doubt, some hospitals will have a negative view of the EPMs and hope to escape participation. But there are a couple of bright spots in the proposed rule:

  • It addresses the interplay between the EPMs and CMS's proposed criteria for an Advanced Alternative Payment Model (APM) under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Under some circumstances, clinicians who are EPM "collaborators" (including hospital employees) may be able to improve or avoid Part B reimbursement under the new Merit-Based Incentive Payment System (MIPS).
  • The proposed rule also introduces a new incentive payment model for cardiac rehabilitation that will apply to 45 of the MSAs in the new cardiac EPMs and 45 MSAs that were not selected.

Bundled Payments Gain Momentum

CMS began experimenting with bundled payments years ago. Notable programs include the five-year CABG demonstration program that began in 1991, the three-year Acute Care Episode demonstration for cardiac and orthopedic surgery that began in 2009 and, more recently, the four models of the Bundled Payment for Care Improvement Initiative (BPCI)developed by the Center for Medicare & Medicaid Innovation and funded by the Affordable Care Act. Each program was voluntary and included only providers that were willing applicants. Building on these bundled payment initiatives, CMS is now upping the stakes.

Just last month, the voluntary Oncology Care Model commenced for physician practices administrating chemotherapy and participating payers, including commercial payers. And now CMS is proposing to introduce cardiac EPMs and expand CCJR to a more complex treatment episode, presumably before participants have had an opportunity to assess and learn from their experiences since they are just four months into the CCJR program.

The focus on bundles is not surprising. EPMs do not force providers to accept risk for an entire population or require large numbers of primary care clinicians, like other alternative payment models such as accountable care organizations. And the bundles allow CMS to target conditions that are common and expensive to treat, with great variation in cost. CMS projects $170 million in cost savings over five years in connection with the proposed EPMs.

Key Aspects of the Proposed Episode Payment Models

  • The EPMs begin with an inpatient stay and generally include all payments during the 90 days post-discharge.
  • Participating hospitals would be accountable for the cost and quality of care for the entire defined episode. Under this proposal, CMS sets a target price annually for each EPM that is adjusted by a discount factor based on the treating hospital's quality performance. During the performance year, providers and suppliers bill and are paid as usual under applicable payment systems. At the end of the performance year, CMS compares the hospital's average EPM costs to the target. If the target price less the discount exceeds the hospital's average EPM cost, the hospital receives a "reconciliation" payment from CMS. If the target price less the discount is less than the hospital's average EPM cost, the hospital would make a "repayment" to CMS.
  • Like CCJR, the proposed rule includes upside and downside risk for participants, phased in over time with symmetrical stop-loss and stop-gain. The downside risk would not apply in the first performance year. The proposed rule provides additional protections for certain participants that may have a lower risk tolerance and less infrastructure and support to achieve efficiencies for high-payment EPMs.
  • Only EPM hospital participants are directly subject to these payment requirements. The proposed rule contemplates that participants would align with other providers and suppliers as EPM "collaborators" and could engage in gainsharing with the collaborators.
  • As authorized by Section 1115A of the Social Security Act, waivers are proposed for certain Medicare program requirements including telehealth; post-discharge nursing visits; model-specific decisions related to waiving the three-day stay requirement for skilled nursing facility payment; and performance of cardiac rehabilitation and intensive cardiac rehabilitation by non-physicians, including nurse practitioners, clinical nurse specialists or physician assistants.
  • While CMS does not provide for fraud and abuse waivers in the proposed rule, the agency recognizes that certain arrangements between EPM and third-party participants could implicate the fraud and abuse laws. As a result, CMS is soliciting comments on whether such waivers may be necessary.

Interplay with MACRA

As part of the May 2016 proposed rules implementing MACRA, CMS created two pathways for linking quality to payment: the MIPS and APMs. Under the proposed EPMs, eligible participants would be able to improve their MIPS score or qualify for advanced APM incentive payments. Notably, under the proposed MACRA rule, participants in the CCJR and BPCI programs are not eligible for the APM pathway. CMS received comments urging reconsideration and it appears the agency is trying to create a workable mechanism to treat certain EPMs as advanced APMs.

Cardiac Rehabilitation Incentive

The proposed rule cites to evidence that cardiac rehabilitation programs improve health outcomes but are underutilized. CMS also expressed concern that the proposed cardiac bundles may negatively affect the use of cardiac rehabilitation services. For these reasons, CMS is proposing financial incentives for facilities to encourage greater utilization of cardiac rehabilitation services. Hospitals will receive $25 per cardiac rehabilitation service for the first 11 services paid by Medicare during a heart attack or bypass surgery care period. After 11 services, a participating hospital will receive $175 per service. For a proper case-control evaluation, CMS will select participants from 45 geographic areas for AMI and CABG EPM participation and 45 MSAs that were not included in the EPMs.

Preparing for Implementation

While CMS is rolling out its payment reforms with surprising speed, hospitals will need time to evaluate and revise their operations to succeed under the new payment frameworks. As recognized by the American Hospital Association in a recent bulletin to members, hospitals should consider developing strategies to:

  • Identify patients eligible for bundles early and assess their risk for complications;
  • Establish data analytic and information sharing capabilities;
  • Track patients across the continuum of care;
  • Redesign care;
  • Engage physicians; and
  • Coordinate care transitions and manage post-acute services.

Given the complexity of these actions and scope of relationships with third parties that must be evaluated, hospitals should begin preparing for the possibility of the proposed payment reforms.

Now is also the time to voice concerns to CMS. Comments to the proposed rule are due by October 3, 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions