HHS Announces New Medicare Alternative Payment Models to Reward Better Care at Lower Cost

heart-careToday, the Department of Health & Human Services finalized new Medicare alternative payment models that continue the Administration’s progress in reforming how the health care system pays for care. These new approaches will shift Medicare payments from rewarding quantity to rewarding quality by creating incentives for hospitals and clinicians to work together to avoid complications, avoid preventable hospital readmissions, and speed patient recovery.

Today’s announcement finalizes new policies that:

1) Improve cardiac care: Three new payment models will support clinicians in providing care to patients who receive treatment for heart attacks, heart surgery to bypass blocked coronary arteries, or cardiac rehabilitation.

2) Further improve orthopedic care: One new payment model will support clinicians in providing care to patients who receive surgery after a hip fracture beyond hip replacement. In addition, HHS is finalizing updates to the Comprehensive Care for Joint Replacement Model, which began in April 2016. 

3) Provides an Accountable Care Organization opportunity for small practices: In order to encourage more practices, especially small practices, to advance to performance-based risk, the new Medicare ACO Track 1+ Model will have more limited downside risk than in Tracks 2 or 3 of the Medicare Shared Savings Program. The model also allows hospitals, including small rural hospitals, to participate in this new ACO model. Stakeholders, including physician groups, have requested this type of ACO model be added to the portfolio of options. This approach will provide opportunities for an estimated 70,000 clinicians to qualify for Advanced Alternative Payment Model (APM) incentive payments in 2018.

Improving Patient Outcomes through Cardiac and Orthopedic Care Coordination

The cardiac and orthopedic episode payment models being finalized today provide opportunities to improve care coordination and quality. The focus of these approaches is to reduce unnecessary variation in care, improve patient results, and reduce preventable readmissions. In 2014, more than 200,000 Medicare beneficiaries were hospitalized for heart attack treatment or underwent bypass surgery, costing Medicare over $6 billion. But the cost of treating patients for bypass surgery, hospitalization, and recovery varied by 50 percent across hospitals, and the share of heart attack patients readmitted to the hospital within 30 days varied by more than 50 percent. In addition, only 15 percent of heart attack patients receive cardiac rehabilitation, even though clinical studies have found that completing a rehabilitation program can lower the risk of a second heart attack or death.

Under the new approaches, the hospital in which a Medicare patient is admitted for care for a heart attack, bypass surgery, or a hip or femur procedure will be accountable for the quality and cost of care provided to Medicare fee-for-service beneficiaries during the inpatient stay and for 90 days after discharge. The new models will operate over a period of five years beginning July 1, 2017. The cardiac models will apply to hospitals located in the 98 metro areas participating in the model (about one-quarter of all metro areas in the nation). The surgical hip fracture treatment model will apply to hospitals in 67 metro areas, which are the same metro areas currently included in the Comprehensive Care for Joint Replacement Model.

The cardiac rehabilitation incentive payment model will test the impact of providing payment to hospitals to incentivize referral and coordination of cardiac rehabilitation following discharge from the hospital for a heart attack or bypass surgery. These payments will cover the same five-year period as the cardiac care bundled payment models and will be available to hospital participants in 45 geographic areas that were not selected for the cardiac care bundled payment models, and 45 geographic areas that were selected for the cardiac care bundled payment models.

Under all of these approaches, beneficiaries retain their freedom to choose services and their hospital or physician. CMS will monitor and evaluate the impact of the approaches on care quality and value. An ombudsman will also be monitoring the models and be available for beneficiaries. More information about the structure of these models is available in the fact sheet.

New incentive earning opportunities for clinicians

These new payment models and the updated Comprehensive Care for Joint Replacement Model give clinicians additional opportunities to qualify for a 5 percent incentive payment through the Advanced Alternative Payment Model (APM) path under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and the Quality Payment Program. For the new cardiac and orthopedic payment models, clinicians may potentially earn the incentive payment beginning in performance year 2019 or potentially as early as performance year 2018 if they collaborate with participant hospitals that choose the Advanced APM path. For the Comprehensive Care for Joint Replacement model, clinicians may potentially earn the incentive payment beginning in performance year 2017. For the Track 1+ Model, clinicians may potentially earn the incentive payment beginning in performance year 2018, and the application cycle will align with the other Shared Savings Program tracks.