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CMS Considers Including ASCs in Bundled Payment Models

Surgery centers can submit comments until the end of June

BY ALEX TAIRA | JUNE 2020

The deadline to submit comments on how to design a joint replacement model that incorporates ASCs as participants in the Comprehensive Care for Joint Replacement (CJR) bundled payment model is approaching fast. Interested parties may submit comments until 5:00 pm ET on June 23.

The Centers for Medicare & Medicaid Services (CMS) released a proposed rule on February 20, 2020, with a number of updates to the CJR bundled payment model. Among the updates was a request for comments on a new lower extremity joint replacement (LEJR) model that would include ASCs. While private payers have already implemented numerous bundled payment models incorporating ASCs, this is the first indication that Medicare might be considering a non-fee-for-service (FFS) payment arrangement in the ASC space.

Bundled Payment Background

In a bundled payment, the payer provides a single, comprehensive payment designed to cover all care and treatment for a discrete episode of care. The episode is usually defined by a specific time period, and the single, all-encompassing payment is designed to promote alignment between all the stakeholders involved with delivering care (i.e., facilities, physicians, post-acute providers, etc.). Rather than being paid separately, the single payment means that all stakeholders have financial incentive to coordinate and deliver the most efficient, high-quality care possible. If they are able to consistently perform the episode of care for less than the bundled payment, they are rewarded by keeping the remaining amount. If the providers are uncoordinated or patients experience adverse events, the providers would lose money by delivering additional care for no additional reimbursement.

CMS began implementing bundled payment models after the passage of the Patient Protection and Affordable Care Act (ACA), which directed the agency to establish a voluntary pilot program. This program, the Bundled Payment for Care Improvement (BPCI) initiative, began in 2013, with the first phase of the model focused on inpatient stays at acute care hospitals. Later phases of the model incorporated more advanced pricing methodology and extended the episode of care to post-acute settings such as skilled nursing and inpatient rehabilitation.

CMS introduced the CJR model in April 2016 and took a step farther than BPCI by making participation mandatory for hospitals within certain metropolitan statistical areas. For approximately 800 hospitals, a 90-day bundled payment episode would automatically be triggered by discharge under a major joint replacement diagnosis-related group. In 2017, in response to opposition to the mandatory participation structure, the new administration reduced the number of mandatory metropolitan statistical areas from 67 to 34.

ASCA Comments to CJR Proposed Rule

The original model period was set to expire at the end of 2020, so a fundamental purpose for the new proposed rule is to extend the model period through the end of 2023. CMS also proposes to change the CJR episode definition to include outpatient total hip and total knee replacements, to reflect those procedures moving off the inpatient-only (IPO) list in FFS Medicare. The trend of LEJR procedures toward outpatient settings, including notably the addition of total knee arthroplasty (TKA) to the ASC-payable list in 2020, is also the catalyst for CMS including the request for comments regarding ASCs.

CMS does not say that it is considering adding ASCs to the existing CJR model. Rather, it is requesting comments about how it might devise a new model that includes ASCs as an eligible site of service. In comments responding to the request, ASCA stressed the need for flexibility when contemplating any model involving ASCs. Regarding basic participation, no Medicare bundled payment model should require mandatory participation from any ASCs as CJR currently requires of certain hospitals. ASCA also advocated for role flexibility within the bundle itself, so that an ASC could decide how much financial accountability to take on. Some ASCs might be well equipped to manage a 90-day episode of care, thanks to strong regional relationships, whereas others might simply wish to be eligible as a site of service. In any case, ASCA noted in comments that the target pricing baseline should be based on the inpatient/outpatient hospital blended target price—which CMS proposes elsewhere in the rule—and not on the TKA reimbursement approved for ASCs. Using the hospital pricing baseline would produce the greatest savings potential within Medicare and also would strongly encourage clinicians to move patients to ASCs where appropriate. Finally, ASCA advocated for CMS to work with the ASC Quality Collaboration (ASCQC) to develop the best possible quality metrics to track a prospective model incorporating ASCs.

Given that the CJR model expires at the end of the calendar year, it is likely that CMS will release a final rule on or before November 1, 2020. However, given the early stage of consideration for including ASCs in Medicare bundled payments, it is unlikely that any proposal finalized in the upcoming final rule will affect ASCs.

For more information, write Alex Taira.