New Payment Models Are MIPS Eligible Advanced Alternative Payment Models

On December 20, 2016, the Centers for Medicare and Medicaid Services (CMS) released the Advancing Care Coordination through Episode Payment Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and Changes to the Comprehensive Care for Joint Replacement Model (CJR) final rule. These new models add to the growing list of Center for Medicare and Medicaid Innovation (CMMI) initiatives finalized in the final days of the Obama administration including:

  • The Medicare-Medicaid ACO Model which builds on the current Medicare Shared Savings Program;
  • The Medicare ACO Track 1+ Model;
  • Two Beneficiary Engagement and Incentives (BEI) Models: the Shared Decision Making Model (SDM Model) and the Direct Decision Support Model (DDS Model); and
  • Opening applications for new participants in the Comprehensive Primary Care Plus (CPC+) model and the Next Generation Accountable Care Organization (ACO) model.

With these new opportunities, CMS expects that by the 2018 performance period, 25 percent of clinicians in the Quality Payment Program would be a part of these advanced models and may be eligible to earn incentive payments. However, it is unclear how far these plans will proceed under the incoming administration. President-elect Donald Trump’s nominee to lead the Department of Health and Human Services (HHS), Representative Tom Price, a Republican Congressman and orthopedic surgeon from Georgia, has been a vocal critic of CMMI, and specifically some of their payment model pilots. Currently, Representative Price has 24 cosponsors for his bill (HR 4848) which seeks to delay and suspend the implementation of Medicare’s Comprehensive Care for Joint Replacement Model. Many of those who oppose CMMI’s models take issue with the scope of the models, saying that they are overly broad and overstep the statutory authority of CMMI to test ‘pilots.’ They also express dissatisfaction with the required participation of facilities in the selected geographic areas, interpreting CMMI’s purpose instead as testing optional payment pilots.

Much of the rule was adopted as proposed, without many changes. The rule:

  • establishes bundled payment model for cardiac care,
  • extends the existing bundled payment model for hip replacements to include other hip surgeries, and
  • adopts several modifications to the Comprehensive Care for Joint Replacement model.

The three EPMs include models for episodes of care surrounding an acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment excluding lower extremity joint replacement (SHFFT). Episodes in the new models begin with admissions for hospitalizations in inpatient hospitals, and extend 90 days post-hospital discharge. Once the models are fully in effect, participating hospitals will be paid a fixed target price for each care episode, with hospitals that deliver higher-quality care receiving a higher target price. The goal for the payment models are to improve the quality of care provided to beneficiaries in an applicable episode while reducing episode spending through financial accountability.

Key changes between the finalized models and the proposed payment models include:

  • In the proposed rule, CMS outlined the selection approach but not the selected geographic areas for the AMI and CABG EPM. Today, CMS identified the 98 metropolitan statistical areas (MSAs) selected to participate in these EPMs. Approximately 1,120 hospitals will participate in the AMI and CABG models and 860 in the SHFFT model. The complete list of selected MSAs can be found on page 224-226 of the final rule.
    • Participant hospitals in these selected geographic areas are all acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) that are not concurrently participating in Models 2, 3, or 4 of the Innovation Center’s Bundled Payment for Care Improvement (BPCI) initiative for AMI, CABG, or SHFFT episodes.
    • Geographic areas where all-payer models under the Innovation Center are operating — Maryland and Vermont — are excluded. Hospitals paid under a reasonable cost methodology, such as critical access hospitals, also are excluded.
    • Notably, 17 of the selected MSAs have also been selected to participate in the CJR demonstration.
  • The final rule changes how AMI episodes involving an inpatient-to-inpatient transfer are treated under the EPM, relative to the proposed rule.
  • The final rule aligns the design of the finalized EPMs with the now-finalized Advanced Alternative Payment Model (APM) criteria from the Quality Payment Program. EPM participants who choose to use and attest to use of certified electronic health record technology may participate in an EPM that meets the criteria of an Advanced APM.
  • The proposed rule excluded beneficiaries assigned to ACOs in either the Next Generation ACO or Comprehensive End Stage Renal Disease Care models. In response to public comment, the final rule also excludes ACO beneficiaries assigned to Shared Savings Program Track 3 ACOs from the EPMs.
  • The final rule makes changes to the timing of EPM participants’ acceptance of downside risk.
  • The final rule provides additional support for low-volume hospitals.
  • The final rule allows for the voluntary submission of composite measure data from the Society of Thoracic Surgeons for the CABG measure set.
  • The final rule waives the SNF 3-day inpatient requirement for discharges under EPMs.
  • The final rule establishes which cardiac rehabilitation services (identified by HCPCS code), count towards cardiac rehabilitation incentive payments.
  • The final rule establishes an Alternative Payment Models Beneficiary Ombudsman to monitor the models and assist beneficiaries with inquiries.

