Mandatory Bundled Payment Models Are Coming: What You Need to Know

 In Analytics & Data Management, Healthcare Transformation

Representatives from CMS just announced a policy shift regarding mandated alternative payment models.

HHS Secretary Alex Azar said the administration would “revisit” mandatory models that it had previously abandoned in cardiac care, noting the time had come for “exploring new and improved episode-based models in other areas, including radiation oncology.”

To understand the impact this policy shift might have on payers and providers, Patrick McGuigan, Producer of Episode Intelligence, connected with Dr. Andrei Gonzales, who leads the product development efforts for Change Healthcare’s value-based payment solutions.

In this interview, they discuss:

  • What CMS is introducing and why it’s generating so much news [00:23]
  • What this means for commercial health plans [02:40]
  • What health plans should be doing now to prepare for this change [04:46]
  • How providers are reacting to this news, and how they can prepare for a future that includes mandatory payment models [06:03]

Related Resources

Show Transcript


PATRICK MCGUIGAN: Welcome to this edition of Episode Intelligence. I’m Patrick McGuigan, and I’m here with Dr. Andrei Gonzales, who leads the product development efforts for Change Healthcare’s line of value-based payment solutions. Andrei, welcome to this edition of Episode Intelligence.

ANDREI GONZALES: Thank you. I’m glad to be here.


PATRICK: Andrei, we wanted to talk with you today to get your thoughts on CMS’s renewed interest in now pushing mandatory payment models. Alex Azar, secretary of Health and Human Services, mentioned this change earlier in the month. Seema Verma of CMS noted the new models might be announced early next year. And I just saw that CMMI director Adam Baylor wants fee-for-service, volume-based care to die. Can you tell our listeners what CMS is introducing, and why it’s generating so much news?

ANDREI: I’d be glad to, Patrick. As I’ve looked into the secretary’s statements and his presentation transcript, it’s clear that after reviewing the results of the comprehensive care for joint replacement model and the first BPCI bundled payment for care improvement model, CMS has found that some of these models have resulted in very positive results especially around some of the mandatory programs.

What I’ve seen in their statements is that they are revisiting some of those models that they retreated from a couple of years ago when secretary Price was in place at HHS. What the new secretary is talking about is really looking at some of the episode-based models in areas like radiology oncology, some of the cardiac areas, to really try and realize some of the benefits that they saw with some of those early programs that were kind of cut short especially with the comprehensive care for joint replacement models. He stated that these models would be available or that they would be talking about them in the near future.

As you said, Seema Verma, who heads up CMS, has stated that there would be an announcement made either by the end of this year or early next year. It’s fairly striking that the team is pretty coordinated in these statements. The secretary made his statements kind of in mid-November. Since then, both Seema Verma and Adam Baylor have made similar statements and getting a little more specific about the timing of when we’re going to see some of these new models emerge.


PATRICK: What does this really mean for health plans? Isn’t this an issue that’s normally just affecting the providers handling Medicare?

ANDREI: Well directly, yes. That’s right. The significance of this for commercial health plans is how CMS goes is very important, especially from the provider perspective. Pretty much every provider is impacted by CMS. Most providers take either Medicare or Medicaid patients, or potentially both; more Medicare than Medicaid.

So when CMS announces a program like this that’s going to impact how Medicare pays for anything, whether it’s fee-for-service or in this case value-based care looking at episodes of care and bundled payments for cardiac care and for radiation oncology, that has an impact on a commercial plan because they know now that at least a portion of their providers are going to be operating under this sort of a model. Commercial health plans have expressed a great interest in moving to value-based care just as CMS is reiterating their interest in moving towards value-based care and value-based payments.

The fact that CMS is now talking about mandatory programs makes it easier for commercial plans to roll out some of their own programs. Of course, a lot of commercial plans want to see what CMS is doing to see if it will work for them, and if possible they would like to piggyback on the experience with CMS to make it easier for providers by introducing programs that are consistent with what they’re doing with CMS in commercial plans. By doing that, they make it simpler for providers because the providers don’t have to follow so many different rules. That’s not to say that commercial plans will take exactly what CMS is doing and run with it. But a commercial plan would be very interested in looking at what CMS is doing to see if there’s an opportunity for alignment to make it easier for their provider partners to really engage in these value-based programs and be successful in them


PATRICK: Should the health plans be doing something now to prepare for this change?

