Practice Management: Bundled Payments for CABG: What CT Surgeons Need to Know

The Centers for Medicare & Medicaid Services (CMS) has made it clear that the future of physician payments will be linked to quality and value. It is more necessary than ever for cardiothoracic surgeons to stay informed on how these payment models will affect their practices. In this issue of STS News, Dr. V. Seenu Reddy explains a CMS rule to bundle payments for coronary artery bypass grafting (CABG) surgery. 
--Frank L. Fazzalari, MD, MBA, Chair, Workforce on Practice Management

V. Seenu Reddy, MD, MBA
TriStar Cardiovascular Surgery, Nashville, TN

Editor's Note: This text is accurate as of December 20, 2016. In August 2017, the Centers for Medicare & Medicaid Services announced a proposed rule that would cancel the Coronary Artery Bypass Graft Episode Payment Model.

STS News, Winter 2017 -- Since the passage of the Affordable Care Act, CMS has been seeking to promote cooperative, value-based care. Alternative payment models are one way CMS is attempting to drive quality and value.

This past April, CMS implemented a bundled payment model for hospitals participating in the mandatory Comprehensive Care for Joint Replacement (CJR) program. A few months later, without any results from the CJR program, CMS proposed to mandate that randomly selected hospitals throughout the country participate in new bundled payment models for cardiac care, specifically the care of acute myocardial infarction (AMI) and CABG surgery.

What this means for cardiothoracic surgeons may be gleaned from what has gone on in the orthopedic specialty regarding the care of patients undergoing joint replacement. The key premise for CMS is that bundling payments for the episode of care surrounding bypass surgery will incentivize increased quality, lower costs, and more care coordination.

Here are some highlights from the final rule, which was issued on December 20.

1. Cases related to Medicare fee-for-service patients admitted for heart attacks and bypass surgeries are eligible for the new cardiac bundled payment program. Cases covered by Medicare Advantage plans and Accountable Care Organizations are excluded.
2. The bundle will make hospitals accountable for the cost and quality of care provided during the inpatient stay and for 90 days after discharge. Hospitals initially will be paid at the current reimbursement rates under the Inpatient Prospective Payment system. However, a retrospective reconciliation will occur relative to a predetermined fixed target price for each episode of care. At the end of each performance year, hospitals will have the opportunity to earn shared savings based on how they performed relative to the target price.
3. Hospitals will be chosen from 98 randomly selected metropolitan statistical areas for the cardiac bundling program. Initially, hospitals outside of these selected areas will not participate in the cardiac bundles. Hospitals in rural counties will be excluded, and financial risk will be limited for rural hospitals that fall into the areas selected. More information on the selected hospitals is available.
4. The bundles will begin on July 1, 2017. CMS will roll out the bundles in phases so that hospitals can adapt to the new payment scheme and establish support processes. Penalties will not be levied until the third program year (although participants are allowed to assume risk in 2018 if they so choose). For those who assume risk in 2018 and for all participants beginning January 1, 2019, through the third program year, penalties will be capped at 5% (referred to as the stop-loss amount). The stop-loss amount will increase to 10% in the fourth year and 20% in the fifth year. Potential gains also will be phased in. In the first two performance years, hospitals will be able to earn maximum bonuses of 5% (referred to as stop-gain amounts). These potential gains will then grow, in step with penalties, up to 20% in performance year 5.
5. Hospitals will receive quality-adjusted target payments for each episode of care. These target payments will be based on a blend of historical hospital-specific and regional data and will be adjusted to account for case complexity. Hospital targets also will be adjusted for quality, so that hospitals delivering the best care have the opportunity to share in more savings. If hospitals do not meet the baseline standards for quality, they cannot share in savings.
6. At the end of each performance year, hospitals that meet quality standards can earn additional payments based on cost. This means CMS will compare the actual spending for each episode to the target prices paid to the hospital. Those that are able to deliver care for less than the target price will be paid the achieved savings. Hospitals that exceed the target will be required to repay Medicare.
7. The proposed rule also includes a model for cardiac rehabilitation services. The model aims to test whether payments incentivize use of cardiac rehabilitation during the 90-day period following hospital discharge.
8. The AMI and CABG bundles can qualify as Advanced Alternative Payment Models in 2018 under the Medicare Access and CHIP Reauthorization Act (MACRA). The cardiac bundled payment program established pathways for physicians potentially to qualify under the Quality Payment Program for Advanced APMs. Surgeons participating in Advanced APMs will earn a 5% bonus payment from 2019 to 2024. The mandatory CABG bundle will qualify as an Advanced APM. Physicians in participating hospitals can get credit for participating in an APM (and therefore be exempt from participating in the Merit-Based Incentive Payment System) as early as January 2018, provided that their hospitals are willing to assume downside financial risk sooner than is required under the rule finalized on December 20. Physicians in these hospitals will be eligible to receive bonus payments in 2019.

STS has actively advocated on behalf of cardiothoracic surgeons in relation to this new payment program, including meeting with CMS in person last September and sending a subsequent comment letter outlining specific concerns. In particular, the Society has noted that there are already too many payment policy changes in store for 2017 for physicians to have a reasonable expectation of success under this proposal. STS also has argued that clinical data, such as those in the STS National Database, should be used instead of Medicare claims data to determine the risk methodology of such payments. The final rule issued in late December incorporated some of the Society’s recommendations on quality measurement.

The key for cardiothoracic surgeons, whether in an employment or private practice model, is that the system of independent physician payment for volume of services provided will soon be of historic interest. Much like the “usual and customary” fee schedule of the past, the future of physician payments will be based on and linked to quality, care coordination, and overall value.