Medicare episode payment models still evolving

Issue: October 2016

ByL. Samuel Wann, MD, MACC, FESC

ByErik G. Stilp, MD, FACC

The latest iteration of CMS’ congressionally mandated plan to shift Medicare from a fee-for-service payment system to models intended to reward the value rather than the volume of care delivered was issued July 25. The newly proposed episode payment strategies are intended to incentivize integrated care delivery organizations, encouraging them to take responsibility for controlling all-inclusive costs as they also take responsibility for the quality of care surrounding an entire care episode.

The initial models to be tested will address services delivered to patients undergoing CABG, those with acute MI or those being treated for a broken hip, all high-volume, high-cost clinical scenarios covered by Medicare.

The episode payment model differs from traditional bundled fee models in that it would set target prices not for procedures alone, but for the total costs of treating a particular illness for a set period of time, an episode of care including all ancillary services, not just core procedures. Patients presenting for acute MI, CABG or hip fracture repair, for instance, would receive lump-sum payments to include all medical care, beginning with hospitalization and extending 90 days after discharge. The bundled payment will also cover rehabilitation and continuing care for conditions of all causes during the defined episode of care.

CMS is now seeking comments on the structure of this episode payment model, which it optimistically expects to begin testing in 2017, with hospitals assuming full financial risk as soon as 2020.

Other options being tested

The episode payment model is but one option being tested as a result of the “doc-fix” legislation, or the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which retired the dysfunctional SGR reimbursement formula.

MACRA outlines new payment structures to replace the traditional Medicare fee-for-service model, comprising two broad options: the merit-based incentive payment system (MIPS), which requires extensive reporting on process measures of care to receive payment incentives while retaining a basic fee-for-service payment structure; and alternate payment models (APMs), which include the episode payment model now being presented by CMS for public comment. The accountable care organization (ACO) model also falls under APMs; several variations of ACOs are currently being tested around the country. ACOs, in general, focus on delivering greater value by coordinating all medical care for entire populations of patients over a prolonged period of time, not short episodes, emphasizing prevention, chronic care, rehabilitation and outpatient management, aiming to minimize need for expensive procedures and hospitalized care.

Key elements of the proposed episode payment model under discussion that are of particular importance to cardiologists include:

the definition of the beginning and end of an episode;
the ICD-10 diagnostic codes to be included in an episode;
methods for risk stratification of patients to be included in the bundle to insure inclusion of a mix of high- and low-risk individuals; and
the compensation model — how to allocate funds for ancillary services as well as for major procedures.

L. Samuel Wann, MD, MACC, FESC — L. Samuel Wann

How CMS will determine the adequacy and quality of care delivered under an episode payment model has not yet been defined. Some elements of the process measures required for MIPS payment will likely be incorporated into the bundled episode payment to track the appropriateness of care delivered.

Translating authoritative guidelines and appropriate use criteria generated by our professional organizations into discrete, detailed quality measures to be applied at the level of individual physicians and patients is a labyrinthine undertaking, not at all straightforward, confounded by a lack of interoperability between various electronic health records (EHRs) used to comply with the complex rules for these new programs.

Here to stay and with enormous potential benefit, EHRs are already a point of considerable dissatisfaction among cardiologists and other professionals; MACRA will probably make this unhappiness worse, not overlooking the fact that CMS’ primary goal is to reduce payments to physicians by $39.5 billion in the next 10 years. CMS’ purpose in shifting to risk-based reimbursement with financial incentives based on performance or lump sum payments is to reduce costs without sacrificing quality of care, not to pay more in aggregate for better care. Success may be redefined not as an increase in revenue but as less decline in revenue when a system delivers high-value care efficiently.

Financial incentives changing

As various MACRA payment options mature and implementation becomes widespread, conflict will arise related to distribution of financial incentives between lower-income primary care physicians and higher-income specialized physicians who have historically been more generously compensated for providing concentrated inpatient care and performing complex procedures, expenses to be avoided, if appropriate and consistent with quality care, in the new paradigm. Activities that do not involve direct patient contact, such as interpretation of diagnostic images, may be particularly vulnerable to reductions in compensation, particularly if the results of these activities cannot be directly tied to improvement in patient outcomes. However, currently unreimbursed patient care time, such as laboratory value interpretation, multidisciplinary care team meetings and follow-up calls to patients and caregivers, may gain compensated value.