ANDREI: At this point, I think most health plans are already pretty active in value-based care. In my opinion, I think what they can really do at this point to prepare is to look at any sort of cardiac programs they have, any sort of oncology programs they have. There are already quite a few orthopedic programs just to see how CMS is aligning in BPCIA. Clearly, we’re going to hear something fairly soon.

So I think it makes sense to do some watchful waiting. But just to evaluate really where a health plan is with its provider partners and maybe start to think about how to take advantage of the momentum that CMS will provide health plans in moving towards value-based care. Some commercial plans have kind of taken a wait and see approach with some of the canceling of some of the mandatory programs that was done a couple years ago. And now that the programs look to have new life, it’s important for the commercial health plans now to look at their strategy and see if maybe it’s time to start to move more aggressively into value-based programs with their provider partners.


PATRICK: What about the provider community? How are they reacting to this news? And what should they be doing to prepare for mandatory payment models?

ANDREI: That’s a great question. I’ve seen a few different responses as you could imagine in the provider community. Some providers are stating that they are very nervous about and concerned about mandatory programs. We heard that feedback that resulted in secretary Price canceling some of those mandatory programs.

As I’m sure you’re aware, secretary Price is a physician, a surgeon, and saw some of that feedback from his physician colleagues who were also very concerned about some of those mandatory programs. I think what’s most important here is that the current HHS and CMS administration is very clear on their desire to move towards value-based care with, as you said earlier, Adam Baylor, who’s in charge of CMMI, the director of CMMI stating that he just wants to kill fee-for-service. He wants it gone. That is a very ambitious goal.

But the secretary Azar has stated the transition to value-based care is one of his top priorities for CMS. When he looks at his administration, at his goals, it’s really one of the top four goals that he’s laid out. So he stated that the average household pays about $28,000 a year on healthcare. And when you look at our metrics, our outcomes we’re not living to 100. We’re not getting good outcomes. It’s clear that we need to make better use of the money that we spend, get better outcomes for it, and also acknowledge that that amount of money is too much for the average household to be spending on healthcare.

When we look at how we’re planning to do that, they’re looking at empowering customers, empowering all of us as healthcare consumers, allowing providers to become accountable navigators and expecting really that providers become accountable navigators of the healthcare system. Meaning that providers need to start coordinating care better across settings of care, paying more for outcomes, and preventing disease.

So what I think providers need to do is to look at those goals, at those objectives that the secretary has laid out and that his team is implementing and start to really prepare to become those navigators within the healthcare system. They need to start thinking about how they take accountability for the care of their patients not just when their patient is in their office or in their O.R., but when that patient is entering their care and when that patient really achieves the goal of their care which might be screening colonoscopy, or a diagnostic or an interventional colonoscopy, for a patient. Really getting that patient through to the point where they no longer have to worry about whatever condition or symptom or finding led them to that test.

Or if a patient who has a knee replacement really thinking about the entire continuum of care from the time that patient enters the knee replacement episode to the time that patient is up and walking around and feeling heathier and feeling better, and without pain in their knees. And really thinking about the total cost of care for every component of care like skilled nursing care, everything that goes into that as the surgeon needs to start taking accountability for the entire cost of that episode and the outcome for the patient.

So taking that perspective and understanding that while the Trump administration came in and there was some reevaluation of what was going on in HHS and CMS and CMMI specifically, it looks like the new leadership for HHS is very committed to the transition to value-based care and a lot of what was started before needs to be reenergized and there are going to be mandatory models that providers are going to have to engage in.

PATRICK: Great. Andrei, thank you so much for those insights. And we hope you’ll update us once CMS finalizes their plans.

ANDREI: Absolutely. Thank you for having me. It’s a pleasure.

PATRICK: That’s it for this edition of Episode Intelligence, but be on the lookout for our next episode in which Rob Capobianco will be talking with Susan Delbanco, executive director of Catalyst for Payment Reform. Susan will be sharing an employer’s perspective on healthcare and highlight some of the innovative approaches employers are pursuing to help them control rising healthcare costs. See you next time.

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