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Rule

Medicare Program; Advancing Care Coordination Through Episode Payment Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and Changes to the Comprehensive Care for Joint Replacement Model (CJR)

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Start Preamble Start Printed Page 180

AGENCY:

Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION:

Final rule.

SUMMARY:

This final rule implements three new Medicare Parts A and B episode payment models, a Cardiac Rehabilitation (CR) Incentive Payment model and modifications to the existing Comprehensive Care for Joint Replacement model under section 1115A of the Social Security Act. Acute care hospitals in certain selected geographic areas will participate in retrospective episode payment models targeting care for Medicare fee-for-service beneficiaries receiving services during acute myocardial infarction, coronary artery bypass graft, and surgical hip/femur fracture treatment episodes. All related care within 90 days of hospital discharge will be included in the episode of care. 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.

DATES:

Effective dates: This rule is effective February 18, 2017, except for the following amendatory instructions: number 3 amending 42 CFR 510.2; number 4 adding 42 CFR 510.110; number 6 amending 42 CFR 510.120; number 14 amending 42 CFR 510.405; number 15 42 CFR 510.410; number 16 revising 42 CFR 510.500; number 17 revising 42 CFR 510.505; number 18 adding 42 CFR 510.506; and number 19 amending 42 CFR 510.515, which are effective July 1, 2017.

Applicability date: The regulations at 42 CFR part 512 are applicable July 1, 2017.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

For questions related to the EPMs: EPMRULE@cms.hhs.gov.

For questions related to the CJR model: CJR@cms.hhs.gov.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

Electronic Access

This Federal Register document is also available from the Federal Register online database through Federal Digital System (FDsys), a service of the U.S. Government Printing Office. This database can be accessed via the internet at http://www.gpo.gov/​fdsys/​.

Alphabetical List of Acronyms

Because of the many terms to which we refer by acronym, abbreviation, or short form in this final rule, we are listing the acronyms, abbreviations and short forms used and their corresponding terms in alphabetical order.

ACE Acute-care episode

ACO Accountable Care Organization

ALOS Average length of stay

AMA American Medical Association

AMI Acute Myocardial Infarction

APM Alternative Payment Model

APRN Advanced Practice Registered Nurse

ASC QRP Ambulatory Surgical Center Quality Reporting Program

ASC Ambulatory Surgical Center

ASPE Assistant Secretary for Planning and Evaluation

BAA Business Associate Agreement

BPCI Bundled Payments for Care Improvement

CABG Coronary Artery Bypass Graft

CAD Coronary artery disease

CAH Critical access hospital

CBSA Core-Based Statistical Area

CC Complication or comorbidity

CCDA Consolidated clinical document architecture

CCDE Core clinical data elements

CCN CMS Certification Number

CEC Comprehensive ESRD Care Initiative

CEHRT Certified Electronic Health Record Technology

CEP Clinical Episode Payment

CFR Code of Federal Regulations

CHIP Children's Health Insurance Program

CJR Comprehensive Care for Joint Replacement

CMHC Community Mental Health Center

CMI Case Mix Index

CMP Civil monetary penalty

CQMC Core Quality Measure Collaborative

CMS Centers for Medicare & Medicaid Services

CoP Condition of Participation

CORF Comprehensive Outpatient Rehabilitation Facility

CPC Comprehensive Primary Care Initiative

CPT Current Procedural Terminology

CR Cardiac rehabilitation

CRNA Certified Registered Nurse Anesthetists

CSA Combined Statistical Area

CVICU Cardiovascular intensive care units

CY Calendar year

DES Drug-eluting stents

DME Durable medical equipment

DMEPOS Durable medical equipment, prosthetics, orthotics, and supplies

DR Downside Risk

DSH Disproportionate Share Hospital

DUA Data Use Agreement

ED Emergency Department

ECMO Extracorporeal membrane circulation

ECQM Electronic Clinical Quality Measures

EFT Electronic funds transfer

EGM Episode Grouper for Medicare

EHR Electronic health record

E/M Evaluation and management

EPM Episode payment model

ESCO ESRD Seamless Care Organization

ESRD End-Stage Renal Disease

FFS Fee-for-service

FFR Fractional Flow Reserve

GAAP Generally-Accepted Accounting Principles

GEM General Equivalence Mapping

GPCI Geographic Practice Cost Index

HAC Hospital-Acquired Condition

HACRP Hospital-Acquired Condition Reduction Program

HCAHPS Hospital Consumer Assessment of Healthcare Providers and Systems

HCC Hierarchical Condition Category

HCPCS Healthcare Common Procedure Coding System

HHA Home health agency

HHPPS Home Health Prospective Payment System

HHRG Home Health Resource Group

HHS U.S. Department of Health and Human Services

HH QRP Home Health Quality Reporting Program

HICN Health Insurance Claim Number

HIPAA Health Insurance Portability and Accountability Act

HIQR Hospital Inpatient Quality Reporting

HIV Human Immunodeficiency Virus

Health IT Health Information Technology

HLM Hierarchical Logistic Regression model

HLMR HCAHPS Linear Mean Roll Up

HOOS Hip Dysfunction and Osteoarthritis Outcome Score

HOPD Hospital outpatient department

HRRP Hospital Readmissions Reductions Program

HRR Hospital Referral Region

HVBP Hospital Value-Based Purchasing Program

ICD-9-CM International Classification of Diseases, 9th Revision, Clinical Modification

ICHOM International Consortium for Health Outcomes Measurement

IRFQR Inpatient Rehabilitation Facilities Quality Reporting

ICD Implantable Cardioverter Defibrillator

ICD-10-CM International Classification of Diseases, 10th Revision, Clinical Modification

ICR Intensive Cardiac Rehabilitation

I-I Inpatient to inpatient transfer

IME Indirect medical education

IP Inpatient

IPF Inpatient psychiatric facility

IPF QRP Inpatient Psychiatric Facility Quality Reporting Program

IPPS Inpatient Prospective Payment System

IRF Inpatient rehabilitation facility

IRF QRP Inpatient Rehabilitation Facility Quality Reporting Program

IVR Active Interactive Voice Recognition

KOOS Knee Injury and Osteoarthritis Outcome ScoreStart Printed Page 181

LAN Healthcare Payment Learning and Action Network

LBBB Left bundled branch block

LEJR Lower-extremity joint replacement

LEP limited English proficiency

LIP Low-income percentage

LOS Length-of-stay

LTCH QRP Long-Term Care Hospital Quality Reporting Program

LTCH Long-term care hospital

LUPA Low-utilization payment adjustment

MA Medicare Advantage

MAC Medicare Administrative Contractor

MACRA Medicare Access and CHIP Reauthorization Act of 2015

MAP Measure Application Partnership

MAPCP Multi-Payer Advanced Primary Care Practice

MAT Measure Authoring Tool

MCC Major complications or comorbidities

MCCM Medicare Care Choices Model

MDC Major diagnostic category

MDH Medicare-Dependent Hospital

MDM Master Database Management

MedPAC Medicare Payment Advisory Commission

MIPS Merit-based Incentive Payment System

MP Malpractice

MSA Metropolitan Statistical Area

MS-DRG Medical Severity Diagnosis-Related Group

MSPB Medicare Spending Per Beneficiary

NHDS National Hospital Discharge Survey

NCDR National Cardiovascular Data Registry

NDR No Downside Risk

NPI National Provider Identifier

NPPGP Non-Physician Practitioner Group Practice

NPRA Net Payment Reconciliation Amount

NQF National Quality Forum

NSTEMI Non ST-elevation myocardial infarction

OCM Oncology Care Model

OIG Department of Health and Human Services' Office of the Inspector General

O-I Outpatient-to-inpatient transfer

OPPS Outpatient Prospective Payment System

OPT Outpatient Physical Therapist

OQR Outpatient Quality Reporting

PACE Program of All-Inclusive Care for the Elderly

PBPM Per-beneficiary per-month

PCI Percutaneous Coronary Intervention

PCMH Primary Care Medical Homes

PE Practice Expense

PEP Partial Episode Payment

PFS Physician Fee Schedule

PGP Physician group practice

PHA Partial hip arthroplasty

PQRS Physician Quality Reporting System

PPS Prospective Payment System

PRO Patient-Reported Outcome

PROMIS Patient-Reported Outcomes Measurement Information Systems

PROM Patient-Reported Outcome Performance Measure

PTAC Focused Payment Model Technical Advisory Committee

PTCA Percutaneous transluminal coronary angioplasty

PY Performance year

QCDR Qualified clinical data registries

QE Qualified Entity

QIO Quality Improvement Organization

QP Qualifying APM Participant

QPP Quality Payment Program

QRDA Quality Reporting Document Architecture

QRUR Quality and Resource Use Reports

RAC Recovery Audit Contractor

RRC Rural Referral Center

RSCR Risk-Standardized Complication Rate

RSRR Risk-Standardized Readmission Rate

RSMR Risk-Standardized Mortality Rate

RVU Relative Value Unit

SCH Sole Community Hospital

SDS Socio-demographic Status

SFT Secure File Transfer

SHFFT Surgical hip/femur fracture treatment

SHIP State Health Insurance Assistance Programs

SILS2 Single Item Health Literacy Screening

SLA Service level agreement

SNF Skilled nursing facility

SNF-QRP QRP  Skilled Nursing Facility Quality Reporting Program

SSDMF Social Security Death Master file

STEMI ST-elevation myocardial infarction

STS Society of Thoracic Surgeons

ST-T ST-segment-T wave

TEP Technical Expert Panel

TGP Therapy Group Practice

THA Total hip arthroplasty

TIN Taxpayer identification number

TJA Total joint arthroplasty

TKA Total knee arthroplasty

TP Target price

UHDDS Uniform Hospital Discharge Data Set

VAD Ventricular Assist Device

VBP Value Based Purchasing

VR-12 Veterans Rand 12 Item Health Survey

Table of Contents

I. Executive Summary

A. Purpose

B. Summary of the Major Provisions

1. Model Overview—EPM Episodes of Care

2. Model Scope

3. Payment

4. Similar, Previous, and Concurrent Models

5. Overlap With Ongoing CMS Efforts

6. Quality Measures and Reporting Requirements

7. Beneficiary Protections

8. Financial Arrangements

9. Data Sharing

10. Program Waivers

C. Summary of Economic Effects

II. Background

III. Episode Payment Models

A. Selection of Episodes, Advanced Alternative Payment Model Considerations, and Future Directions

1. Selection of Episodes for Episode Payment Models in This Rulemaking

a. Overview

b. SHFFT Model

c. AMI and CABG Models

2. Advanced Alternative Payment Model Considerations

a. Overview for the EPMs

b. EPM Participant Tracks

c. Clinician Financial Arrangements Lists Under the EPMs

d. Documentation Requirements

3. Future Directions for Episode Payment Models

a. Refinements to the BPCI Initiative Models

b. Potential Future Condition-Specific Episode Payment Models

c. Potential Future Event-Based Episode Payment Models for Procedures and Medical Conditions

d. Health Information Technology Readiness for Potential Future Episode Payment Models

B. Definition of the Episode Initiator and Selected Geographic Areas

1. Background

2. Definition of Episode Initiator

3. Financial Responsibility for Episode of Care

4. Geographic Unit of Selection and Exclusion of Selected Hospitals

5. Overview and Options for Geographic Area Selection for AMI and CABG Episodes

a. Exclusion of Certain MSAs

b. Selection Approach

(1) Factors Considered but Not Used

(2) Sample Size Calculations and the Number of Selected MSAs

(3) Method of Selecting MSAs

C. Episode Definition for EPMs

1. Background

2. Overview of Three New Episode Payment Models

3. Clinical Dimensions of AMI, CABG, and SHFFT Model Episodes

a. Definition of the Clinical Conditions Included in AMI, CABG, and SHFFT Model Episodes

