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CMS proposes cancelling select bundled payments

In August, CMS released proposed changes to select bundled payment programs. The proposed rule would affect the following payment programs:


  • Comprehensive Care for Joint Replacement (CJR) Model: Currently, there is mandatory participation in this model in 67 geographic areas. CMS proposes to reduce the number of geographic areas that must participate to 34, and allow the remaining 33 areas to participate on a voluntary basis. Participation in CJR would also be voluntary for any low volume and rural hospitals.


  • Episode Payment Models (EPMs) and Cardiac Rehabilitation (CR) incentive payment model: These models were scheduled to begin on January 1, 2018. The new proposal would cancel these models.


CMS says it is proposing these changes in order to provide the agency greater flexibility to design and test innovations. According to CMS Administrator Seema Verma, “Changing the scope of these models allows CMS to test and evaluate improvements in care processes that will improve quality, reduce costs, and ease burdens on hospitals.”

Opinions vary on the anticipated impact that these proposed changes will have on hospitals. Moody’s Investment Service believes the results will be credit-positive for most nonprofit hospitals, as reducing mandatory bundles will free up hospital efforts to focus on preparations for risk-bearing reimbursement models, including building clinically integrated networks and making needed changes to operations. However, the proposed changes may also mean a shift in power from hospitals to physicians. Francois de Brantes, VP and Director of the Center for Payment Innovation at Altarum, believes CMS will release additional voluntary bundle programs which will focus on paying physicians for outpatient care. De Brantes says this is because new government models are expected to follow examples set by commercial payers for bundling reimbursement outside of the hospital setting

The proposed changes have left some puzzled, given early signs of success with bundled payments. One study on Medicare’s Acute Care Episode (ACE) Demonstration Program found that bundles for cardiac and orthopedic surgery reduced total payments for post-acute care in the 30 days following hospitalization. The Congressional Budget Office estimated  in 2013 that bundling inpatient and post-acute care would reduce Medicare spending by $47 billion through 2023. In a survey of 70 acute and post-acute care executives, 75% of respondents said that bundled payments had led to improvements in quality of care, and over 60% said bundled payments had both improved quality and lowered costs.

The switch to value-based care is having positive impact on costs and patient care, and bundle programs have made key contributions to these outcomes. If CMS does switch these select bundle programs from mandatory to voluntary, hospitals and health systems will need to make a decision whether to act in favor of health care progress.

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