CMS finalized these three episodes because they represent high-expenditure, high-volume episodes-of-care experienced by Medicare beneficiaries. According to CMS historical data from CY 2012-2014, the average annual number of historical episodes that began with Inpatient Prospective Payment System (IPPS) hospitalizations and extended 90 days post-hospital discharge along with the total annual Medicare spending are:

Payment Model Average Annual Episodes Total Annual Medicare Spending
AMI 168,000 $4.1 billion
CABG 48,000 $2.3 billion
SHFFT 109,000 $4.7 billion

CMS believes hospitals would have significant opportunity to redesign care and improve quality of care furnished during these episodes.

These new payment models, like the CJR model, require provider participation in selected geographic areas. The SHFFT model’s 67 geographic areas are the same as the CJR’s. The cardiac test is meant to apply to hospitals located in 98 metro areas of the nation, representing about a quarter of all these regions in the nation.

Existing CJR geographical areas are identified by stars.

CMS selected the EPM episodes based on their clinical homogeneity, site-of-service, and Medical Severity Diagnosis-Related Group (MS-DRG) assignment considerations. However, the AMI, CABG, and SHFFT models differ from previous CMMI payment models in a few ways. The Lower Extremity Joint Replacement model, while the procedures are common among the Medicare population, the majority of such procedures are elective. In contrast, the patient population included in the finalized episodes are substantially different from the patient population in CJR episodes, due to the clinical nature of the cardiac and SHFFT episodes. Beneficiaries in these episodes commonly have chronic conditions that contribute to the initiation of the episodes, and need both planned and unplanned care throughout the EPM episode following discharge from the initial hospitalization that begins the episode. Both the AMI and CABG model episodes primarily include beneficiaries with cardiovascular disease, a chronic condition which likely contributed to the acute events or procedures that initiate the episodes. Additionally, beneficiaries in these episodes commonly have chronic conditions that contribute to the initiation of the episodes and need both planned and unplanned care throughout the EPM episode following discharge from the initial hospitalization that begins the episode.

By implementing these models, CMS aims to reduce barriers to high-value care by testing a financial incentive for hospitals that encourages the management of beneficiaries that have had an AMI or a CABG in ways that may contribute to long-term improvements in quality and reductions in Medicare spending.

In addition to finalizing new bundled payment models for hospitals, the AMI, CABG, and SHFFT models, as well as the CJR model, could qualify as Advanced Alternative Payment Models beginning in 2018, including for physicians who collaborate with hospitals participating in the models. CMS also finalized a track in each model to potentially qualify as an AAPM for MIPS. The tracks:

  • Require participants to bear risk for monetary losses that meets the nominal risk criteria;
  • Use quality measures that meet the measure requirements to base payments; and
  • Allow participants to opt into a track that requires use of Certified Electronic Health Record Technology.

The rule is scheduled to be published in the Federal Register on January 3, 2017. If you would like assistance in evaluating the impact of these new payment models on your business or products, contact us at 202-558-5272 or e-mail us directly at

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