(1) AMI (Medical Management and PCI) Model

(2) CABG Model

(3) SHFFT (Excludes Lower Extremity Joint Replacement) Model

b. Definition of the Related Services Included in EPM Episodes

4. EPM Episodes

a. Beneficiary Care Inclusion Criteria and Beginning of EPM Episodes

(1) General Beneficiary Care Inclusion Criteria

(2) Beginning AMI Episodes

(3) Beginning CABG Episodes

(4) Beginning SHFFT Episodes

(5) Special Policies for Hospital Transfers of Beneficiaries With AMI

b. Middle of EPM Episodes

c. End of EPM Episodes

(1) AMI and CABG Models

(2) SHFFT Model

D. Methodology for Setting EPM Episode Prices and Paying EPM Participants in the AMI, CABG, and SHFFT Models

1. Background

a. Overview

b. Key Terms for EPM Episode Pricing and Payment

2. Performance Years, Retrospective Episode Payments, and Two-Sided Risk EPMs

a. Performance Period

b. Retrospective Payment Methodology

c. Two-Sided Risk EPMs

3. Adjustments to Actual EPM Episode Payments and to Historical Episode Payments Used To Set Episode PricesStart Printed Page 182

a. Overview

b. Special Payment Provisions

c. Services That Straddle Episodes

d. High-Payment EPM Episodes

e. Treatment of Reconciliation Payments and Medicare Repayments When Calculating Historical EPM-Episode Payments To Update EPM-Episode Benchmark and Quality-Adjusted Target Prices

4. EPM-Episode Price-Setting Methodologies

a. Overview

(1) AMI Model DRGs

(2) CABG Model DRGs

(3) SHFFT Model DRGs

b. EPM-Episode Benchmark and Quality-Adjusted Target Price Features

(1) Risk-Stratifying EPM-Episode Benchmark Prices Based on MS-DRG and Diagnosis

(2) Adjustments To Account for EPM-Episode Price Variation

(a) Adjustments for Certain AMI Model Episodes With Chained Anchor Hospitalizations

(b) Adjustments for CABG Model Episodes

(c) Adjustments for Certain AMI Model Episodes With CABG Readmissions

(d) Potential Future Approaches To Setting Target Prices for AMI and Hip Fracture Episodes

(e) Summary of Pricing Methodologies for AMI, CABG, and SHFFT Model Episode Scenarios

(3) 3 Years of Historical Data

(4) Trending Historical Data to the Most Recent Year

(5) Update Historical EPM-Episode Payments for Ongoing Payment System Updates

(6) Blend Hospital-Specific and Regional Historical Data

(7) Define Regions as U.S. Census Divisions

(8) Normalize for Provider-Specific Wage Adjustment Variations

(9) Combining Episodes To Set Stable Benchmark and Quality-Adjusted Target Prices

(10) Effective Discount Factor

c. Approach To Combine Pricing Features for all SHFFT Model Episodes and AMI Model Episodes Without CABG Readmissions

d. Approach To Combine Pricing Features for CABG Model Episodes

(1) Anchor Hospitalization Portion of CABG Model Episodes

(2) Approach To Combine Pricing Features for Post-Anchor Hospitalization Portion of CABG Model Episodes

(3) Combine CABG Anchor Hospitalization Benchmark Price and CABG Post-Anchor Hospitalization Benchmark Price

e. Approach To Combine Pricing Features for AMI Model Episodes With CABG Readmissions

5. Process for Reconciliation

a. Net Payment Reconciliation Amount (NPRA)

b. Payment Reconciliation

c. Reconciliation Report

6. Adjustments for Overlaps With Other Innovation Center Models and CMS Programs

a. Overview

b. Provider Overlap

(1) BPCI Participant Hospitals in Geographic Areas Selected for EPMs

(2) BPCI Physician Group Practice (PGP) Episode Initiators in Hospitals Participating in EPMs

c. Beneficiary Overlap

(1) Beneficiary Overlap With BPCI

(2) Beneficiary Overlap With the CJR Model and Other EPMs

(3) Beneficiary Overlap With Shared Savings Models and Programs

d. Payment Reconciliation of Overlap With Non-ACO CMS Models and Programs

7. Limits or Adjustments to EPM Participants' Financial Responsibility

a. Overview

b. Limit on Actual EPM-Episode Payment Contribution to Repayment Amounts and Reconciliation Payments

(1) Limit on Actual EPM-Episode Payment Contribution to Repayment Amounts

(2) Limitation on Reconciliation Payments

c. Additional Protections for Certain EPM Participants

(1) Policies for Certain EPM Participants to Further Limit Repayment Responsibility

(2) Considerations for Hospitals Serving a High Percentage of Potentially Vulnerable Populations

d. Application of Stop-Gain and Stop-Loss Limits

e. EPM Participant Responsibility for Increased Post-Episode Payments

8. Appeals Process

a. Overview

b. Notice of Calculation Error (First Level Appeal)

c. Dispute Resolution Process (Second Level of Appeal)

d. Exception to the Notice of Calculation Error Process and Notice of Termination

e. Limitations on Review

E. EPM Quality Measures, Public Display, and Use of Quality Measures in the EPM Payment Methodology

1. Background

2. Selection of Quality Measures for the EPMs

a. Overview of Quality Measure Selection

b. AMI Model Quality Measures

c. CABG Model Quality Measures

d. SHFFT Model Quality Measures

3. Use of Quality Measures in the EPM Payment Methodologies

a. Overview of EPM Composite Quality Score Methodology

b. Determining Quality Measure Performance

c. Determining Quality Measure Improvement

d. Determining Successful Submission of Voluntary Data for AMI and SHFFT Models

(1) Hybrid AMI Mortality (NQF #2473) Voluntary Data

(2) Patient-Reported Outcomes and Limited Risk Variable Voluntary Data Following Elective Primary THA/TKA

e. Calculation of the EPM-Specific Composite Quality Score

(1) AMI Model Composite Quality Score

(2) CABG Model Composite Quality Score

(3) SHFFT Model Composite Quality Score

f. EPM Pay-for-Performance Methodologies To Link Quality and Payment

(1) Overview of Pay-for-Performance Proposals Applicable to the EPMs

(2) AMI and CABG Model Pay-for-Performance Methodology

(a) AMI Model Pay-for-Performance Methodology

(b) CABG Model Pay-for-Performance Methodology

(c) Alignment Between the AMI and CABG Model Methodologies

(3) SHFFT Model Pay-for-Performance Methodology

4. Details on Quality Measures for the EPMs

a. AMI Model-Specific Measures

(1) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization (NQF #0230) (MORT-30-AMI)

(a) Background

(b) Data Sources

(c) Cohort

(d) Inclusion and Exclusion Criteria

(e) Risk-Adjustment

(f) Calculating the Risk-Standardized Mortality Ratio (RSMR) and Performance Period

(2) Excess Days in Acute Care After Hospitalization for Acute Myocardial Infarction (AMI Excess Days)

(a) Background

(b) Data Sources

(c) Cohort

(d) Inclusion and Exclusion Criteria

(e) Risk-Adjustment

(f) Calculating the Rate and Performance Period

(3) Hybrid Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization (NQF #2473) (Hybrid AMI Mortality)

(a) Background

(b) Data Sources

(c) Cohort

(d) Inclusion and Exclusion Criteria

(e) Risk-Adjustment

(f) Calculating the Risk-Standardized Mortality Ratio (RSMR) and Performance Period

(g) Requirements for Successful Submission of AMI Voluntary Data

b. CABG Model-Specific Measure

(1) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft (CABG) Surgery (NQF #2558) (MORT-30-CABG)

(a) Background

(b) Data Source

(c) Cohort

(d) Inclusion and Exclusion Criteria

(e) Risk-Adjustment

(f) Calculating the Risk-Standardized Mortality Ratio (RSMR) and Performance Period

c. SHFFT Model-Specific Measures

(1) Hospital Level Risk Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550) (Hip/Knee Complications)

(a) Background

(b) Data SourcesStart Printed Page 183

(c) Cohort

(d) Inclusion and Exclusion Criteria

(e) Risk Adjustment

(f) Calculating the Risk Standardized Complication Rate and Performance Period

(2) Hospital-Level Performance Measure(s) of Patient-Reported Outcomes Following Elective Primary Total Hip and/or Total Knee Arthroplasty

(a) Background

(b) Data Sources

(c) Cohort

(d) Inclusion and Exclusion Criteria

(e) Outcome

(f) Risk Adjustment (If Applicable)

(g) Calculating the Risk Standardized Rate

(h) Performance Period for Successful Submission of THA/TKA Patient-Reported Outcome-Based Voluntary Data

(i) Requirements for Successful Submission of THA/TKA Patient-Reported-Outcome-Based Voluntary Data

d. Measure Used for All EPMs

(1) Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey (NQF #0166)

(a) Background

(b) Data Sources

(c) Cohort

(d) Inclusion and Exclusion Criteria

(e) Case-Mix Adjustment

(f) HCAHPS Scoring

(g) Calculating the Rate and Performance Period

e. Potential Future Measures

5. Form, Manner, and Timing of Quality Measure Data Submission

6. Display of Quality Measures and Availability of Information for the Public From the AMI, CABG, and SHFFT Models

F. Compliance Enforcement and Termination of an Episode Payment Model

1. Overview and Background

2. Compliance Enforcement for EPMs

3. Termination of an Episode Payment Model

G. Monitoring and Beneficiary Protection

1. Introduction and Summary

2. Beneficiary Choice

3. Beneficiary Notification

4. Monitoring for Access To Care

5. Monitoring for Quality of Care

6. Monitoring for Delayed Care

H. Access to Records and Record Retention

I. Financial Arrangements Under EPM

1. Background

2. Overview of the EPM Financial Arrangements

3. EPM Collaborators

4. Sharing Arrangements Under EPM

a. General

b. Requirements

c. Gainsharing Payment, Alignment Payment, and Internal Cost Savings Conditions and Restrictions

d. Documentation Requirements

5. Distribution Arrangements Under the EPM

a. General

b. Requirements

6. Downstream Distribution Arrangements Under the EPM

a. General

b. Requirements

7. Summary of Proposals for Sharing, Distribution, and Downstream Distribution Arrangements Under the EPM

8. Enforcement Authority

9. Beneficiary Engagement Incentives Under the EPM

a. General

b. Technology Provided to an EPM Beneficiary

c. Clinical Goals of the EPM

d. Documentation of Beneficiary Incentives

10. Compliance With Fraud and Abuse Laws

J. Waivers of Medicare Program Requirements

1. Overview

2. Summary of Waivers Adopted Under the CJR Model

3. Analysis of Current Model Data

a. Analysis of Waiver Usage

b. Analysis of Discharge Destination—Post-Acute Care Usage

c. Analysis of Hospital Mean Length of Stay Data

4. Post-Discharge Home Visits

a. AMI Model

b. CABG Model

c. SHFFT Model

5. Billing and Payment for Telehealth Services

6. SNF 3-Day Rule

a. Waiver of SNF 3-Day Rule

b. Additional Beneficiary Protections Under the SNF 3-Day Stay Rule Waiver

7. Waivers of Medicare Program Rules To Allow Reconciliation Payment or Repayment Actions Resulting From the Net Payment Reconciliation Amount

8. New Waiver for Providers and Suppliers of Cardiac Rehabilitation and Intensive Cardiac Rehabilitation Services Furnished to EPM Beneficiaries During an AMI or CABG Episode

K. Data Sharing

1. Overview

2. Beneficiary Claims Data

3. Aggregate Regional Data

4. Timing and Period of Baseline Data

5. Frequency and Period of Claims Data Updates for Sharing Beneficiary-Identifiable Claims Data During the Performance Period

6. Legal Permission To Share Beneficiary-Identifiable Data

7. Data Considerations With Respect to EPM and CJR Collaborators

L. Coordination With Other Agencies

IV. Evaluation Approach

A. Background

B. Design and Evaluation Methods

C. Data Collection Methods

D. Key Evaluation Research Questions

E. Evaluation Period and Anticipated Reports

V. Comprehensive Care for Joint Replacement Model

A. Participant Hospitals in the CJR Model

B. Inclusion of Reconciliation and Repayment Amounts When Updating Data for Quality-Adjusted Target Prices

C. Quality-Adjusted Target Price

D. Reconciliation

1. Hospital Responsibility for Increased Post-Episode Payments

2. ACO Overlap and Subsequent Reconciliation Calculation

3. Stop-Loss and Stop-Gain Limits

4. Modifications to Reconciliation Process

E. Use of Quality Measures and the Composite Quality Score

1. Hospitals Included in Quality Performance Distribution

2. Quality Improvement Points

3. Relationship of Composite Quality Score to Quality Categories

4. Maximum Composite Quality Score

5. Acknowledgement of Voluntary Data Submission

6. Calculation of the HCAHPS Linear Mean Roll-Up (HLMR) Score

F. Accounting for Overlap With CMS ACO Models and the Medicare Shared Savings Program

G. Appeals Process

H. Beneficiary Notification

I. Compliance Enforcement

1. Failure To Comply

J. Financial Arrangements Under the CJR Model

1. Definitions Related to Financial Arrangements

a. Addition to the Definition of CJR Collaborators

b. Deleting the Term Collaborator Agreements

c. Addition of CJR Activities

2. Sharing Arrangements

a. General

b. Requirements

c. Gainsharing Payment, Alignment Payment, and Internal Cost Savings Conditions and Restrictions

d. Documentation

3. Distribution Arrangements

a. General

b. Requirements

4. Downstream Distribution Arrangements Under the CJR Model

a. General

b. Requirements

5. Summary of Proposals for Sharing, Distribution, and Downstream Distribution Arrangements Under the CJR Model

K. Beneficiary Incentives Under the CJR Model

L. Access to Records and Record Retention

M. Waivers of Medicare Program Rules To Allow Reconciliation Payment or Repayment Actions Resulting From the Net Payment Reconciliation Amount

