Medicare’s Poorly Designed Proposal

Submitted by on Thursday, July 16, 2015 - 04:01

Newtown, CT – July 17, 2015

I hate to say it, but see, I told you so – Five years ago, when the current Medicare Bundled Payment for Care Improvement program was still in its design phase, I had several calls with CMS/HHS staff to discuss the design and implementation of the pilot. Once the outline had been sketched, including the imposition of an up-front discount and a full risk contract, I noted to CMS staff that the pilot was assured success (you can't lose if you ask for a discount on historical average cost on a full risk deal) and that they should start now thinking about the implications of that success for a scaled implementation. My primary observation was that the Medicare Administrative Contractors, whose claims adjudication technology dates back to the 1970s, would be hard pressed to administer anything other than simple FFS when the time came. The steps I outlined then were to start with an audit of current capabilities and then to lay out specifications for more advanced systems to be ready within five years. That advice, much like many advices from organizations like ours who toil the field daily, was ignored. And now, five years hence, CMMI is proposing to deploy a mandated Lower Extremity Joint Replacement bundle in 75 very large metropolitan areas in the US. The proposed design is lousy and largely because the Administrative Contractors can't do much else. They're no more ready today to implement a sophisticated bundled payment program than they were five years ago, and everyone will pay the price for that lack of readiness.

What this means to you – Harold Miller has it exactly right in a recent blog post on this CMMI announcement and that he entitled: Bundling Badly. Some of the points Harold makes are points that we and others have repeatedly made to CMMI and that have fallen and continue to fall on deaf ears. Others, such as limiting the expansion to acute care hospitals, starting the bundle on the day of the procedure, having a very limited amount of services excluded from the bundle, and sticking to the heterogeneous DRGs (the expansion isn't just about hips and knees, but ankles, feet, toes), have to do with what can be reasonably made operational by Medicare's TPAs. It's incredible that in 2015 the rollout of a major and potentially very transformative payment program would be constrained by outdated software. In this instance, like in many others, the deficient operational tail is wagging the payment reform dog, and not the other way around. And it's not just incredible, it's incredibly frustrating because I warned CMS about this very issue quite a while ago and they had plenty of time to address and fix it. So now what? First, let's see whether CMMI actually considers the myriad comments that will pour in. Some will be from the whiners (including ACOs who fear for their survival when, in theory, they should thrive in delivering efficient bundles…does anyone else see the irony here?), and most will be from those who are concerned that the design flaws will taint the potential of this rollout irreparably. Second, irrespective of what CMS does, the private sector should not copy a badly designed program because a silly gorilla has sketched it. We need to stick to the nuanced, sophisticated and more likely to succeed alternatives that are already under way. And finally, if CMS is interested in doing this right, despite the incompetence of their TPAs, we're happy to provide them with the free software that will accomplish the task. Whatever happens, I really hope I don't have to say SITYS again in five years.