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Health Plans Keep Focus on Value as HHS Backs Off Bundling, Payment Reform

By Gregory A. Freeman  
   August 30, 2017

Value-based reimbursement is now less of a focus for Medicare and Medicaid, but health plans will continue to carry the torch. The impact of their efforts may be diminished, however.

Health plans are committed to moving toward more of a value-based strategy even though the Centers for Medicare & Medicaid Services is backing away from some key programs intended to encourage that approach, says an industry insider.

The government's retreat from those programs will make it more difficult for health plans to have significant impact on how care is delivered in the country, says Michael Thompson, president and CEO of the National Alliance of Healthcare Purchaser Coalitions (formerly the National Business Coalition on Health), a DC-based nonprofit that represents more than 12,000 purchasers employers and 41 million Americans.

CMS announced recently that it will abandon two bundled-payment models and cut down the number of providers required to participate in a third, saying providers wanted more input in the models' designs. Bundled-payment models are meant to incentivize quality care by paying hospitals essentially a lump sum for a particular type or episode of care, with the hospital taking the financial hit for cost overruns due to poor outcomes, readmissions, and errors.

CMS plans to cancel the Episode Payment Models and the Cardiac Rehabilitation incentive payment model, which were scheduled to begin on Jan. 1, 2018. In addition, the geographic mandatory participation areas for the Comprehensive Care for Joint Replacement, or CJR, model will be cut from 67 to 34 under the proposed rule.

In the remaining mandatory participation areas, hospitals with fewer than 20 joint replacements over three years will be excluded starting in February 2018, but they can voluntarily participate in the model if they so choose. Up to 470 hospitals are expected to continue to operate under the model, down from 800 if no changes were made.

Gregory A. Freeman is a contributing writer for HealthLeaders.

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