N. SNF 3-Day Waiver Beneficiary Protections

O. Advanced Alternative Payment Model Considerations

1. Overview for CJR

2. CJR Participant Hospital Track

3. Clinician Financial Arrangements Lists Under the CJR Model

4. Documentation Requirements

VI. Cardiac Rehabilitation Incentive Payment Model

A. Background

B. Overview of the CR Incentive Payment Model

1. Rationale for the CR Incentive Payment Model

2. General Design of the CR Incentive Payment Model

C. CR Incentive Payment Model ParticipantsStart Printed Page 184

D. CR/ICR Services That Count Towards CR Incentive Payments

E. Determination of CR Incentive Payments

1. Determination of CR Amounts That Sum To Determine a CR Incentive Payment

2. Relation of CR Incentive Payments to EPM Pricing and Payment Policies and Sharing Arrangements for EPM-CR Participants

3. CR Incentive Payment Report

4. Timing for Making CR Incentive Payments

F. Provisions for FFS-CR Participants

1. Access to Records and Retention for FFS-CR Participants

2. Appeals Process for FFS-CR Participants

a. Overview

b. Notice of Calculation Error (First Level Appeal)

c. Dispute Resolution Process (Second Level of Appeal)

d. Exception to the Notice of Calculation Error Process and Notice of Termination

e. Limitations on Review

3. Data Sharing for FFS-CR Participants

a. Overview

b. Data Sharing With CR Participants

4. Compliance Enforcement for FFS-CR Participants and Termination of the CR Incentive Payment Model

5. Enforcement Authority for FFS-CR Participants

6. Beneficiary Engagement Incentives for FFS-CR Participants

7. Waiver of Physician Definition for FFS-CR Participants Furnishing CR and ICR Services

a. Overview of Program Rule Waivers Under an EPM

b. General Physician Requirements for Furnishing CR/ICR Services

c. Waiver of Physician Definition For EPM-CR Participants Furnishing CR and ICR Services

d. Waiver of Physician Definition For FFS-CR Participants Furnishing CR and ICR Services

G. Considerations Regarding Financial Arrangements Under the CR Incentive Payment Model

VII. Collection of Information Requirements

VIII. Regulatory Impact Analysis

A. Statement of Need

1. Need for EPM Final Rule

2. Need for CJR Modifications

3. Need for CR Incentive Payment Model

4. Aggregate Impact of EPMs, CJR, and CR Incentive Payment Model

B. Overall Impact

C. Anticipated Effects

1. Overall Magnitude of the Model and Its Effects on the Market

a. EPMs

b. CJR

c. CR Incentive Payment Model

d. Aggregate Effects on the Market

2. Effects on the Medicare Program

a. EPMs

(1) Assumptions and Uncertainties

(2) Analyses

(3) Uncertainties

b. CJR

(1) Assumptions and Uncertainties

(2) Analyses

c. CR Incentive Payment Model

(1) Assumptions and Uncertainties

(2) Analysis

d. Further Consideration

3. Effects on Beneficiaries

4. Effects on Small Rural Hospitals

5. Effects on Small Entities

6. Effects on Collection of Information

7. Unfunded Mandates

D. Alternatives Considered

E. Accounting Statement and Table

F. Conclusion

Regulations Text

I. Executive Summary

A. Purpose

The purpose of this final rule—Advancing Care Coordination through Episode Payment Models is to implement the creation and testing of three new episode payment models (EPMs) and a Cardiac Rehabilitation (CR) incentive payment model under the authority of the Center for Medicare and Medicaid Innovation (“the Innovation Center”), as well as to implement several modifications to the Comprehensive Care for Joint Replacement model. Section 1115A of the Social Security Act (“the Act”) authorizes the Innovation Center to test innovative payment and service-delivery models to reduce Medicare, Medicaid, and Children's Health Insurance Program (CHIP) expenditures while preserving or enhancing the quality of care furnished to such programs' beneficiaries. Under the fee-for-service (FFS) program, Medicare makes separate payments to providers and suppliers for the items and services furnished to a beneficiary over the course of treatment (an episode of care). With the amount of payments dependent on the volume of services delivered, providers may not have incentives to invest in quality-improvement and care-coordination activities. As a result, care may be fragmented, unnecessary, or duplicative. The goal for the EPMs is to improve the quality of care provided to beneficiaries in an applicable episode while reducing episode spending through financial accountability.[1] The EPMs include models for episodes of care surrounding an acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment excluding lower extremity joint replacement (SHFFT). Under this final rule, the Centers for Medicare & Medicaid Services (CMS) will test whether an EPM for AMI, CABG, and SHFFT episodes of care will reduce Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries. We anticipate that the finalized models will benefit Medicare beneficiaries by improving the coordination and transition of care, improving the coordination of items and services paid for through FFS Medicare, encouraging more provider investment in infrastructure and redesigned care processes for higher-quality and more efficient service delivery, and incentivizing higher-value care across the inpatient and post-acute care spectrum. We proposed on August 2, 2016 to test the proposed EPMs for 5 performance years, beginning July 1, 2017, and ending December 31, 2021 (81 FR 50799) and we are finalizing those dates as proposed in this final rule.

Within this final rule, we discuss three distinct EPMs focused on episodes of care for AMI, CABG, and SHFFT episodes. We chose these episodes for the models because, as discussed in depth in section III.A. of this final rule and as stated in the proposed rule, we believe hospitals would have a significant opportunity to redesign care and to improve the quality of care furnished during the applicable episode. The EPMs will enable hospitals to consider the most appropriate strategies for care redesign, including: (1) Increasing post-hospitalization follow-up and medical management for patients; (2) coordinating across the inpatient and post-acute care spectrum; (3) conducting appropriate discharge planning; (4) improving adherence to treatment or drug regimens; (5) reducing readmissions and complications during the post-discharge period; (6) managing chronic diseases and conditions that may be related to the EPMs' episodes; (7) choosing the most appropriate post-acute care setting; and (8) coordinating between providers and suppliers such as hospitals, physicians, and post-acute care providers. The EPMs would offer hospitals the opportunity to examine and better understand their own care processes and patterns with regard to patients in AMI, CABG, and SHFFT episodes, as well as the processes of post-acute care providers and physicians.

We previously have used our statutory authority under section 1115A of the Act to test other episode payment models such as the Bundled Payments for Care Improvement (BPCI) initiative and Comprehensive Care for Joint Replacement (CJR) model. Bundled payments for multiple services in an episode of care hold participating organizations financially accountable for that episode of care. Such models also allow participants to receive payments based in part on the reduction in Medicare expenditures that arise Start Printed Page 185from such participants' care redesign efforts. This payment can be used for investments in care redesign strategies and infrastructure, as well as to incentivize collaboration with other providers and suppliers furnishing services to beneficiaries included in the models.

We believe the EPMs will further the Innovation Center's mission and the Administration's goal of increasingly paying for value and outcomes, rather than for volume alone,2 by promoting the alignment of financial and other incentives for all health care providers caring for beneficiaries during SHFFT, CABG, or AMI episodes. The acute care hospital where an eligible beneficiary has a hospitalization for one of the procedures or clinical conditions included in these EPMs will be held accountable for spending during the episode of care. EPM participants could earn reconciliation payments by appropriately reducing expenditures and meeting certain quality metrics. EPM participants will also gain access to data and educational resources to better understand care patterns during the inpatient hospitalization and post-acute periods, as well as associated spending. Payment approaches that reward providers for assuming financial and performance accountability for a particular episode of care create incentives for the implementation and coordination of care redesign between participants and other providers and suppliers such as physicians and post-acute care providers.

The AMI, CABG, and SHFFT models will require the participation of hospitals in multiple geographic areas that might not otherwise participate in testing episode payment for the episodes of care. CMS is testing other episode payment models with the BPCI initiative and the CJR model. The BPCI initiative is voluntary; providers applied to participate and chose from 48 clinical episodes. BPCI participants entered the at-risk phase between 2013 and 2015 and have the option to continue participating in the initiative through FY 2018. In the CJR model, acute care hospitals in selected geographic areas are required to participate in the CJR model for all eligible lower-extremity joint replacement (LEJR) episodes that initiate at a CJR participant hospital. The CJR model began its first of 5 performance years on April 1, 2016. Realizing the full potential of new EPMs will require the engagement of an even broader set of providers than have participated to date in our episode payment models such as the BPCI initiative and the CJR model. As such, we are interested in testing and evaluating the impact of episode payment for the three EPMs in a variety of circumstances, including those hospitals that may not otherwise participate in such a test.

While we note that testing of the CJR model that began in April 2016 will allow CMS to gain experience with requiring hospitals to participate in an episode payment model, the clinical circumstances of the episodes we proposed (AMI, CABG, and SHFFT) differ in important ways from the LEJR episodes included in the CJR model. LEJR procedures are common among the Medicare population, and the majority of such procedures are elective. In contrast, under the three EPMs, CMS will test episode payment for certain cardiac conditions and procedures, as well as SHFFT. We expect the patient population included in these episodes will be substantially different from the patient population in CJR episodes, due to the clinical nature of the cardiac and SHFFT episodes. Beneficiaries in these episodes commonly have chronic conditions that contribute to the initiation of the episodes, and need both planned and unplanned care throughout the EPM episode following discharge from the hospitalization that begins the episode. Both AMI and CABG model episodes primarily include beneficiaries with cardiovascular disease, a chronic condition which likely contributed to the acute events or procedures that initiate the episodes. About half the average AMI model historical episode spending was for the hospitalization, with the majority of spending following discharge from the hospitalization due to hospital readmissions, while there was relatively less spending on SNF services, Part B professional services, and hospital outpatient services. In CABG model historical episodes, about three-quarters of episode spending was for the hospitalization, with the remaining episode spending relatively evenly divided between Part B professional services and hospital readmissions, and a lesser percentage on SNF services. Similar to AMI episodes, post-acute care provider use was relatively uncommon in CABG model historical episodes, while hospital readmissions during CABG model historical episodes were relatively common. SHFFT model historical episodes also were accompanied by substantial spending for hospital readmissions, and post-acute care provider use in these episodes also was high.[2] The number of affected beneficiaries and potential impact of the models on quality and Medicare spending present an important opportunity to further the Administration's goal of shifting health care payments to support the quality of care over the quantity of services by promoting better coordination among health care providers and suppliers and greater efficiency in the care of beneficiaries in these models, while reducing Medicare expenditures.[3] Pay-for-performance episode payment models such as the three EPMs in this rule financially incentivize improved quality of care and reduced cost by aligning the financial incentives of all providers and suppliers caring for model beneficiaries with these goals. This alignment leads to a heightened focus on care coordination and management throughout the episode that prioritizes the provision of those items and services which improve beneficiary outcomes and experience at the lowest cost. A more detailed discussion of the evidence supporting the episode selection for these models can be found in section III.A.1. of this final rule.

These models will also allow CMS to gain additional experience with episode-payment based approaches for hospitals with variance in (1) historic care and utilization patterns; (2) patient populations and care patterns; (3) roles within their local markets; (4) volumes of services; (5) levels of access to financial, community, or other resources; and (6) levels of population and health-care-provider density, including local variations in the availability and use of different categories of post-acute care providers. We believe that participation in the EPMs by a large number of hospitals with diverse characteristics will result in a robust data set for evaluating this payment approach and will stimulate the rapid development of new evidence-based knowledge. Testing the EPMs in this manner will also allow us to learn more about patterns of inefficient utilization of health care services and how to incentivize quality improvement for beneficiaries receiving services in AMI, CABG, and SHFFT episodes. This knowledge could potentially inform future Medicare payment policies.

