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Avalere Analysis on Final EPM Bundle Rule

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Today, the Centers for Medicare & Medicaid Services took another step in shifting Medicare to a value-based payment model that rewards hospitals for delivering better care at a lower cost.

Most significantly, the rule creates new Episode Payment Models (EPM) for heart attack and cardiac bypass surgery services. It also expands the current orthopedic bundled program, the Comprehensive Care for Joint Replacement (CJR) model, to include hip and femur fracture repair.

The cardiac EPMs are mandatory for hospitals in 98 different markets beginning July 1, 2017. These hospitals will bear financial risk based upon their performance on quality and cost. The payment models seek to reward hospitals that work with physicians and other providers to avoid complications, prevent hospital readmissions, and reduce Medicare spending during 90-day episodes of care.

Specifically, the EPM final rule contains three significant policies:

  • New mandatory risk-bearing bundled payment models for cardiac care in which providers will bear risk and an extension of the existing bundled payment model for hip replacements to other hip surgeries covered under CJR
  • A new model to increase cardiac rehabilitation utilization in 90 geographic areas; roughly half of those in the aforementioned model will overlap with the 98 geographic areas, in which cardiac EPMs are mandatory, to test the effectiveness of the model
  • A pathway for those physicians with significant participation in bundled payment models to qualify for payment incentives under the proposed Quality Payment Program, Medicare’s new physician payment model

“One of the broader questions facing physicians, hospitals, and post-acute providers is the future of bundled payments. At this point in time, the rule is slated to take effect July 1, 2017, but the new leaders at CMS may alter this,” said Fred Bentley, vice president at Avalere Health. “Despite the uncertainty, it’s critical to note that payment and delivery reform maintains bipartisan support among policymakers.”

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