Cardiac Bundles Delay Should Not Slow Your Preparation

I trust no one was surprised on Monday when CMS announced in the Federal Register it was delaying the implementation date for the Episode Payment Models (aka EPMs or bundles) for cardiac care from July 1 to October 1. CMS also hinted that it could further delay the EPM launch until Jan. 1, 2018. The programs were scheduled to start on July 1 and run through 2021. Now, the programs will begin on October 1 at the earliest.

If you were caught off guard by the news, then you haven’t been paying attention. First, Dr. Tom Price, President Trump’s selection as HHS Secretary, has been an outspoken critic of bundled payments in the past, especially the mandatory nature of this particular program. In addition, Seema Verma, the new CMS Administrator, said during her confirmation hearing before the Senate Finance Committee in February that she is supportive of innovation, but like Price, doesn’t seem to like making tests of alternative payment models, like bundled payments, mandatory for providers.

It would be very unwise for hospitals to totally halt their EPM preparation.

I think the CMS announcement for a delay is a wise move, as there was widespread criticism that the EPM program was hastily announced and gave the estimated 1,200 hospitals who would be participating inadequate time to prepare. However, I think it would be very unwise for hospitals to totally halt their EPM preparation; there are some compelling arguments for why hospitals should embrace this delay as an opportunity. Here are four:

1. As MedAxiom has begun working with various heart programs to prepare for a July 1st launch, it became evident that the importance of understanding your current performance data is a complex and time consuming task. Take for example the image below, which shows one hospital’s AMI and CABG DRGs. We see a wide variation not just in overall episode costs, but also the degree to which those costs are attributed to the hospitalization, readmission, or various forms of post-acute care. And it should not surprise you that there is wide variation between physicians within this hospital within each DRG. Not only does digesting the data take time, but engaging and aligning your physicians and doing the necessary hard wiring changes to your clinical delivery model takes even longer.

2. It’s totally uncertain whether this delay will result in minor or major adjustments to the EPM program, and this delay buys you time to “do it right.” Think of it as a gift of time to better understand your current performance and to be taking steps to put yourself in a position for success. Yes, Price and Verma have previously voiced their opposition to its mandatory nature. That being said, it’s important to note that the EPM program was created with strong bi-partisan support and it may not matter what Price thinks. There’s no guarantee that there would be enough republican support behind wholesale elimination of mandatory participation or even significant change to the current design. As we’ve seen with Paul Ryan’s proposed American Health Care Act and republican opposition, there are many voices to be taken into consideration. In this political era, I think we have learned that nothing is certain so follow a proven health care strategy for uncertain times and fix the problems you have before they really become major liabilities. 

3. If you think EPMs are going away, I caution you to think again. As I blogged about recently, although the volume-to-value movement may not have yet reached a tipping point in your market, it certainly has in others and it will eventually reach you. Your understanding and ability to manage episodes of care, specific clinical populations, and your competence at becoming a market leader in terms of high quality and low cost, will become more and more of a determinant of your organizational success. CMS is not the only driver of bundled payment models. Commercial payers, and even employers, are also driving bundled payment arrangements. And our experience is that commercial cardiac bundles are even more complex, due to their less homogenous population and treatment patterns compared to Medicare-aged beneficiaries. Regardless, bundles have become part of the health care landscape and they are here to stay.

4. This delay is an opportunity for you to capitalize on creating a competitive advantage. Most organizations will sit back and wait to see what happens next. And that may be their most prudent strategy. But some organizations will push ahead, either knowing that they were in one of the 98 MSAs and wanting to get a head start, or hoping that the program becomes voluntary so they can leverage their high performance in that design and/or with commercial payers. You don’t have to look any farther than the joint replacement bundle to see who is doing the best – those organizations who embraced the opportunity and changed their care delivery to capitalize on it. The image below shows an example of the variation that exists in one market with AMI (without PCI) costs. If you were this hospital (“You” in the graph) would you rest on your laurels (while hoping the other competitors do nothing) or figure out how to be better than Peer 3? I know what I would do.

Health care is in a period where uncertainty abounds like never before. To me, this period of uncertainty represents an incredible opportunity to prepare for the future. Those who will be best positioned for success are preparing for it now.

Get Your FREE Customized EPM Report! To empower you with data to keep you moving along in your EPM/Cardiac Bundles journey, we would like to send you a customized EPM data set including:

1. Your hospital's historical cost per case for AMI and CABG bundles

2. Your hospital's cost by type – Hospital, SNF, HHA, rehab, hospital outpatient service, etc.

3. Your hospital's regional cost per case, overall and by type of cost

4. Your hospital's target hospital costs compared to 5 regional competitors (blinded)

Get Your Report

Visit the MedAxiom EPM/Bundled Payments Resource Center for all the information you need to stay on top of the changes. Access official CMS news, on-demand webinars and presentations, and more!

Go to the EPM Resource Center

Larry Sobal is Executive Vice President and a Senior Consultant at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and health insurance. Larry consults, writes and presents on topics relevant to transforming physician practices and health systems. His weekly blog post comes out on Thursdays and can be accessed at www.medaxiom.com.

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