Skip to main content

CMS Cancels Bundled Payment Programs, Continuing Shift Toward Voluntary Models

News  |  By Jack O'Brien  
   December 01, 2017

Agency intends to increase flexibility and test innovative in-patient and post-acute care measures.

In another blow to mandatory Obama-era programs, the Trump administration has cancelled two bundled payment models that were set to take effect next month.

The Centers for Medicare and Medicaid Services (CMS) announced an interim final rule Thursday that cancels the mandatory hip fracture and cardiac bundled payment models, which the agency says were not operating “in the best interest” of CMS and its providers.

“We anticipate announcing new voluntary payment bundles soon,” said CMS Administrator Seema Verma in a statement.

The agency said it intends to increase flexibility and test innovative in-patient and post-acute care measures, and it noted that hospitals are still involved in other episode payment models (EPMs).

The interim final rule also changes the Comprehensive Care for Joint Replacement (CJR) model, affecting about half of the geographic-area hospitals currently participating in the mandatory CJR model.

The American Physical Therapy Association describes the CJR model as an exclusive operation administered by CMS for Medicare patients in designated geographic areas. The program provides comprehensive coverage for total hip and knee replacement procedures, including the rehabilitation process.

In addition to the proposed voluntary participation policy, which was first introduced in August, this rule will also apply to the involvement of low-volume providers in rural locations across the country. It is expected to assist rural hospitals by affording them the chance to evaluate what works best for their financial situation.

Bundled payments have gained significant attention in recent years as a way for hospitals and healthcare providers to improve quality and care while reducing costs. While the Trump administration’s decision was not unexpected, the move from mandatory participation to voluntary status has been challenged by recent evaluations of the CJR model that found significant spending savings.

Researchers with the University of Pennsylvania conducted a study entitled “Cost of Joint Replacement Using Bundled Payment Models” which examined more than 3,900 joint replacement patients at Baptist Health System in Texas.

The average Medicare payments for joint replacement decreased nearly 21%, patients saw a 15% reduction in the length of their hospital stay, and hospitals earned significant savings through internal cost reductions, according to the data collected.

“The Trump administration and new CMS leadership will need to decide whether to continue to ramp up mandatory bundles, and have expressed misgivings about this approach,” the researchers noted in their January 2017 report.

David B. Kendall, senior fellow for health and fiscal policy at the centrist think tank Third Way, criticized the government’s move.

“Trump administration is backing away from successful cost-saving bundled payment program in Medicare,” Kendall tweeted Thursday.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

Get the latest on healthcare leadership in your inbox.