We proposed the CR incentive payment model to test the effects on Start Printed Page 186quality of care and Medicare expenditures of providing financial incentives to hospitals for beneficiaries hospitalized for treatment of AMI or CABG to encourage care coordination and greater utilization of medically necessary CR and intensive cardiac rehabilitation (ICR) services for 90 days post-hospital discharge where the beneficiary's overall care is paid under either an EPM or the Medicare FFS program. Despite the evidence from multiple studies that CR services improve health outcomes, the literature also indicates that these services are underutilized, estimating that only about 35 percent of AMI patients older than 50 receive this indicated treatment.[4 5 6] Recent analysis confirms a similar pattern of underutilization for Medicare beneficiaries who are eligible for and could benefit from CR.

Considering the evidence demonstrating that CR/ICR services improve long-term patient outcomes, the room for improvement in CR/ICR service utilization for beneficiaries eligible for this benefit, and the need for ongoing, chronic treatment for underlying coronary artery disease (CAD) among beneficiaries that have had an AMI or a CABG, we believe that there is a need for improved long-term care management and care coordination for beneficiaries that have had an AMI or a CABG and that incentivizing the use of CR/ICR services is an important component of meeting this need. We want to reduce barriers to high-value care by testing a financial incentive for hospitals that encourages the management of beneficiaries that have had an AMI or a CABG in ways that may contribute to long-term improvements in quality and reductions in Medicare spending.

We sought public comment on the proposals contained in the proposed rule (81 FR 50794) published on August 2, 2016, and also on any alternatives considered. Public comment and our responses to those comments follow under the applicable sections. The applicable sections contain our proposed policy changes, commenters' reactions, and our responses.

We received approximately 175 timely pieces of correspondence containing multiple comments on the EPM proposed rule. We note that some of these public comments were outside of the scope of the proposed rule. These out-of-scope public comments are mentioned in this section but are not addressed with the policy responses in this final rule. The following is a summary of the comments received on the proposed model as a whole, including the authority for the model and general comments on CMS' implementation of the EPM model at this time and our responses.

Comment: Some commenters expressed support for the proposed EPMs and for requiring participation from specific hospitals in the selected geographic regions. Other commenters requested whether CMS has the authority under section 1115A of the Social Security Act (the Act) to implement the EPMs as proposed, while others stated specifically that they believe CMS cannot compel provider participation and further stated that they did not believe Congress intended to delegate its authority to make permanent changes to the Medicare program to the Secretary through the Innovation Center.

Many commenters raised concerns that interpreting section 1115A to mean that requiring participation in models is permissible under statute holds significant implications for the patients and providers included in the proposed EPMs, as required models could negatively impact the Medicare Shared Savings Program (Shared Savings Program) and/or Accountable Care Organizations (ACOs).

Response: While we appreciate the support expressed by some commenters, we disagree with the contention that the Innovation Center lacks the authority to test models under section 1115A of the Act in which participation is required. Section 1115A of the Act authorizes the Secretary to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care furnished to Medicare, Medicaid, and Children's Health Insurance Program (CHIP) beneficiaries, and section 1115A of the Act does not specify that participation in models must be voluntary. As discussed in section IV. of this final rule, one of the reasons that we have determined it is necessary to test the EPM models by requiring the participation of certain hospitals is to obtain more generalizable evaluation results.

Moreover, the Secretary has authority to establish regulations to carry out the administration of Medicare. Specifically, the Secretary has authority under both sections 1102 and 1871 of the Act to implement regulations as necessary to administer Medicare, including testing these Medicare payment and service delivery models. We note that the EPMs will test different methods for delivering and paying for services covered under the Medicare program, which the Secretary has clear legal authority to regulate.

To be clear, we did not propose, and are not finalizing, permanent changes to Medicare, but rather are testing payment and service delivery models under section 1115A(b) of the Act. While the EPMs require the participation of certain participant hospitals, the EPMs are not permanent changes to the Medicare program. We acknowledge the importance of examining the impact of the EPMs as this test will implement models at the geographic regional level. The EPMs are thus intended to enable CMS to test and evaluate the effects of episode payment approaches on a broader range of Medicare providers and suppliers than would choose to participate in an alternative payment model. More specifically, the evaluation is to conduct a multifaceted and multi-pronged examination of issues of quality, access, and consequences. Randomized evaluation designs of this kind helps to reduce the systematic differences among hospitals that are and are not participating in the EPMs, which helps to ensure that, on average, differences in outcomes between participating and non-participating hospitals reflect the impact of the model. Testing these models in this manner also allows us to learn more about patterns of inefficient utilization of health care services and how to incentivize the improvement of quality for AMI, CABG, and SHFFT procedure/diagnosis episodes. This learning can potentially inform future Medicare payment policy.

We do not believe the EPMs will harm the continuation of a permanent Medicare program such as the Shared Savings Program, We continue to believe that while we test the EPMs, ACOs will still work towards the goals of the Shared Savings Program. These goals have been previously described (76 FR 67801) and include ensuring the coordination of care for beneficiaries, regardless of the time or place of that care, being innovative in service delivery by drawing upon the best, most advanced models of care, and using modern technologies, including telehealth and electronic health records, and other tools to continually reinvent care in the modern age.

We refer to our discussion about ACO overlap with the proposed EPMs that was included in the proposed rule (81 FR 50870) and acknowledge the concerns expressed by some ACOs that the current CJR and BPCI ACO overlap Start Printed Page 187policies deprive them of a key source of savings. Because ACOs in certain types of two-sided risk arrangements have stronger incentives than those in one-sided risk arrangements to reduce total cost of care, especially given the possibility of paying CMS shared losses, we believe that ACOs in such two-sided risk arrangements may be best positioned to assume the risk associated with EPM episodes, while ACOs in one-sided risk arrangements may be less well-positioned to do so. Furthermore, it is more operationally feasible to identify and exclude beneficiaries who are prospectively aligned to ACOs.

Comment: One commenter believed that the EPMs did not satisfy the requirement that the model address “a defined population for which there are deficits in care leading to poor clinical outcomes or potentially avoidable costs” as is required by section 1115A(b)(2)(A) of the Act.

Response: Models tested under section 1115A of the Act must address a defined population for which there are either deficits in care leading to poor clinical outcomes or potentially avoidable expenditures. As discussed in section III.C. of the proposed rule (81 FR 50829-50843) and section III.C. of this final rule, these models satisfy the requirements of section 1115A(b) of the Act, as the EPMs address defined populations (FFS Medicare beneficiaries experiencing acute myocardial infarctions, coronary artery bypass grafting procedures and/or surgical hip/femur fracture treatment) for which there are potentially avoidable expenditure because there are no strong incentives for coordinated care, which can lead to suboptimal care. As discussed in section IV. of this final rule, one of the reasons that we have determined it is necessary to require the participation of hospitals in multiple geographic areas that might not otherwise participate in testing episode payment for the episodes of care is to provide more generalizable evaluation results of the impacts of these models.

Comment: A few commenters asserted that the SHFFT model is equivalent to an expansion of the CJR model under section 1115A(c) of the Act. The same commenters stated that the SHFFT EPM model test should not be finalized in this rule as the CJR model has not yet satisfied the requirements of section 1115A(c) of the Act. One commenter stated that before implementing the SHFFT EPM, CMS must first complete the evaluation of the CJR model required under section 1115A(b)(4) of the Act; make the determinations required under section 1115A(c)(1) and (3) of the Act; and receive the certification from the Chief Actuary required under section 1115A(c)(2) of the Act.

Response: Regarding the commenters' assertion that the proposed SHFFT model expands the CJR model prior to the CJR evaluation, we note that this is not the case. We agree that section 1115A of the Act establishes the necessary criteria for the Secretary to expand payment and service delivery models. However, the SHFFT model we are finalizing in this rule is not an expansion of the CJR model under section 1115A(c) of the Act. Rather, the SHFFT EPM model is a new model test under section 1115A(b) of the Act. The CJR model is still at the initial model test stage, and we will not make any determinations about continuing the CJR model test through expansion under section 1115A(c) of the Act until there is sufficient information from evaluation(s) to assess its potential for expansion. While the SHFFT EPM model test complements the CJR model test, it is a separate and distinct model test. Specifically, the SHFFT model differs from the CJR model in that the CJR model is largely for planned admissions for hip and knee replacements and the episode of care begins with an admission to a participant hospital of a beneficiary who is ultimately discharged under MS-DRG 469 (Major joint replacement or reattachment of lower extremity with major complications or comorbidities) or 470 (Major joint replacement or reattachment of lower extremity without major complications or comorbidities). In contrast, the SHFFT model tests a hospital payment for hip fixation and the episode of care eventually results from a discharge paid under MS-DRG 480 (Hip and femur procedures except major joint with major complication or comorbidity—CC), MS-DRG 481 (Hip and femur procedures except major joint with complication or comorbidity—MCC), or MS-DRG 482 (Hip and femur procedures except major joint without CC or MCC). Therefore, the interventions under each model test would not overlap. Further, the SHFFT model test would give hospitals already participating in the CJR model different experience in managing care for hip and femur fracture cases that typically present emergently, rather than the planned, elective surgery that is most common for lower extremity joint replacement. Despite this geographic overlap, beneficiaries who initiate an episode in either the SHFFT or CJR model remain in that initial model and are precluded from initiating a simultaneous episode in the CJR or SHFFT models respectively. As a result, the evaluations of the CJR model and the SHFFT model will assess the effect of discrete episodes.

Comment: Some commenters expressed support for the intended goals of the EPMs, and stated they want to contribute to moving our health care system to a value-based system. However, many commenters disagreed with the process used by CMS to achieve this goal. Specifically, commenters stated that CMS moved too fast and too soon in implementing these models. Furthermore, commenters believe that the breadth and speed of the CMS models expanded exponentially. Commenters stated that in situations when multiple initiatives are being implemented simultaneously, for example Meaningful Use, new conditions of participation for emergency preparedness, multiple clinical and payment changes to the existing fee-for-service payment systems, performance requirements of payment reforms such as the MACRA, and state regulatory changes to health care, commenters stated that hospitals may have little time or resources available for thoughtful care redesigns to be applied to the proposed model. A few commenters noted that the insurance marketplace in general remains volatile, adding further complication to the health care landscape, while others believe generally that CMS is putting the existing initiatives' success at risk as a result of the proposed pace of implementation of new programs and models.

Commenters raised concerns that they were unable to submit informed comments on the proposed rule because they did not have sufficient data on the CJR model, making it difficult to assess even early experience with the process of implementation of models that require participation. Other commenters submitted statements of experience related to implementation of the CJR model, specifically that implementation was administratively challenging due to the need to first develop a process of care redesign and then implement operational changes related to efficiency as well as specific provisions of the model, including but not limited to collaboration agreements, provisions for beneficiary notifications, and data analysis. As a result of this experience, commenters requested that CMS delay the implementation time line of the EPMs. The alternative time lines proposed by commenters varied. A few commenters stated that it would be unreasonable to implement a new episode payment model before Start Printed Page 188evaluation of the outcomes and processes of existing bundled payment models. Other commenters suggested that CMS generally delay implementation until the agency can address concerns related to risk adjustment, minimum volume thresholds, comprehensiveness of payment, and episode definitions. Commenters believed that launching the proposed models simultaneously will require an incredible administrative effort, which may hinder the ability to effectively direct clinical resources towards best practices for success. To this end, commenters also suggested alternative proposals, including but not limited to reconsideration of implementing cardiac EPMs; delay, pilot, or narrow the scope of the proposed SHFFT model; delay the start date of the proposed EPMs until no earlier than January 1, 2018; provide hospitals with at least 12 months of preparation time from the date the final rule is finalized. Other commenters believed hospitals should not be subject to downside risk for at least 12 months from the implementation date of the final rule, and other commenters suggested that CMS delay the onset of downside risk beyond the first quarter of performance year 2. Commenters suggested CMS delay implementation to allow both CMS and EPM participants to prepare to be successful during testing of the model. Specifically, commenters stated that CMS should use the delay to establish a dialogue with hospitals to improve the existing bundled payment experience, perform outcomes studies on existing models and programs, analyze the existing CJR model to determine the model's impact to beneficiaries' outcomes and longer term well-being, and create infrastructure to more easily attribute patients to the EPMs. Commenters also stated that such a delay would allow time for EPM participants to better understand the clinical and financial risk of their patient populations, to establish collaborator relationships and to create the internal organization structure to manage payment bundles. A few commenters specifically suggested changes in payment once the risk-bearing phase begins, to allow a prospective payment to the EPM participants upon determination of an eligible diagnosis, as this change could permit all collaborating providers to share in both the upside and downside financial risk, and not be constrained by what Medicare pays for services during the episode. Overall, most commenters requested that CMS generally apply a more strategic process to achieve the intended goals by building on the experience to date to set the health care system on a pathway to success rather than rolling out new models before anything concrete is gleaned from existing models.