Personal care physicians functioning at the input level of the system can affect savings by reducing unnecessary expenses and directing referrals to high-value specialists, whereas specialists may be better positioned to influence appropriate use of high-cost diagnostic and therapeutic procedures and inpatient care and control costs of necessary procedures. Specialist teams have also developed effective models for outpatient, “primary” care of patients with chronic diseases such as advanced HF and vascular disease, which may not be as well managed in the traditional primary care setting.

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New integrated care models that transcend traditional primary and specialist care delivery, often making extensive use of physician extenders and telemedicine, are clearly needed to accomplish the goals of increasing health care value and improving quality while reducing costs.

Imagine the paradigm shift for the treatment of an episode of critical limb ischemia with ulceration or gangrene. Major adverse CV and adverse limb events can be reduced in this population by adhering to guideline-recommended therapies, but current fee-for-service models make episode-triggered multidisciplinary coordination of such care difficult to achieve across multiple specialties and primary care — too little, too late, with payment favoring procedures necessitated by failed prevention.

A bundled 90-day episode of care payment for the care of a patient presenting with critical limb ischemia might include multiple expensive revascularization attempts; podiatric procedures; hyperbaric oxygen therapy; control of diabetes, BP and hyperlipidemia; exercise therapy; and a system of coordinated care after discharge, all of which need to be included in the “bundle” to decrease the remarkable concurrent risk for MI, stroke, rapid readmission and CV death by focusing on tobacco cessation, ACE inhibitor compliance, appropriate home foot care or the anticipated reduction in cost and improvement in quality, perhaps measured as a reduced amputation rate, will not be realized.

A similar episode of critical limb ischemia occurring in a MIPS environment would likely mandate logging each detail of care — surgical, medical, preventive, rehabilitative, care of comorbid conditions — in the EHR, as well as detailed indications for every attempted revascularization procedure, documenting use of an appropriate use criteria decision tool to guide decisions for revascularization vs. primary amputation. Episode payment models with bundled payment may have advantages in certain clinical scenarios, particularly in care of chronic multi-system diseases, whereas fee-for-service payment may have advantages in insuring availability of focused, high-technology procedures.

No easy formula

CMS’ plans to roll out various MIPS and APM models is aggressive and will undoubtedly be subject to modification as public comments and early prototype results are analyzed, but profound effects on the structure of medical practice are inevitable, likely spreading from Medicare to the private sector.

Although CMS is making some efforts to enable small practices and self-employed physicians to participate in these complex payment plans, the overall effect is likely to result in further consolidation of physician practices and hospital organizations. Although considerable geographic variation in employment patterns exists, the integration of care necessary to successfully accept financial risk for delivering specified bundles of care favors narrow networks of physicians closely affiliated with or employed by hospitals. There is no easy formula for delivering high-value CV medicine to our patients, but whatever the structure of the delivery system or the payment model, medicine is clearly a team sport; the rules for this “sport” are evolving.

References:
CMS. MACRA. Delivery System Reform, Medicare Payment Reform. Available at: www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html. Accessed on Sept. 1, 2016.
CMS. CMS Episode Groups Summary. Available at: www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/Episode-groups-summary.pdf. Accessed on Sept. 1, 2016.
Miller HD. Center for Healthcare Quality & Payment Reform comments on resource use measurement. Feb. 15, 2016. Available at: www.chqpr.org/downloads/CHQPRComments_on_Resource_Use_Measurement.pdf.

For more information:
Erik G. Stilp, MD, FACC, and L. Samuel Wann, MD, MACC, FESC, are cardiovascular specialists at Ascension Healthcare Milwaukee. Wann is also Section Editor of the Practice Management and Quality Care section of the Cardiology Today Editorial Board. The authors can be reached at 2350 N. Lake Drive, Suite 400, Milwaukee, WI 53211; email: samuelwann@gmail.com.

Disclosure: The authors report no relevant financial disclosures.