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CMS Ends Episode-based Payment Models – Now What? 

Published on 9/11/2017

Since the Centers for Medicare and Medicaid Services (CMS) announced its proposed rule to scale back the Comprehensive Care for Joint Replacement program and cancel the episode-based payment models on Aug. 15, many have wondered what the future holds for other alternative payment models and the industry's continued transition to value-based care.

While CMS proposed rule would cancel the mandatory bundled payments for acute myocardial infarction, coronary artery bypass graft and surgical hip femur fracture treatment as well as the cardiac rehabilitation incentive program, it also mentions their intent to introduce more voluntary models via the Bundled Payments for Care Improvement (BPCI) Initiative.

Currently, there are 1,244 acute care hospitals, skilled nursing facilities, physician group practices, home health agencies and inpatient rehabilitation facilities participating in Phase 2 of BPCI. These organizations have entered payment arrangements that include financial performance accountability for episodes of care, which are presumed to lead to higher quality and more coordinated care at a lower cost, many times doing so in innovative ways outside of regulatory requirements.

Value-based care programs are not dead

To those ringing the death knell for value-based care programs after this proposed rule, including bundled payments, I respectfully disagree. In fact, they are very much alive in Medicare, Medicaid and among commercial payers.

A 2016 survey by the National Association of Medicaid Directors identified three states - Arkansas, Ohio and Tennessee - that were already using bundled episode-of-care payments for a wide range of care episodes, and four more states are developing similar programs.

Furthermore, bundled payments are one of several types of value-based care programs. Commercial payers, Medicare Advantage and state Medicaid programs continue to offer an array of value-based care models focused on improving quality and reducing costs, including Accountable Care Organizations, capitation and patient-centered medical homes.

Tactics for success with alternative payment models

Based on current trajectory, it's a safe bet that these programs are worth the investment. In 2019, CMS will allow eligible clinicians to participate in alternative payment models designed by other payers and potentially be exempt from the Merit-based Incentive Payment System, or MIPS . As health care organizations and providers plan their strategy for participating in the MACRA Quality Payment Program and evaluate opportunities to enter value-based care programs with other payers, there are three things to keep in mind:

#1: View the EHR Incentive (meaningful use) as a steppingstone.

Transitioning to value-based care is a marathon, not a sprint. This diagram from the Healthcare Payment Learning and Action Network illustrates how fee-for-service programs with a link to quality and value (e.g., the EHR Incentive or "meaningful use" program) are the stepping stones to more advanced models where payment is truly redesigned and downside financial risk is required.

#2: Create a governance committee.

To be successful in alternative payment models, organizations should prioritize and align resources accordingly. Creating a governance committee that addresses performance from a quality and cost standpoint can help with this. This committee should consist of representatives across departments, such as quality, IT, revenue cycle management, as well as administrative and clinical leadership. Commitment to value-based care efforts across the organization is crucial to long-term success.

#3: Make HIT a priority.

Health IT plays a key role in value-based care. While some CMS alternative payment models have specific requirements for the use of Certified Electronic Health Record Technology, health IT can do much more than what is outlined in these programs. Health care organizations should look to partner with health IT providers that can assist with care coordination, analytics and population health management, all of which are integral components of value-based care.

Value-based care is here to stay, and soon it will be the rule rather than the exception. Payers, including CMS, want more predictability in costs of care and value-based care programs, particularly bundled payments and capitated models, offer more reliability than fee-for-service. Health care organizations should not view value-based care programs as attempts to ration care or cut resources, but opportunities to enhance care coordination and planning, improve patients' health and save money in the process.

How will you stay ahead of the curve with value-based care? Count on Cerner to lead you through the future of alternative payment models. Learn more here.