Response: We appreciate the comments we received in support of our proposed performance period and start date. We also appreciate comments expressing concerns around the timing of this model. Although we believe that it is important to initiate these EPMs now since they are different than CJR and BPCI and will provide essential information about the potential for episode payment to improve care and lower spending, we are sensitive to commenters' concerns that our proposed date to implement downside risk may not provide sufficient time for participants to implement the kinds of changes needed to successfully participate in the model, particularly given the availability of baseline data. Accordingly, this final rule will increase available preparation time by not implementing downside risk for all participants in the EPMs until October 1, 2018. Downside risk for EPM episodes will be applied to episodes ending on or after January 1, 2019. As discussed in detail in section III.D. of this final rule, participants who are interested in taking on downside risk earlier can choose to begin downside risk for episodes ending on or after January 1, 2018. Additionally, specific amendments to the regulations regarding the CJR model access to records and records retention policy, compliance enforcement policy, and waiver of the SNF 3 day rule will take effect July 1, 2017. We refer readers to sections V.H., V.I., and V.L. of the final rule for discussions of our final decisions. We believe that these changes will both facilitate participants' abilities to be successful under these models and allow for a more gradual transition to full financial responsibility under the models. CMS will also continue to work internally to determine the extent to which the suggestions submitted by commenters, including performing education and outreach activities or outcomes studies on existing models, will impact the implementation of the EPMs. The EPMs will only include a limited number of episode types, and as such we believe it is reasonable for hospitals to begin to analyze data and identify care patterns and opportunities for care redesign for these episodes prior to assuming financial responsibility for spending for episode beginning after October 1, 2018. We also note that due to the gradual implementation of financial responsibility that was proposed and that will still be incorporated in the models even given the start of the phased-in downside risk that we are finalizing in this rule, we expect that hospitals will spend the first performance year of the model analyzing data, identifying care pathways, forming clinical and financial relationships with other providers and suppliers, and assessing opportunities for savings under the model, utilizing in part the claims data we provide to them. As a result of these changes, we do not believe that further changes are needed to the start date of implementation. We also do not agree with commenters that implementation of the model is premature or that it should not be implemented until results for CJR or other episode-based payment models are available. While we anticipate that these models will offer valuable information that should assist CMS in developing future episode payment models, the EPMs will offer additional insights that are not available under the CJR model; in particular, insights with respect to episode payment models on a distinct set of episodes for participants that would not otherwise participate under a model such as BPCI.

Likewise, we do not agree that the models should be implemented after certain other actions have occurred or because of the multiple competing mandates faced by hospitals and other providers. Since the Medicare program's inception, providers have and will continue to contend with constantly evolving statutory and administrative requirements that often require them to make concurrent changes in their practices and procedures. We do not believe the EPMs are dissimilar to those requirements.

Also as discussed earlier in this section, some commenters pointed to the potential for unintended consequences that could result from our proposed start date, including impediments to beneficiary access and reduced quality of care. As discussed in section III.E. of this final rule, we are including quality measures for purposes of evaluating hospitals' performance both individually and in aggregate across the models. Also, as discussed in section III.F. of this final rule, we are making final policies and actions to monitor both care access and quality. We believe these features will help ensure that beneficiary access to high quality care is not compromised under the EPMs.

Comment: Commenters raised specific concerns that the proposed EPMs' emphasis on cost-savings could incentivize hospitals to use the least Start Printed Page 189costly post-acute alternative rather than the option that is most appropriate for the beneficiary. Furthermore, commenters stated that under an episode payment structure, EPM participants that admit healthier patients would have better financial results. Some commenters believe this design will consequently impact Medicare beneficiaries and the Medicare Trust Fund by increasing the frequency of Medicare payments from participants initiating a higher volume of episodes in a healthier population of beneficiaries. Other commenters believed that the proposed regulation would have serious negative impacts on Medicare beneficiaries by encouraging unnecessary surgeries and on health care stakeholders by discouraging innovation. One commenter encouraged us to create a patient advisory panel so that beneficiary viewpoints could be incorporated into model planning for the EPMs and any other Innovation Center bundled payment models.

Response: We appreciate the commenters' concerns regarding the quality of care for Medicare beneficiaries. Improving the quality of care is a central goal of the Innovation Center's work to test new payment and service delivery models. We disagree with commenters that the models will negatively impact the quality of care for beneficiaries in these models and we refer readers to the monitoring and beneficiary protections discussion in section III.G. of this final rule which we believe will address the commenters' concerns about care stinting. We emphasize that care stinting or denying the provision of medically necessary care is not permitted under the EPMs. Medicare beneficiaries in the EPMs will retain the right to obtain health services from any individual or organization qualified to participate in the Medicare program, and EPM participants are required to supply beneficiaries with written information regarding the design and implications of these models as well as the beneficiaries' rights under Medicare, including their right to use their providers of choice. We disagree with commenters that the EPMs will stifle innovation for care furnished during an EPM episode. We proposed, and are finalizing in this final rule, a payment methodology that will account for changes in care patterns and utilization trends for EPM episodes as described in section III.D. of this final rule and will have a monitoring contractor actively reviewing claims and monitoring behavior of participant providers to ensure beneficiary choice and care are not compromised by the EPMs. The Federal Government has long recognized the important role of the public in developing effective policies. Advisory committees are a way of ensuring public and expert involvement and advice in federal decision-making. In compliance with the Federal Advisory Committee Act (FACA) the number of advisory committees is carefully managed and committee memberships reflect a balance of viewpoints, education, and experience. Although the establishment of a Patient Advisory Committee for all Innovation Center models is beyond the scope of this rule, we believe that stakeholder engagement is essential to the success of these models and our learning and monitoring contractors as well as our evaluation contractor will be soliciting beneficiary feedback on their experiences with the EPMs.

Comment: While some commenters appreciated the approach of CMS to implement episode-based payment models for a select group of clinical scenarios, others suggested that participation be voluntary, in order to allow hospitals and providers implementing other payment reforms like the MACRA a more gradual adoption process of EPMs. An additional voluntary component to the proposed EPMs, commenters stated, would also permit additional participants who are interested in the models but not located in the MSAs in which the models will be tested to volunteer for participation. Still, other commenters stated that single-episode initiatives fail to encourage systemic change within organizations, and may hinder competition if implemented. Commenters stated that as a result of mandated participation, many surgeons who and facilities which lack familiarity, experience, or proper infrastructure to support care redesign efforts will hamper provider participation, bias model performance evaluation, and negatively affect patient care. One commenter suggested that the nature of the models will provide information about how many organizations, and which organizations, fail. Other commenters commended CMS for the episode payment models. The commenters believed that this overall strategy will motivate hospitals to work more closely with other members of the patient's care team, which could reduce avoidable complications after surgery and decrease the risk of additional hospitalizations.

Response: We thank the commenters for their feedback, but disagree with the suggestion to finalize the proposed EPMs as a voluntary initiative. The EPMs will give CMS the ability to test how an episode payment model might function among participants that would otherwise not participate in such a model. As such, we expect the results from these models will produce data that are more broadly representative than what might be achieved under a voluntary model. Also, these models test a regional target pricing approach to consider a participant hospital's performance relative to its regional peers. As part of this test, we will learn whether our alternative pricing approach in these models will better incentivize participants who are already delivering high quality and efficient care while still incentivizing historically less efficient providers to improve. We would not be able to test such a regional pricing approach under a purely voluntary model, nor could the appropriate evaluation approach be implemented if participants could volunteer, because it is likely that only the already high quality and efficient providers would sign up.

Comment: Many commenters supported our use of notice and comment rulemaking for the EPMs and encouraged us to continue to use the notice and comment rulemaking process to facilitate a robust public dialogue on important issues related to the EPMs and the CR incentive payment model. These commenters generally agreed with the proposed EPM episodes. A few commenters were concerned that we would avoid notice and comment rulemaking requirements.

Response: We appreciate the commenters' support for the use of notice and comment rule-making for the EPM models. The EPMs are intended to enable CMS to better understand the effects of payment models on a broader range of Medicare providers than what is currently being tested under the BPCI initiative. To this end, testing the EPMs in the proposed manner will also allow us to learn more about patterns of inefficient utilization of health care services and how to incentivize improvement in quality for common AMI episodes.

We respectfully disagree that we are avoiding notice and comment rulemaking. We note that the proposed rule (81 FR 50794), promulgated in accordance with the requirements of 5 U.S.C. 553, went into great detail about the provisions of the proposed EPMs, enabling the public to fully understand and comment on how the proposed models were designed and could apply to those affected providers and beneficiaries. In this final rule, which is also being promulgated in accordance with the requirements of 5 U.S.C. 553, Start Printed Page 190we respond to the public comments received on our proposals, and after considering them, we are finalizing our proposals with some modifications.

Comment: Commenters questioned the extent to which EPM participants would have the knowledge, skills, and experience to successfully drive improvements in care delivery and health outcomes. Many commenters asserted they do not have enough experience to even know where the efficiencies in care delivery are available to take advantage of them, which limits the ability of the EPMs' potential success. Another commenter recommended CMS inform the participants that will be in these episode payment models as early as possible. To this end, many commenters recommended that CMS implement a broad-based education campaign regarding the new EPMs that uses all of CMS' communication channels to reach hospitals, post-acute care providers, physicians, and community-based providers of long term services and supports.

There were many unique suggestions by commenters to appropriately communicate the proposed EPMs to affected stakeholders. A few commenters were generally uncertain where CMS could articulate its vision for innovative payment models. A few other commenters believed CMS should explain in detail the applicable EPMs, provide contact information and a publicly accessible list of all the providers that are part of the model in each region. Other commenters requested more opportunity to analyze the lessons learned from Health Care Payment Learning and Action Network (HCP-LAN), Clinical Episode Payment (CEP) work group, and BPCI so they can be broadly applied to care redesigns as part of the proposed EPMs. To support learning efforts, some commenters recommended CMS to include in final regulations a requirement that participating hospitals must develop, have approved by CMS, and implement a comprehensive, effective clinical care model and leadership structure for coordinating care and managing implementation of the EPMs. A few suggested that CMS assign a Medicare Project Officer to assist CJR and EPM participants. One commenter suggested that CMS provide advanced education and clinical-financial tools attainable through a blend of registries, databases and CMS claims data. Other commenters supported the intention of CMS to establish a learning and diffusion program.

Response: We agree with commenters regarding the need to continually improve stakeholder outreach for models to succeed and we intend to do as much as we can to work to design and deploy a helpful learning and diffusion program. CMS is committed to continuing to facilitate performance improvement by identifying areas of excellence for the purposes of extrapolating best practices. CMS encourages collaboration amongst organizations and can provide guidance on the development and implementation of specific learning systems. We currently deploy the expertise and experience of The Innovation Center's Learning and Diffusion Group to facilitate learning within models by disseminating the lessons learned across models so that participants can benefit from the experiences of other models, and are always looking for better ways to educate and assist participants in knowledge sharing. For example, BPCI includes a shared learning network that brings experienced stakeholders together for knowledge sharing, collaboration, and peer-to-peer learning. We continue to believe that these efforts contribute to reducing the administrative burden on the health care delivery system and will be responsive to commenters' concerns.

Comment: One commenter stated that they believe CMS should engage in models which enhance sharing of best practices rather than financial incentives.

Response: We appreciate the commenter's submission and agree with the sentiment that providers of care in the EPMs should ensure quality of care is maintained or improved. The design of the episode-based payments directly corresponds with CMS' stated goal of decreasing costs while maintaining or improving quality. Within this framework, we anticipate best practices naturally evolving as participants explore care redesign to achieve efficiencies in the episode.

