Breaking: Future of Value-Based Payments in Doubt as CMS Cancels Major Episode Payment Rule

It has become evident over the last several years that the Centers for Medicare & Medicaid Services (CMS) has been changing the trajectory of the provision of medical care in the U.S. from a system based on increasing revenue by increasing volume to a system based on rewarding providers for improving quality. 

But last week, the philosophical outlook of the Secretary of the U.S. Department of Health and Human Services, Dr. Tom Price, revealed itself in a significant way when CMS proposed canceling the expansion of the Advancing Care Coordination through Episode Payment Model. Once finalized, this move may force many hospitals and other providers to step back and reassess the CMS path, at least in the near future.

Dr. Price was a practicing orthopedic surgeon prior to entering politics, and it is common knowledge that he is not a fan of government intrusion into the patient-physician relationship. In fact, in many of the rules proposed since he was appointed, CMS has asked for comments on how to reduce the administrative burden on providers.

While many expected Dr. Price to slow down the move from volume to value, I don’t think anyone expected him to stop the movement altogether. But it appears he has done just that with this move, which has been scheduled to become effective on Jan. 1.

For those who cannot keep all these initiatives straight, this program was to start a bundled payment program in select areas for acute myocardial infarction, cardiac bypass surgery, and hip and femur fractures. Just like the Comprehensive Care of Joint Replacement (CJR) program, this was to be mandatory at all hospitals in the select areas, with a comparison of expected to observed 90-day spending on episodes of care and the sharing of savings with the hospitals that spent less than expected and paybacks from the hospitals who spent more than expected.

And while many will be happy to see this expansion halted, there is some important collateral damage to consider. The rule that contained this proposal also contained the cardiac rehabilitation incentive model, which was going to increase reimbursement for cardiac rehabilitation, an intervention CMS felt was underused in patients after cardiac bypass surgery and acute myocardial infarction. And because you apparently cannot just cancel one part of a rule, it appears that this cardiac rehabilitation incentive program must be eliminated in order for CMS to stop the expansion of the episode payment program.

With the caveat that I am not a journalist, and therefore free to wildly speculate about changes to CMS policy and personnel, I will also point out that the very same day that this program cancellation was proposed, Dr. Patrick Conway, CMS’s chief medical officer and deputy administrator for innovation and quality, announced that he was leaving CMS to become CEO of Blue Cross Blue Shield of North Carolina. Was this a move by Dr. Conway in response to the program cancellation, or just coincidence?

And I will take the conspiracy theory a step further and tell you that the day after Dr. Conway resigned, the chief of staff for CMS Administrator Seema Verma reportedly resigned as well. I will admit I had no idea that the CMS administrator even needed a chief of staff – and I have no idea what one does as chief of staff, and if it even involves decisions on CMS policy. But with both Dr. Conway and this official leaving office within two days of each other, it is fun to wonder.

On the practical level, what does this cancellation mean? Well, right now, nothing. The rule is not yet officially withdrawn. Emily Evans, a RACmonitor legislative analyst and frequent Monitor Mondays guest, noted in her unpublished comments that the rule cancellation has been sent to the White House. And I must admit that as a legislative amateur, I do not know if CMS has to post the cancellation and give 60 days for comments in order to cancel a rule that was already finalized – or whether a cancellation is a unilateral move that only requires the president’s signature.

Emily also brought up other interesting aspects of this news – for example, what does this program cancellation tell us about what CMS is going to do with the already implemented CJR program? Will that move from being mandatory to voluntary? Will physicians be allowed to be the episode initiators, and therefore control the savings? Or will that program be canceled altogether? Only time (and hopefully, Ms. Evans’s knowledge and wisdom) will give us answers to those questions.


Ronald Hirsch, MD, FACP, CHCQM, CHRI

Ronald Hirsch, MD, is vice president of the Regulations and Education Group at R1 Physician Advisory Services. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute-care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the Advisory Board of the American College of Physician Advisors, a member of the American Case Management Association, and a Fellow of the American College of Physicians. Dr. Hirsch is a member of the RACmonitor editorial board and is regular panelist on Monitor Mondays. The opinions expressed are those of the author and do not necessarily reflect the views, policies, or opinions of R1 RCM, Inc. or R1 Physician Advisory Services (R1 PAS).

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