The call to action that began with CJR is gaining even more momentum now as CMS adds additional mandatory bundles to the ever growing slate of alternative payment models in the Medicare program.
To be specific, on July 25, CMS proposed three new mandatory bundled payment models for Medicare fee-for-service (FFS) beneficiaries treated for acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment (SHFFT) episodes. Starting on July 1, 2017, hospitals within 98 randomly selected metropolitan statistical areas (MSAs) will be at financial risk for Part A and B payments for the inpatient stay and 90-days after their discharge. There are several similarities between these new bundles and the BPCI and CJR programs – the 90-day window and the retrospective reconciliation of Medicare payments vs. a target price being two key examples.
Why these bundles? The focus on cardiac bundles reflects the sheer volume of these types of procedures and conditions, and CMS has already seem action in this area through existing demo programs. The SHFFT bundles continue the focus on the care of major joint issues. We also saw in the recent hospital payment rule that quality updates include several measures specific to cardiac care. The bottom line is that CMS is increasingly focusing its care delivery transformation efforts on the highest-impact therapeutic areas.
Speaking of high impact, what is the scope of these bundles? Our data shows that these new cardiac bundles will impact more than $4B in Medicare spending, and about ¾ of a billion of those dollars currently go to PAC providers. PAC is used in about a third of the specified cardiac episodes, with home health receiving the most volume at 16% of discharges. SNFs follow with 13% and IRFs get 3% of discharges. The SHFFT bundles will affect just over $1B in Medicare spending and a little over half of those dollars currently go to PAC providers. SNFs are particularly important in SHHFT episodes, receiving about 64% of those discharges; IRF comes in second with 18% and HH gets 6%.
So, the cardiac bundles are less dependent on post-acute care, but the large volume of those conditions and dollars make these high-impact bundles from the hospital perspective. The SHFFT bundles, however, have a huge PAC component and PAC providers already thinking about how to grab opportunities within CJR will be ahead of the game. As with any new mandatory bundle, PAC providers testing similar or the same bundles as part of BPCI are at a major advantage – this is in line with CMS’ trend of rewarding providers who are voluntarily innovating while pushing everyone further towards value-based care. The PAC providers have had a few years’ head start to plan and execute transformations in their care delivery and business models in response to bundled payments. As a PAC provider, if you haven’t yet embraced or at least acknowledged the need to perform in bundles, you are increasingly at risk of losing Medicare patient volume to more progressive facilities that can tout their ability to manage these bundles at a low cost while maintaining good outcomes.
Progressive PAC companies should consider creating bundle-specific offerings that include the typical course of care and potentially some wrap around care management services to reduce readmissions. This can create a stronger bargaining position when negotiating new arrangements with at-risk hospitals, who will have expectations around outcomes but may also be willing to invest resources in partnerships that they see as beneficial or with significant ROI. These types of arrangements are starting to take hold in the market and will be dependent on good data resources that help PAC providers understand hospital pain points,describe their own value, and allow for collaboration with hospital partners on a going-forward basis. We work with our clients to tailor strategies and create data-driven tools to support these essential transformations needed to capitalize on opportunities created by new bundles like the cardiac and SHFFT models. We know we will see more of these in the coming months and years, the only question is for which conditions, in which geographies, and most importantly, how will PAC providers respond?