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.

In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.