Comment: Many commenters applauded many of the design features in the new proposed models—suggesting that the proposed rule outlined the framework for models that could become very successful at reducing Medicare spending and improving patient care. One commenter suggested that CMS develop accreditation standards for participation and only select accredited EPM participants. Another commenter suggested considering Quality Improvement Organizations (QIOs) as participants, or that QIOs be more centrally involved in such models to continue to recognize the importance of care transitions.

Response: We thank commenters for their support of the proposed design features in the new proposed models. The QIO Care Transitions Project [7] previously tested the extent to which QIOs lead improvements in care transitions. Research found reduced rates of 30-day re-hospitalization and all-cause hospitalization per 1,000, however the reduced rate of all-cause 30-day re-hospitalization as a percentage of hospital discharges was not statistically significant. We will continue to work internally to evaluate the extent to which QIOs complement the operations of the EPMs. We disagree with the suggestion to develop accreditation standards, as such actions are distinct from testing of EPMs, and the proposal to define EPM episode initiators as only those accredited EPM participants. The definition of the episode initiator is discussed further in section III.B of this final rule.

As discussed in more detail in section V. of this final rule, we proposed numerous modifications to the CJR model, which began on April 1, 2016. Section V. of this final rule contains our proposed policy changes, commenters' reactions, and our responses. We discuss here comments we received on the CJR model as a whole, including several comments pertaining to model policies for which we did not propose any changes, as well as our responses.

Comment: In general, commenters expressed support for the CJR model. One commenter suggested that CMS extend the model on a voluntary basis after the conclusion of the model's 5 performance years, to allow for successful participants to continue under CJR. The commenter also suggested that in such a scenario, CMS allow for convening organizations to participate (as is the case currently under the BPCI initiative) and modify the model design to include features such as financial risk for the post-acute care period only. The commenter noted that such flexibility would encourage participation in alternative payment models.

Another commenter expressed support for the CJR model but noted the significant time and effort required for hospitals to implement the model. Commenters also requested several policy changes out of scope for this rulemaking, including: Additional relaxation of regulatory barriers to integration between hospitals and other stakeholders, removal of fractures in Start Printed Page 191their entirety from this episode payment model, additional waivers of Medicare program rules, additional quality measures, policies that would encourage use of specific medical devices associated with lower revision rates, and modifications to the pricing methodology that would include comprehensive risk adjustment. Finally, one commenter requested that data be provided on a more frequent basis.

Response: We thank the commenters for their support of the CJR model. With regard to the CJR model policies for which we did not propose any changes, we will continue to consider the issues commenters brought forward and if warranted, would address any changes through future rulemaking as necessary. In addition, we note that while currently we provide CJR hospitals with episode data on a quarterly basis, we may begin to consider providing such data on a monthly basis when practicable.

Comment: A few commenters supported CMS' pursuit of opportunities to spread value-based payment to more providers through additional episode payment models beyond lower extremity joint replacement.

Response: We acknowledge and appreciate the commenters' remarks.

Comment: A few commenters addressed issues on the following subject-matter areas: Alternative administration of medications, non-medically directed anesthesia delivery, remote patient monitoring, data collection for global surgical services, and the long term care hospital certification program.

Response: These comments pertain to issues for which we did not include any proposals in the proposed rule. Therefore, we believe these comments are outside the scope of the proposed rule, and we are not addressing them in this final rule. After carefully considering all of the comments we received on the proposed model, including those discussed previously and within the following pages, for the reasons described elsewhere in this rule, we have concluded that we can successfully test the Episode Payment Models with several modifications and timing changes. The final model design we are implementing includes additional lead time for participants prior to the onset of downside risk to ensure that the models have time to incorporate risk adjustment into pricing, a commitment to conduct public listening sessions on risk adjustment during the 2017 calendar year and rulemaking during the 2018 calendar year on risk adjustment methods, an exemption for the Medicare Shared Savings Program Track 3 ACOs from participation in the EPMs and adjustments to the AMI transfer policy and the CABG quality measures. All of these changes are discussed in detail in this final rule.

B. Summary of the Major Provisions

1. Model Overview—EPM Episodes of Care

The EPMs, as described further in section III.B.2. of this final rule, are an AMI, CABG, or SHFFT model episode that will begin with an inpatient admission to an anchor hospital assigned to one of the following MS-DRGs upon beneficiary discharge. Acute care hospital services furnished to beneficiaries in AMI, CABG, and SHFFT episodes currently are paid under the Inpatient Prospective Payment System (IPPS) through several Medicare Severity-Diagnosis Related Groups (MS-DRGs): For AMI episodes, AMI MS-DRGs (280-282) and those Percutaneous Coronary Intervention (PCI) MS-DRGs (246-251) representing IPPS admissions for AMI that are treated with PCIs; CABG MS-DRGs (231-236); and SHFFT MS-DRGs (480-482). Episodes will end 90 days after the date of discharge from the anchor hospital, as defined under § 512.2. Defining EPMs' episodes of care in such a manner offers operational simplicity for both providers and CMS. The EPMs' episodes will include the inpatient stays and all related care covered under Medicare Parts A and B within the 90 days after discharge, including hospital care, post-acute care, and physician services.

2. Model Scope

Consistent with the CJR model, we proposed that acute care hospitals would be the episode initiators and bear financial risk under the proposed AMI, CABG and SHFFT models. In comparison to other health care facilities, hospitals are more likely to have resources that would allow them to appropriately coordinate and manage care throughout an episode, and hospital staff members already are involved in hospital-discharge planning and post-acute care recommendations for recovery, key dimensions of high-quality and efficient care. We proposed to require all hospitals to participate that are paid under the IPPS, have a CMS Certification Number (CCN), and have an address located in selected geographic areas to participate in the EPMs, with limited exceptions. An eligible beneficiary who receives care at such a hospital will automatically be included in the applicable EPM. We proposed to select geographic areas through a random sampling methodology.

For the CR incentive payment model, we proposed to provide a CR incentive payment specifically to selected hospitals with financial responsibility for AMI or CABG model episodes (hereinafter EPM-CR participants) because they are already engaged in managing the AMI or CABG model beneficiary's overall care for a period of time following hospital discharge. Similarly, we believe there are opportunities to test the same financial incentives for hospitals where the beneficiary's overall care is paid under the Medicare FFS program. Thus, we also proposed to provide a CR incentive payment specifically to selected hospitals that are not AMI or CABG model participants (hereinafter FFS-CR participants).

Our geographic-area selection process is detailed further in section III.B.4. of this final rule.

3. Payment

We will test the AMI, CABG, and SHFFT EPMs for 5 performance years. The first performance year would begin July 1, 2017. During these performance years we will continue paying hospitals and other providers and suppliers according to the appropriate Medicare FFS payment systems. However, after the completion of a performance year, the Medicare claims payments for services furnished to an eligible beneficiary during an episode, based on claims data, will be combined to calculate an actual episode payment. The actual episode payment will then be reconciled against an established EPM quality adjusted target price. The amount of this calculation, if positive, will be paid to the EPM participant as a “reconciliation payment” provided they had achieved a quality category of “acceptable” or higher. If the amount of this calculation is negative, we will require a “Medicare repayment” from the participant hospital beginning with episodes ending in performance year 3 of the EPMs. We had proposed to phase in the requirement that participants whose actual episode payments exceed the quality adjusted target price pay the difference back to Medicare beginning in the second quarter of performance year 2, and under this proposal, CMS would not require a Medicare repayment from hospitals for actual episode payments that exceed their target price in performance year 1 and the first quarter of performance year 2. Our final rule implements the requirement for Medicare repayments during performance year 3 and includes Start Printed Page 192an applicable discount factor that would be used for calculating repayment amounts for performance years 3 and 4. Also, participants may elect to assume downside risk for performance year 2, which would also include an applicable discount factor for calculating repayment amounts.

In contrast to the CJR model, due to the clinical characteristics and common patterns of care in AMI episodes, we proposed payment adjustments in the cases of certain transfers and readmissions of beneficiaries to inpatient hospitals for these episodes. These payment adjustments are discussed in detail in sections III.D.4.b.(1). through III.D.4.b.(2).(a). of the proposed and this final rule. We did not finalize one of these proposals—a payment adjustment for AMI episodes involving an inpatient-to-inpatient transfer or what we referred to as a chained anchor hospitalization. We also proposed payment adjustments for CABG model episodes, which we are finalizing in this rule. We proposed and are making final with modification limits on how much a hospital can gain or lose based on its actual episode payments relative to quality adjusted target prices, including policies to further limit the risk of high payment cases for special categories of participants as described in sections III.D.7.a. through III.D.7.d. of this final rule. In response to comments, we are finalizing a policy to extend separate financial loss protections to participants with a low volume of episodes under a model, which we refer to as EPM volume protection hospitals.

In addition to the EPMs, we proposed to test a CR incentive payment model (81 FR 50800) to encourage the utilization of CR/ICR services for beneficiaries hospitalized for treatment of AMI or CABG. To determine the CR incentive payment, we proposed to count the number of CR/ICR services for the relevant time periods under the Outpatient Prospective Payment System (OPPS) and PFS on the basis of the presence of paid claims of the HCPCS codes that report CR/ICR services and the units of service billed. The initial level of the per service CR incentive amount would be $25 per CR/ICR service for each of the first 11 CR/ICR services paid for by Medicare during an AMI or CABG model episode or AMI or CABG care period. After 11 CR/ICR services are paid for by Medicare for a beneficiary, the level of the per service CR incentive amount will increase to $175 per CR/ICR service for each additional CR/ICR service paid for by Medicare during the AMI or CABG model episode or AMI care period or CABG care period. A more detailed discussion of the CR incentive payment is located in section VI.E.1 of this final rule. The CR performance years would be the same as the performance years for the EPMs in section III.D.2.a. of this final rule. Further details about the payment structure and design of the CR incentive payment model can be found in section VI. of this final rule.

4. Similar, Previous, and Concurrent Models

The EPMs are informed by other models and demonstrations currently and previously conducted by CMS, and will explore additional ways to use episode payment to enhance coordination of care and improve the quality of care.

We recently announced practices that will participate in the Oncology Care Model (OCM), an episode payment model for physician practices administering chemotherapy. Under OCM, practices will enter into payment arrangements that include both financial and performance accountability for episodes of care surrounding chemotherapy administration to cancer patients. We will coordinate with other payers to align with OCM in order to facilitate enhanced services and care at participating practices.[8]

The Innovation Center previously tested innovative episode payment approaches in the Medicare Acute Care Episode (ACE) demonstration,[9] and, as described in this final rule, currently is testing additional approaches under the BPCI initiative and the CJR model. The ACE demonstration tested an alternative payment approach for cardiac and orthopedic inpatient surgical services and procedures. All Medicare Part A and Part B services pertaining to the inpatient stay were included in the ACE demonstration episodes of care. Evaluations of the ACE demonstration found that while there was not strong quantitative evidence indicating improvements in quality, there was qualitative evidence that hospitals worked to improve processes and outcomes as a result of their participation in the demonstration.

Currently, we are testing the BPCI initiative, which is composed of related payment models that link payments for multiple services that a Medicare beneficiary receives during an episode of care into a bundled payment. Under the initiative, entities enter into payment arrangements with CMS that include financial and performance accountability for episodes of care. Episodes of care under the BPCI initiative begin with either: (1) An inpatient hospital stay or (2) post-acute care services following a qualifying inpatient hospital stay. The BPCI initiative is evaluating the effects of episode-based payment approaches on patient experience of care, outcomes, and cost of care for Medicare FFS beneficiaries. Participating organizations chose from 48 clinical episodes, including hip and femur procedures except major joint, acute myocardial infarction, percutaneous coronary intervention, and coronary artery bypass graft surgery. BPCI Model 2 is an episode payment model in which a qualifying acute care hospitalization initiates a 30-, 60-, or 90-day episode of care. The episode includes the inpatient stay in an acute care hospital and all related services covered under Medicare Parts A and B during the episode, including post-acute care services.[10] Our experience testing BPCI Model 2 informed the design of the three proposed EPMs. Although some interim evaluation results from the BPCI models are available, final evaluation results for the models within the BPCI initiative are not yet available. However, we believe that CMS' experiences with BPCI support the design of the proposed EPMs. Stakeholders both directly and indirectly involved in testing BPCI models have conveyed that they perceive the initiative to be an effective mechanism for advancing better, more accountable care and aligning providers along the care continuum. This message has been reinforced through CMS site visits to participating entities, the Bundled Payments summit in Washington, in-person meetings with Awardees at CMS, and Awardee-led Affinity Group discussions. The BPCI initiative incorporates 48 clinical episodes, including cardiac and orthopedic episodes similar to the AMI, CABG, and SHFFT models. These clinical episodes are being tested by over 1,200 Medicare providers, including acute care hospitals, physician group practices, skilled nursing facilities, and home health agencies. Cardiac and orthopedic clinical episodes are among the most popular episodes in BPCI, indicating that BPCI awardees participating in BPCI believe they can reduce cost and Start Printed Page 193improve quality for beneficiaries in these episodes of care.

