Episodic PayDuring the last weeks of the Obama administration—on January 3, 2017—the Centers for Medicare & Medicaid Services published a final rule implementing new mandatory episodic payment models (the “EPM Rule”) to take effect July 1, 2017.  These models include the following:

Acute Myocardial Infarction (AMI) Model: Acute care hospitals in 98 selected metropolitan statistical areas (MSAs) will participate in retrospective episode-based payments for items and services that are related to AMI, beginning with a hospitalization and extending for 90 days following hospital discharge.

Coronary Artery Bypass Graft (CABG) Model:  The same hospitals participating in the AMI Model also will participate in retrospective episode-based payments for CABG surgeries.

Surgical Hip and Femur Fracture Treatment (SHFFT) Model:  Hospitals in the 67 selected MSAs that are part of the Comprehensive Care for Joint Replacement Program also will participate in retrospective episode-based payments for items and services related to surgeries for hip and femur fractures.

Cardiac Rehabilitation Incentive Payment Model:  Under this program, to be implemented in 90 selected MSAs (45 of which will also participate in the AMI and CABG Models), hospitals will receive retrospective incentive payments for beneficiary utilization of cardiac rehabilitation/intensive cardiac rehabilitation services for the first 90 days following an AMI or CABG episode of care.

At the time, some speculated these new programs would be dismantled by the Trump administration, given that the incoming Secretary of Health and Human Services, Dr. Tom Price, had been critical of such “mandatory innovation.”

On March 21, 2017, CMS published a notice delaying the EPM Rule’s effective date to October 1, 2017.  CMS also solicited comments as to whether the effective date should be further delayed to January 1, 2018.

Two months later, on May 19, CMS now has announced the EPM Rule will take effect January 1, 2018.  CMS agreed with numerous comments stating that hospitals “need time to evaluate the final model provisions, to develop specific EPM care plans, and to update health information technology, quality metrics, patient and family education, care management and discharge planning.”

Other commenters asked the agency to withdraw the EPM Rule or delay its effective date indefinitely.  In response, CMS made clear its intent to move forward with these new alternative payment models, stating:

We also note that we disagree with commenters who suggested that CMS withdraw these models altogether and/or delay them indefinitely. As we stated in the January 3, 2017, EPM final rule, we believe these models will further our goals of improving the efficiency and quality of care for Medicare beneficiaries receiving care for these common clinical conditions and procedures.

This crystal-clear statement should lay to rest any notion that the Trump administration intends to reverse or even slow the pace of change in Medicare payment policy.  Instead, the new leadership team is committed to pursuing the Triple Aim through payment models that incentivize improved quality and greater efficiency.

For providers in those MSAs in which these models will operate, now is the time to study the models’ details and commence work on re-designing these episodes of care.  Other providers should prepare for the eventual expansion of these and other episodic payment models, seeking opportunities with their own employee health plans, other employers, and other commercial payers.