Providers reading the headlines about the current administration proposing to cancel the three new mandatory episode payment models (EPMs) might think that Medicare is backing off value-based payments. Think again, because the practical effect of this proposal is likely to be the opposite.

In a proposed rule released on August 15, 2017, the Centers for Medicare and Medicaid Services (CMS) proposed to cancel the three new mandatory EPMs (heart attacks, bypass surgery, and hip fracture bundles) scheduled for January 1, 2018, implementation, and to make the currently mandatory joint replacement bundling program optional in half of the existing 67 markets.

That is certainly newsworthy, but early in the proposal, there is possibly the biggest news of all:

“Many providers are currently engaged in voluntary initiatives with CMS, and we expect to continue to offer opportunities for providers to participate in voluntary initiatives, including episode-based payment models. We are concerned that engaging in large mandatory episode payment model efforts at this time may impede our ability to engage providers, such as hospitals, in future voluntary efforts.”

A few pages later, CMS states, “providers interested in participating in bundled payment models may still have an opportunity to do so during calendar year (CY) 2018 via new voluntary bundled payment models. Building on the BPCI initiative, the Innovation Center expects to develop new voluntary bundled payment model(s) during CY 2018 that would be designed to meet the criteria to be an Advanced [Alternative Payment Model] APM.”

These statements are consistent with our understanding of where CMS is going from both philosophical and pragmatic standpoints. Ongoing federal deficits and the need for Advanced APMs under the physician fix legislation (known as MACRA) will continue to drive growth in these models. The new administration simply doesn’t want to mandate them without more tweaking and evaluation.

Our experience is that voluntary bundling has been very positive for our clients. It is challenging to be sure, but it is also clinically transformative and can be financially rewarding. Based on our experience, it is reasonable to assume that there will be great interest when this opportunity comes forward again, possibly sooner than later. Think about what happens when your referring providers, or your competitors, are taking two-sided risk. It is not safe to ignore this on the mistaken assumption that the new administration is “canceling bundling.”

Stay tuned to Health Dimensions Group for more information about how these proposed changes affect providers and what you can do to prepare for these emerging opportunities.


Authored by: Brian Ellsworth, MA, Director, Payment Transformation, Health Dimensions Group