Our design and implementation of the CJR model, which is an episode payment model for LEJR episodes, also informed the design of the AMI, CABG, and SHFFT EPMs. After releasing a proposed rule in July 2015 and receiving nearly 400 comments from the public, in November 2015 we released final regulations implementing the CJR model. Approximately 800 acute care hospitals (approximately 23 percent of all IPPS hospitals) now participate in the CJR model. The first CJR performance year began on April 1, 2016. The CJR model will continue for 5 performance years, ending on December 31, 2020. The AMI, CABG, and SHFFT models build upon our experience designing and implementing the CJR model, including feedback from providers and other public stakeholders during the CJR model's rulemaking and implementation processes.

Further information on why specific elements of the models and initiatives were incorporated into the EPMs' designs is discussed later in this final rule.

5. Overlap With Ongoing CMS Efforts

We proposed to exclude from participation in the AMI, CABG, and SHFFT models certain acute care hospitals participating in BPCI Models 2 and 4 for the hip and femur procedures except major joint or for all three of the BPCI cardiac episodes (AMI, PCI, and CABG). We proposed to exclude from EPMs beneficiaries prospectively aligned to Innovation Center ACO models which had downside financial risk such as the Next Generation ACO and the Comprehensive ESRD Care models. We also sought comment regarding whether this exclusion should be extended to include beneficiaries assigned to Track 3 Shared Savings Program ACOs as these ACOs also have prospective assignment and downside financial risk. As discussed in the proposed rule, other CMS programs, such as the Shared Savings Program (Tracks 1 and 2) and other accountable care organization (ACO) or total cost of care initiatives will remain eligible for EPM episode initiation. We proposed to account for overlap, that is, where EPM beneficiaries also are included in other models and programs to ensure the financial policies of the models are maintained and results and spending reductions are attributed to one model or program. Specifically, as with CJR, we have proposed to give precedence to existing BPCI models when a beneficiary is admitted to an acute care hospital for what would otherwise be a covered EPM episode but that acute care hospital or the treating physician is participating in BPCI and the admission would meet the criteria to be covered under BPCI. In addition, as with CJR, an EPM episode will be cancelled if a beneficiary whose hospitalization initiates an EPM episode receives treatment during the post discharge period that would also result in the episode being covered under BPCI. Based on the comments received, we are finalizing these proposals with the modification that we will exclude from EPMs not only those beneficiaries prospectively assigned to the Next Generation ACO and the Comprehensive ESRD Care models which also share in downside risk with CMS, but also those beneficiaries prospectively assigned to Track 3 Shared Savings Program ACOs. More detail on our policies for accounting for provider- and beneficiary-level overlap is discussed in section III.D.6. of this final rule.

The amendments made by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10, April 16, 2015) created two paths for eligible clinicians to link quality to payments: The Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs). These two paths create a flexible payment system called the Quality Payment Program as finalized by CMS in the Quality Payment Program final rule with comment period (81 FR 77008 through 77831). The MIPS streamlines and improves on three current programs—the Physician Quality Reporting System (PQRS), the Physician Value-based Payment Modifier (VM), and the Medicare Electronic Health Record (EHR) Incentive Program—and continues the focus on quality and value in one cohesive program. Through sufficient participation in Advanced APMs, eligible clinicians can become Qualifying APM Participants (QPs) for a payment year beginning with CY 2019 and potentially receive an APM Incentive Payment (or, in later years, a more favorable payment update under the PFS) for the year.

So that the EPMs may be able to meet the criteria to be Advanced APMs based on the requirements in the Quality Payment Program final rule with comment period, we proposed to require EPM participants to use Certified Electronic Health Record Technology (CEHRT) (as defined in section 1848(o)(4) of the Act) in Track 1 of each EPM. We proposed that EPM participants in these tracks must use certified health information technology (IT) functions, in accordance with the definition of CEHRT under our regulation at 42 CFR 414.1305, to document and communicate clinical care with patients and other health care professionals as described in the Quality Payment Program final rule with comment period. We also made similar proposals with respect to CJR.

We proposed to implement two different tracks within the EPMs whereby EPM participants that meet requirements for use of CEHRT and financial risk would be in Track 1 (an Advanced APM track) and EPM participants that do not meet these requirements would be in Track 2 (a non-Advanced APM track). The different tracks would not change how EPM participants operate within the EPM itself, beyond the requirements associated with selecting to meet CEHRT use requirements. The only distinction between the two tracks is that only Track 1 EPMs could be considered an Advanced APM for purposes of the Quality Payment Program based on the criteria in the Quality Payment Program final rule with comment period. We made similar proposals with respect to CJR. We considered modifying requirements proposed in this rule as necessary to reconcile them with policies adopted in the Quality Payment Program final rule. A more detailed discussion of how EPMs and CJR could qualify as Advanced APMs, and how eligible clinicians participating in the EPMs and CJR will be identified and affected, can be found in sections III.A.2 and V.O. of this final rule.

Comment: One commenter suggested that the most relevant definition of CEHRT to the EPM is found at § 495.4.

Response: The definition at 42 FR 495.4 relates to Medicaid eligible professionals, eligible hospitals, and CAHs, as defined for the EHR Incentive Programs. The definition at 45 FR 414.1305 relates to Medicare eligible clinicians and groups participating as defined for the CMS Quality Payment Program. These two definitions are substantively the same; however, we refer readers to the definition at 42 FR 495.4 as this most closely relates to the eligibility status of EPM participants. We have updated and finalized this technical correction.

6. Quality Measures and Reporting Requirements

Similar to the quality measures selected for the CJR model, we proposed to use established measures used in other CMS quality-reporting programs for the proposed EPMs' episodes. We proposed to use these measures to test Start Printed Page 194EPMs' success in achieving its goals under section 1115A of the Act and to monitor for beneficiary safety. For the SHFFT model, we proposed applying the same quality measures selected for the CJR model.

The quality measures for SHFFT episodes are as follows:

  • THA/TKA Complications: Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (National Quality Forum [NQF] #1550).
  • Hospital Consumer Assessment of Healthcare Providers and Systems (HCAPHS) Survey (NQF #0166).
  • Successful Voluntary Reporting of Patient-Reported Outcomes.

The measures for the AMI model are as follows:

  • MORT-30-AMI: Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute Myocardial Infarction (AMI) Hospitalization (NQF #0230).
  • AMI Excess Days: Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction (acute care days include emergency department, observation, and inpatient readmission days).
  • HCAPHS Survey (NQF #0166), linear mean roll-up (HLMR) scores like CJR.

The measures for the CABG model are as follows:

  • MORT-30-CABG: Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft Surgery (NQF #2558).
  • HCAPHS Survey (NQF #0166), HLMR scores like CJR.

We proposed and requested public feedback on options for including successful implementation testing of the Hybrid AMI measure as a quality measure for the AMI episode. The Hybrid AMI measure will assess a hospital's 30-day risk-standardized acute myocardial infarction mortality rate and will incorporate a combination of claims data and EHR data submitted by hospitals. Public comment and our responses to those comments follow under the applicable sections in section III. of this final rule.

We are finalizing as proposed the following quality measures for SHFFT episodes:

  • THA/TKA Complications: Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (National Quality Forum [NQF] #1550).
  • Hospital Consumer Assessment of Healthcare Providers and Systems (HCAPHS) Survey (NQF #0166).
  • Successful Voluntary Reporting of Patient-Reported Outcomes.

We are finalizing as proposed the following measures for the AMI model:

  • MORT-30-AMI: Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute Myocardial Infarction (AMI) Hospitalization (NQF #0230).
  • AMI Excess Days: Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction (acute care days include emergency department, observation, and inpatient readmission days).
  • HCAPHS Survey (NQF #0166), linear mean roll-up (HLMR) scores like CJR.

We are finalizing as proposed the following measures for the CABG model:

  • MORT-30-CABG: Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft Surgery (NQF #2558).
  • HCAPHS Survey (NQF #0166), HLMR scores like CJR.

In addition, after consideration of comments received, we are finalizing an additional measure for the CABG model. Successful voluntary reporting of the Society of Thoracic Surgeons (STS) CABG composite score (NQF #0696) is a comprehensive NQF-endorsed composite measure and will be weighted at 10 percent of the composite quality score for those hospitals that report this voluntary measure.

Additionally, similar to the CJR model, we proposed to adopt a pay-for-performance methodology for EPMs that relies upon a composite quality score to assign respective EPM participants to four quality categories. These quality categories will determine an EPM participant's eligibility for a reconciliation payment should such EPM participant achieve spending below the quality-adjusted target price, as well as the effective discount percentage at reconciliation. Points for quality performance and improvement (as applicable) will be awarded for each episode measure and then summed to develop a composite quality score that will determine the EPM participant's quality category for the episode. Quality performance will make up the majority of available points in the composite quality score, with improvement points available as “bonus” points for the measure. This approach resembles the CJR model methodology.

7. Beneficiary Protections

As with the CJR model, Medicare beneficiaries in the EPM models will retain the right to obtain health services from any individual or organization qualified to participate in the Medicare program. Eligible beneficiaries who receive services from EPM participants would not have the option to opt out of inclusion in the applicable model. We proposed to require EPM participants to supply beneficiaries with written information regarding the design and implications of these models as well as the beneficiaries' rights under Medicare, including their right to use their providers of choice. We will make a robust effort to reach out to beneficiaries and their advocates to help them understand the models. We also proposed to use our existing authority, if necessary, to audit participant hospitals if claims analysis indicates an inappropriate change in furnished services. Beneficiary protections are discussed in greater depth in section III.G. of this final rule.

8. Financial Arrangements

We proposed a regulatory structure for financial relationships under the EPM to advance the goals of improving the quality and efficiency of model episodes, which also included program integrity safeguards to protect against abuse under the financial relationships permitted for the EPM. Our EPM proposals reflected changes from the current CJR model regulations that generally fell into the following four categories: (1) Removing duplication of requirements in similar provisions; (2) streamlining and reorganizing the provisions for clarity and consistency; (3) providing additional flexibility in response to feedback from CJR participant hospitals and other stakeholders; and (4) expanding the scope of financial arrangements under the EPM. In addition to the collaborators permitted under the CJR model, we proposed to add hospitals and critical access hospitals (CAHs) to the list of providers and suppliers eligible for gainsharing as EPM collaborators due to the expected participation of multiple hospitals in the episode care for some beneficiaries in AMI and CABG episodes. We specifically proposed that ACOs be eligible for gainsharing as EPM collaborators due to the interest of ACOs in gainsharing during the CJR model rulemaking and the ongoing challenges of addressing overlap between episode payment models and ACOs. We made additional proposals that would allow ACOs to enter into financial arrangements under the EPM with ACO participants and ACO providers/suppliers and to allow physicians group practices (PGPs) that are ACO participants in an ACO that is an EPM collaborator to enter into financial Start Printed Page 195arrangements under the EPM with PGP members.

As discussed in section III.I. of this final rule, after consideration of the public comments received we are finalizing the proposed structure for financial arrangements under the EPM, including that EPM participants may enter into sharing arrangements with EPM collaborators, EPM collaborators may enter into distribution arrangements with collaboration agents, and collaboration agents may enter into downstream distribution arrangements with downstream collaboration agents, subject to the requirements specific to each type of arrangement. Our final policies also include modifications to specify individually based on their enrollment in Medicare the specific providers and suppliers of outpatient therapy services that may be EPM collaborators. We also make modifications to clarify that groups of nonphysician practitioners and groups of therapists (physical therapy, occupational therapy, and speech-language pathology) enrolled in Medicare may be EPM collaborators and may enter into distribution arrangements or downstream distribution arrangements under the EPM that are similar to those we are finalizing for PGPs and their members.

