Statement from HCI3 Regarding Proposed CMS Payment Model Regulation

Statement from HCI3 Regarding Proposed CMS Payment Model Regulation

Media Contact:
Cary Conway

WASHINGTON — September 26, 2016 — The nonprofit Health Care Incentives Improvement Institute (HCI3) today responded to a Centers for Medicare and Medicaid Services (CMS) proposed regulation that includes the creation of two new value-based payment models.

HCI3’s comment letter strongly recommends that CMS not implement new Episode Payment Models (EPMs), proposed for acute myocardial infarction, coronary artery bypass graft, and surgical hip/femur fracture treatment episodes. Well designed episode-based payments—also commonly referred to as bundled payments—can raise health care quality and improve affordability, but specific terms of the Episode Payment Model laid out in the rule undermine the program’s ability to deliver on those objectives.

CMS proposes that the new EPMs center on Medical Severity Diagnosis-Related Group codes (MS-DRGs), a deeply flawed system for identifying, budgeting, and measuring episodes of care.

“In building these new payment episodes upon MS-DRG codes and centering the care on hospitals, CMS is significantly limiting the opportunity to improve care or effectively budget for each patient’s treatment, two things the best episode-based programs can do very well,” said François de Brantes, HCI3’s executive director. “Well designed episode-based payment programs, such as the ones described in a recent Health Care Payment Learning and Action Network (HCPLAN) report, engage physicians in taking accountability for the management of patients. CMS should stop its continued attempts to focus on facility-based episodes and apply the important recommendations of the HCPLAN.”

In the letter, he names additional issues with the proposed EPMs, including:

• Only facilities and not clinicians—who are central to the task of raising care quality and improving affordability—are allowed to initiate and control each EPM episode, making it difficult to engage clinicians in care reengineering.

• The EPM model does not include provisions to adjust for patient characteristics, including severity of illness, other than imperfect adjustments made by MS-DRGs.

• The MS-DRG that triggers the episode gets assigned to a patient’s case upon discharge, too late to implement care redesigns targeted to that patient, and also potentially rewarding hospitals for complications that occur during the inpatient stay.

HCI3’s comment letter and a detailed appendix offer an alternative episode-based payment methodology: the Episode Grouper for Medicare (EGM), a system Medicare already possesses, and which avoids many of the serious shortcomings of the proposed EPMs.

The full letter with recommendations can be found on online at