Published 1/1/2018
Shreyasi Deb, PhD, MBA

CMS Shifts Direction with New Initiatives

Administration pledges to reduce paperwork, simplify reporting
On Oct. 26, 2017, Seema Verma, MPH, the administrator of the U.S. Centers for Medicare & Medicaid Services (CMS), invited the American Association of Orthopaedic Surgeons (AAOS) and other stakeholders to a listening session at the Department of Health and Human Services (HHS) headquarters in Washington, D.C. During this meeting, she announced the launch of the “Patient over Paperwork” initiative. Since then, CMS officials have started traveling across the country to gather information on the impact their regulations have on physicians and to understand how to effectively lessen that burden.

Later, in her keynote speech to the 2017 Health Care Payment Learning and Action Network (HCPLAN) Fall Meeting, Ms. Verma reiterated her agency’s commitment to reducing stakeholder burden and to incorporating stakeholder input in redesigning many of the existing CMS programs and initiatives. She also introduced the “Meaningful Measures” initiative, aimed at streamlining reportable quality measures for hospitals and physician practices. The initiative will focus only on those measures that are essential to improving quality of care and care outcomes.

These initiatives signal a continuation of regulatory changes aimed at reducing provider burden while maintaining the core focus of moving to value-based payments from the current fee-for-service system. Meaningful Measures, for example, was developed in collaboration with the HCPLAN, the National Academies of Medicine, the Core Quality Measures Collaboration, and the National Quality Forum. As a participant in these organizations, the AAOS may provide input and effect change.

On Aug. 17, 2017, CMS proposed a rule to cancel the Surgical Hip/Femur Fracture Treatment (SHFFT) Model and recast the Comprehensive Care for Joint Replacement (CJR) Model. The CJR would become partially voluntary in 33 of the 67 Metropolitan Statistical Areas (MSAs) originally selected for CJR. Following this announcement was a request for comments from stakeholders on new directions for the CMS Innovation Center. The remainder of this article presents the AAOS comments on proposed changes to the Alternative Payment Models (APMs) and on the Innovation Center.

Changes to CJR and SHFFT
As of this writing, the CJR model is proposed to remain mandatory in the 34 MSAs that have the highest expenditures for lower extremity joint replacement (LEJR) episodes. Further, participation becomes voluntary in all rural and low-volume (fewer than 20 LEJR episodes in the past 3 years) hospitals, even those in the mandatory MSAs. The proposed rule also broadens the scope of eligible clinicians who are considered ‘affiliated practitioners’ to include those who do not have a financial arrangement under the CJR model but are either directly employed by or contractually engaged with a participant hospital.

This was the positive culmination of both written comments and in-person discussions with CMS officials by AAOS leadership and staff in the AAOS Office of Government Relations. The AAOS responded to the proposed rule by applauding the cancellation of the flawed SHFFT model while urging CMS to make the entire CJR model voluntary.

According to a recent study from the Michigan School of Public Health, Medicare’s voluntary value-based experiments improved health outcomes. More specifically, the study found that participation in Medicare’s value-based payment programs—such as the Meaningful Use of Electronic Health Records program, the Accountable Care Organization (ACO) programs, and the Bundled Payment for Care Improvement (BPCI) models—was associated with greater reductions in 30-day risk-standardized readmission rates under the Hospital Readmission Reduction Program.

More changes needed
The AAOS would like to see physician leadership in the CJR and other Medicare value-based payment models. Allowing surgeons to directly bear financial risks will encourage active participation in these models. The AAOS also suggests that gainsharing in these models be unlimited, to encourage surgeon participation and leadership. If surgeons are willing to bear risks in the CJR and other APMs, the current CJR gainsharing limit of 50 percent of the total Medicare approved amounts under the Physician Fee Schedule for items and services that are furnished to beneficiaries during episodes should be removed altogether.

The CJR Track 1/Certified Electronic Health Record Technology Track Advanced APM is the sole opportunity for surgeon participation in Advanced APMs for 2017. CMS has promised to release regulations for a new Advanced BPCI model for 2018. The AAOS expects this updated BPCI to enable specialists to build upon a known model, allowing for easier transition to Advanced APM participation. The AAOS strongly urged CMS to publish the regulations as soon as possible to ensure the possibility of 2018 participation.

