Experts Say CMS Likely To Expand Alternative Payment Models

CMS' efforts to launch alternative payment models for Medicare services likely will expand past joint replacement procedures, Modern Healthcare reports (Evans, Modern Healthcare, 7/18).

Background

CMS earlier this month proposed significant changes to Medicare reimbursements for knee and hip replacements. Providers currently are reimbursed for hip and knee replacements under a fee-for-service system. The proposed changes would base such reimbursements on quality. In general, providers would receive one flat fee for the procedures instead of receiving multiple payments for each individual service they provide related to the replacements. HHS Secretary Sylvia Mathews Burwell said the proposed changes would "treat these surgeries as one complete service rather than a collection of individual services." The proposal also would require providers to repay part of their reimbursements for the procedures if patients contract infections or other complications that could have been avoided (California Healthline, 7/10).

CMS Likely To Launch Other Alternative Payment Models

According to Modern Healthcare, the Obama administration in January announced plans to transition more than $100 billion in annual Medicare costs into value-based contracts. Under the Affordable Care Act, the HHS secretary has the power to implement alternative payment and delivery models without congressional approval if the models:

• Curb spending growth while not reducing quality of care; or
• Improve care without increasing spending.

Some experts are calling on HHS to roll out more of such programs throughout Medicare. Topher Spiro, vice president of health policy at the Center for American Progress, said CMS' new system for hip and knee replacement reimbursements "will produce savings, so the hope is that it can be expanded on a mandatory basis nationwide within two years."

Thomas Graf, CMO at Geisinger Health System, said the program will likely "be the first of many" alternative payment reforms proposed by CMS.

Challenges, Successes for Bundled Payments

Expanding bundled payment programs might be difficult for the department, according to Modern Healthcare. Some attempts by other organizations to advance bundled payments have had mixed success. For example, one program implemented by Massachusetts' Medicaid program, called the Children's High-Risk Asthma Bundled Payment demonstration, never took hold, despite years of work on the initiative.

Meanwhile, some private-sector expansions of bundled payments have been more successful. For example, a bundled payments program by Humana for radiation therapy has helped to keep complication rates and toxicity among its members low since the program began in 2012, according to Constantine Mantz, CMO of 21st Century Oncology.

According to Peter Huckfeldt, assistant professor of health policy and management at the University of Minnesota, CMS is off to a good start. He said, "Joint replacement is a particularly good candidate for bundled payments," since significant variation in costs once patients are discharged from the hospital provide a clear savings target.

Michael Jaeger, medical director for Anthem Blue Cross and Blue Shield of Wisconsin, noted that a similar program the health plan implemented in 2014 already has generated substantial cost savings. According to Jaeger, the insurer plans to expand the program to other orthopedic services (Modern Healthcare, 7/18).