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Reading the CMS Tea Leaves: What to Watch For in the Future

06/29/16

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Shoshana Krilow, Vice President, Public Policy and Government Relations

Acting Centers for Medicare & Medicaid Services (CMS) administrator Andy Slavitt said earlier this year that CMS often can be viewed as a “black box with opaque regulations and limited back and forth about our policy reasoning or our implementation constraints.” That feeling is commonly held by hospitals across the country, as well as policymakers in Washington.

The agency is seeking to shed that reputation and engage more openly with stakeholders, but trying to forecast the direction that CMS is heading can still be a challenge.

So what can we expect from CMS for the remainder of President Obama’s term (and perhaps into the next administration should presumptive Democratic nominee, Secretary Clinton, win the election)? While no one in Washington dares to make firm predictions, we can follow the bread crumbs – comments from CMS and industry leaders – and perhaps identify the likely direction CMS will head.

First things first, we suggest you buckle up and hang on for the ride. 

MACRA
Perhaps the most substantial item on CMS’ agenda for the remainder of the year will be the focus on finalizing regulations implementing the new physician payment system under the Medicare and CHIP Reauthorization Act (MACRA). Finalizing the MACRA rule, which established the new Quality Payment Program for Medicare physician payments, is a significant undertaking with the comment period having recently closed.

Given the level of the concern already raised about the proposal and how rapidly CMS will be able to successfully implement the new system, it will be a heavy, time-sensitive lift for CMS, and the primary agenda item for the year. 

Payment model testing
In addition to MACRA, and the regular release of annual payment rules for hospitals (Inpatient and Outpatient Prospective Payment Systems), there continues to be a steady stream of activity testing new payment models at the CMS Innovation Center. Possibly the most prominent proposal out of the Innovation Center recently is the Medicare Part B drug demonstration program. The Part B drug demo has received significant scrutiny and skepticism from policymakers and industry stakeholders alike. CMS will be very much under the spotlight as it considers the path forward on the Part B rule, and almost certainly will consider changes to the program. 

Although the Part B demo caught many by surprise and continues to be tangled in stakeholder and policymaker disagreements, CMS was, for the most part, operating under a business-as-usual protocol. That was, until last year, when CMS caught much of the industry off-guard when the Innovation Center unexpectedly released the Comprehensive Care for Joint Replacement program (CJR), a mandatory bundled payment program for hip and knee replacements.

How can we avoid being caught by surprise again? Our advice to you – be ready for anything.  Don’t expect that CJR was a one-off. Look to it as a solid example of where CMS plans to go in the future. 

The Innovation Center is emboldened to act, especially at the end of President Obama’s term, and should Secretary Clinton win the presidential election, her loyalty to the Affordable Care Act (ACA) and continuing its implementation will almost certainly be reflected in the actions of the Innovation Center.

Keep in mind the Innovation Center has a significant level of authority to make substantial policy and reimbursement changes. If the Secretary of the U.S. Department of Health and Human Services determines that any of the demonstration programs tested by it reduces spending while improving or without reducing quality of care, and the CMS Chief Actuary certifies that such expansion would reduce program spending, the scope and duration of such demonstrations can be expanded nationally without congressional approval or formal rule-making.

While being ready for anything may seem like a tall order, and we can’t be certain of exactly where CMS will go, it is useful to look at what is already working (with respect to current alternative payment models) and where CMS is seeing wide variation in Medicare spending.

Could bundled payments for cardiac episodes be next?
Recently, a number of prominent, primarily left-leaning health policy experts sent a letter to CMS, calling on the agency to focus on implementing new mandatory bundled payment programs before the end of the Obama administration. Specifically, they called for a focus on cardiac episodes including coronary artery bypass grafting (CABG), stent placement, cardiac catheterization, pacemaker placement and management of congestive heart failure. They indicate in their letter that wide variation in Medicare spending for episodes around CABG makes it ripe for a bundled payment initiative that can address price and utilization.

What can we read from a small, but respected group of policy wonks pushing the Obama administration to close out its time in office with a greater focus on mandatory bundled payments? Nothing can be expected with 100 percent certainty until we see it in writing in the Federal Register, but the appetite is there to move more aggressively in that direction. 

As more and more data is collected from bundled payment programs showing savings and care improvement, that could well be the next frontier for an ambitious CMS effort. And unlike the Medicare Part B demonstration, there isn’t truly an element of partisanship in opposition to bundled payments. So CMS and the Innovation Center have a number of blueprints they can follow and the authority under the ACA to expand any such demonstration.

Slavitt told Politico in May that for the final months of his tenure, “It’s not about jamming through a bunch of pet policy projects. That’s the wrong way to look at it. It’s really about advancing things that need to be advanced, that can be significantly advanced. It is really about what we can do to help set the stage for those that will come after us.”

The question for hospitals is whether to get ahead of the curve (and we would argue providers should be already) or wait for CMS to dictate any number of bundled payment programs that could prove to be quite difficult to implement if not already experimenting with value-based care.

Buckle up.

About the author. As vice president of public policy and government relations, Krilow leads Vizient’s Government Relations, monitoring federal legislative and regulatory developments of importance to Vizient and its members. She has worked as a strategic advisor to health sector clients with a particular concentration on Medicare, the pharmaceutical and insurance industries, and the Affordable Care Act. Krilow also brings deep legislative expertise having spent several years on Capitol Hill, where she worked as a health policy advisor for Representative Marion Berry (D-Ark.) and Senator Joseph Lieberman (I-Conn.).

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