A recent analysis by a large BPCI convener underscores this point. For the past 3 years, a consistently declining price trend in the current BPCI models, attributable to the National Trend Factor (NTF), has produced unanticipated and significant negative financial consequences for the participating physician group practices. CMS uses the NTF to update target prices quarterly, relying on utilization trends and opaque methodology. This pricing trend equates to about a 7 percent to 8 percent price deflation in unmanaged orthopaedic episodes of care. Based on AAOS information, this appears to be in complete contradiction to Medicare’s national cost trends. Hence, AAOS provided the following recommendations to CMS.

First, to address concerns with data transparency and accuracy in the current BPCI initiative, CMS should provide (on request to conveners that have been significantly impacted by the declining NTF) the actual data used to calculate the NTF for the affected diagnosis-related groups.

Second, to address concerns with pricing methodology, CMS should take the following steps:

  • Eliminate the NTF or place tighter limits on NTF changes.
  • Completely exclude managed episodes from the NTF calculation.
  • Eliminate the wage adjustment factor.
  • Reselect episodes to enter into Phase 2 for the remainder of the BPCI.

Third, to help ensure the long-term stability of and physician engagement in the Advanced BPCI program, CMS must implement the following methodology changes in the pricing model:

  • Include prospective targets—Prospective targets, distributed before the performance period begins, are essential for Episode Initiators (EI) to plan and predict their ability to succeed in the program.
  • Adopt regional pricing targets—Adopting regional pricing targets will help attract and retain high performers.
  • Eliminate the wage factor—The wage factor is inherently unfair to some EIs and does not accurately reflect that actual price changes of the underlying costs.
  • Eliminate the NTF—The NTF has been fraught with issues and is a major contributor to the program’s unsustainability. Replacing the NTF with a more reasonable approach to measuring utilization changes is critical.
  • Implement episodic risk adjustments—Some episodes are inherently riskier than others. Implementing a risk adjustment methodology would allow EIs to more effectively manage their patient population.

In October 2017, CMS officials verbally assured the AAOS that they are working on developing the Advanced BPCI model. They pledged to announce details before the end of the year to give participants enough time to prepare for 2018, as well as to provide feedback to the agency.

The Innovation Center
AAOS encouraged the Innovation Center to embrace the concepts of specialty focused ACOs and Perisurgical Homes to expand the current focus of ACOs beyond primary care. Limiting ACOs to primary care diverts adequate attention from half of the health care provided in the United States. Specialty care accounts for a large share of healthcare expenditures and primary care physicians are not always the ideal gatekeepers to specialist care.

The AAOS also urged CMS to include socioeconomic risk adjustment in all value-based initiatives, including the Innovation Center’s payment models. As required by the Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014, HHS submitted a report to Congress on social risk factors in Medicare’s value-based payment models. AAOS believes that CMS should incorporate those recommendations in the payment design and resource use measures in new payment models and demonstrations so as not to accentuate the health and healthcare disparities among vulnerable Medicare and Medicaid beneficiaries. AAOS provided CMS with a list of potential risk variables (see Fig. 1) to incorporate in their models and initiatives.

The IMPACT report also found that safety-net providers were more likely to receive penalties and be disadvantaged under these payment models. Studies have corroborated these findings. For example, a recent analysis of Medicare claims for patients in Michigan who underwent LEJR procedures from 2011 through 2013 concluded that, without proper risk adjustment, hospitals treating medically complex patients may be unintentionally penalized. Reconciliation payments were found to be reduced by $827 per episode for each standard-deviation increase in the medical complexity of a hospital patient. The study also estimated that risk adjustment could increase reconciliation payments to some hospitals by up to $114,184 annually.

The AAOS is encouraged by the efforts and actions of CMS to incorporate feedback and comments. As new regulations and guidelines are published, the AAOS will continue its efforts to ensure that they reduce the burden on surgeons and enable them to focus on caring for their patients.

Shreyasi Deb, PhD, MBA, is a health services researcher and is currently senior manager, health policy, in the AAOS office of government relations.


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