9. Data Sharing

Based on our experience with various Medicare programs and models, including the BPCI initiative, the CJR model, the Shared Savings Program, and the Pioneer ACO model, we believe that providing certain beneficiary claims data to model participants will be essential to their success. We proposed to share data with participants upon request throughout the performance period of the models to the extent permitted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule and other applicable law. We proposed to share upon request both raw claims-level data and claims summary data with participants. This approach would allow participants without prior experience analyzing claims to use summary data for analysis of care and spending patterns, while allowing those participants who prefer raw claims-level data the opportunity to analyze claims. We proposed to provide participants with up to 3 years of retrospective claims data upon request that will be used to develop their quality-adjusted target price. In accordance with the HIPAA Privacy Rule, we will limit the content of this data to the minimum data necessary for the participant to conduct quality assessment and improvement activities and effectively coordinate care.

10. Program Waivers

Section 1115A of the Act authorizes the Secretary to waive Medicare program requirements as necessary to implement provisions for testing models. Under the CJR model, CMS waived certain program rules regarding the direct supervision requirement for certain post-discharge home visits, telehealth services, and the skilled nursing facility (SNF) 3-day rule. CMS finalized these waivers to offer providers and suppliers more flexibility so that they may increase coordination of care and management of beneficiaries in model episodes. Adopting the CJR waivers for the proposed EPMs required further examination to determine if such adoption would increase financial vulnerability to the Medicare program or would create inappropriate incentives to reduce the quality of beneficiary care. As discussed in section III.J. of this final rule, we will do the following:

  • Adopt waivers of the telehealth originating site and geographic site requirement and to allow in-home telehealth visits for all three proposed EPMs, as well as the general waiver to allow post-discharge nursing visits in the home;
  • Provide model-specific limits to the number of post-discharge nursing visits and make model-specific decisions about offering the SNF 3-day stay waiver; and
  • Adopt a waiver for furnishing cardiac and intensive cardiac rehabilitation services to allow a Nurse Practitioner, Clinical Nurse Specialist, or Physician Assistant, in addition to a physician, to perform specific physician functions.

C. Summary of Economic Effects

As shown in our impact analysis, we expect the EPMs to result in savings to Medicare of $159 million over the 5 performance years of the models. We note that a composite quality score will be calculated for each hospital in order to determine eligibility for a reconciliation payment and whether the hospital qualifies for quality incentive payments that will reduce the effective discount percentage experience by the hospital at reconciliation for a given performance year. More specifically, in performance year 1 of the models, we estimate a Medicare cost of approximately $10 million, as hospitals will not be subject to downside risk in the first performance year of the models. In performance year 2 of the models, we estimate a Medicare cost of approximately $25 million, as some hospitals will voluntarily assume downside risk in the second performance year of the models and some hospitals will receive payments made by CMS. As we introduce downside risk beginning in performance year 3 of the models, we estimate Medicare savings of approximately $34 million. In performance years 4 and 5 of the models, we will move from target episode pricing that is based on a hospital's experience to target pricing based on regional experience, and we estimate Medicare savings of $49 million and $112 million, respectively.

As a result, we estimate the net savings to Medicare to be $159 million over the 5 performance years of the models. We anticipate there will be a broader focus on care coordination and quality improvement for EPMs among hospitals and other providers and suppliers within the Medicare program that will lead to both increased efficiency in the provision of care and improved quality of the care provided to beneficiaries.

Additionally, the CR incentive model estimates that the impact on the Medicare program may range from up to $29 million of additional spending to $32 million of savings between 2017 and 2024, depending on the change in utilization of CR/ICR services based on the proposed incentive structure.

Finally, the change in the estimated net financial impact to the Medicare program from the CJR model modifications in this final rule is $22 million in spending, and the updated assumptions regarding the number of hospitals that will report quality data result in an increase of $4 million in spending. The total estimated net financial impact to the Medicare program from both the modifications in the final rule and revised assumptions are $26 million in spending. We note that under section 1115A(b)(3)(B) of the Act, the Secretary is required to terminate or modify a model unless certain findings can be made with respect to savings and quality after the model has begun. If during the course of testing a model it is determined that termination or modification is necessary, such actions will be undertaken through rulemaking.

II. Background

This final rule finalizes the implementation of three new EPMs and a CR incentive payment model under the authority of section 1115A of the Act. Under the AMI, CABG, and SHFFT EPMs, acute care hospitals in certain selected geographic areas will be financially accountable for quality Start Printed Page 196performance and spending for applicable episodes of care. We proposed to retrospectively apply through a reconciliation process the episode payment methodology; hospitals and other providers and suppliers would continue to submit claims and receive payment via the usual Medicare FFS payment systems throughout the proposed EPMs' performance years. Critical Access Hospitals (CAHs) acting as EPM collaborators would continue to receive payment via the usual cost-based reimbursement system. Hospitals participating in the proposed EPMs would receive target prices, which reflect expected spending for care during an episode as well as a discount to reflect savings to Medicare, on a prospective basis, prior to the beginning of a performance year. All related care covered under Medicare Parts A and B and furnished within 90 days after the date of hospital discharge from the anchor hospitalization which initiated the applicable EPM episode would be included in the episode of care. We proposed the CR incentive payment model to test the effects on quality of care and Medicare expenditures of providing explicit financial incentives to a subset of EPM participants and selected hospitals that are not AMI or CABG model participants for beneficiaries hospitalized for treatment of AMI or CABG to encourage care coordination and greater utilization of medically necessary CR/ICR services for 90 days post-hospital discharge where the beneficiary's overall care is paid under either an EPM or the Medicare FFS program. We believe the models will further our goals of improving the efficiency and quality of care for Medicare beneficiaries for these medical conditions and procedures.

III. Episode Payment Models

A. Selection of Episodes, Advanced Alternative Payment Model Considerations, and Future Directions

1. Selection of Episodes for Episode Payment Models in This Rulemaking

a. Overview

We have been engaged since 2013 in testing various approaches to episode payment for Medicare FFS beneficiaries for 48 clinical episodes in the BPCI initiative. As of October 1, 2016, the BPCI initiative has 1,403 participants in the risk-bearing phase, comprised of 297 Awardees and 1,107 Episode Initiators. The breakdown of BPCI participants by provider type is as follows: Acute care hospitals (354); skilled nursing facilities (642); physician group practices (257); home health agencies (81); and inpatient rehabilitation facilities (9).[11] In BPCI Models 2 and 3, there is participation across all 48 clinical episodes, and in Model 4 there is participation in 19 clinical episodes.

The 10 clinical episodes with the most participation are: Major joint replacement of the lower extremity; simple pneumonia and respiratory infections; congestive heart failure; chronic obstructive pulmonary disease; bronchitis; asthma; hip and femur procedures except major joint; sepsis; urinary tract infection; acute myocardial infarction (medical management only); medical non-infectious orthopedic; and other respiratory.[12]

In November 2015, CMS released the Final Rule for the Comprehensive Care for Joint Replacement (CJR) model (80 FR 73274 through 73554), the first test of episode-based payment model for Medicare FFS beneficiaries in which providers are required to participate. The CJR model, which began on April 1, 2016, focuses on the episode-of-care for lower-extremity joint replacement (LEJR) procedures. As discussed in the CJR Final Rule (80 FR 73277), LEJR episodes were chosen for the CJR model because they represent one of the most common high-expenditure, high-utilization procedures furnished to Medicare beneficiaries and have significant variation in episode spending. We believe this high volume, coupled with substantial variation in utilization and spending across individual providers and geographic regions, created a significant opportunity to test whether an episode payment model focused on a defined set of procedures could improve the quality and coordination of care, as well as result in savings to Medicare. Notably, both the BPCI initiative and the CJR model are focused on care that is related to an inpatient hospitalization, with CJR model and BPCI Model 2 episodes beginning with an inpatient hospitalization (anchor hospitalization) and extending up to 90 days post-hospital discharge.

In the proposed rule (81 FR 50805), we proposed three new EPMs that, like the CJR model, would require provider participation in selected geographic areas. Episodes in the new EPMs would begin with admissions for hospitalizations in IPPS hospitals, and would extend 90 days post-hospital discharge. The episodes included in these three proposed EPMs would be AMI, CABG, and SHFFT excluding lower extremity joint replacement. The proposed AMI model included beneficiaries discharged under AMI MS-DRGs (280-282), representing IPPS admissions for AMI that are treated with medical management. The proposed AMI model also included beneficiaries discharged under PCI MS-DRGs (246-251) with AMI International Classification of Disease, Tenth Edition, Clinical Modification (ICD-10-CM) diagnosis codes for initial AMI diagnoses in the principal or secondary diagnosis code positions, representing IPPS admissions for AMI that are treated with PCIs. The proposed CABG model included beneficiaries discharged under CABG MS-DRGs (231-236), representing IPPS admissions for this coronary revascularization procedure irrespective of AMI diagnosis. The proposed SHFFT model included beneficiaries discharged under hip and femur procedures except major joint replacement MS-DRGs (480-482), representing IPPS admissions for hip-fixation procedures in the setting of hip fractures.

Similar to the selection of LEJR episodes for the CJR model (80 FR 73277), we selected the AMI, CABG, and SHFFT episodes because they represent high-expenditure, high-volume episodes-of-care experienced by Medicare beneficiaries. Based on analysis of historical episodes beginning in CY 2012-2014, the average annual number of episodes that began with IPPS hospitalizations and extended 90 days post-hospital discharge, and therefore would have been included in the proposed models, is approximately 168,000 for AMI; 48,000 for CABG; and 109,000 for SHFFT.[13] The total annual Medicare spending for these historical episodes was approximately $4.1 billion, $2.3 billion, and $4.7 billion, respectively.[14] Each of the episodes provides different opportunities in an EPM to improve the coordination and quality of care, as well as efficiency of care during the episode, based on varying current patterns of utilization and Medicare spending.

However, in contrast to LEJR episodes in the CJR model, which are predominantly elective and during which hospital readmissions are rare Start Printed Page 197and substantial post-acute care provider utilization is common, the proposed AMI, CABG, and SHFFT episodes have very different current patterns of care. Beneficiaries in these episodes commonly have chronic conditions that contribute to the initiation of the episodes and need both planned and unplanned care throughout the EPM episode following discharge from the initial hospitalization that begins the episode. Both AMI and CABG episodes primarily include beneficiaries with cardiovascular disease, a chronic condition which likely contributed to the acute events or procedures that initiate the episodes. About half the average AMI model historical episode spending was for the initial hospitalization, with the majority of spending following discharge from the initial hospitalization due to hospital readmissions, while there was relatively less spending on SNF services, Part B professional services, and hospital outpatient services. In CABG model historical episodes, about three-quarters of episode spending was for the initial hospitalization, with the remaining episode spending relatively evenly divided between Part B professional services and hospital readmissions, and a lesser percentage on SNF services. Similar to AMI episodes, post-acute care provider use was relatively uncommon in CABG model historical episodes, while hospital readmissions during CABG model historical episodes were relatively common. SHFFT model historical episodes also were accompanied by substantial spending for hospital readmissions, and post-acute care provider use in these episodes also was high.[15] The number of affected beneficiaries and potential impact of the models on quality and Medicare spending present an important opportunity to further the Administration's goal of shifting health care payments to support the quality of care over the quantity of services by promoting better coordination among health care providers and suppliers and greater efficiency in the care of beneficiaries in these models, while reducing Medicare expenditures.[16] Pay-for-performance episode payment models, such as the three EPMs proposed in the proposed rulemaking, financially incentivize improved quality of care and reduced cost by aligning the financial incentives of all providers and suppliers caring for model beneficiaries with these goals. This alignment leads to a heightened focus on care coordination and management throughout the episode that prioritizes the provision of those items and services which improve beneficiary outcomes and experience at the lowest cost.

We selected all of the proposed EPM episodes based on their clinical homogeneity, site-of-service, and MS-DRG assignment considerations. We anticipated these proposed new EPMs, like the CJR model, would benefit Medicare beneficiaries by improving the coordination and transition of care among various care settings to facilitate beneficiaries' return to their communities as their recoveries progress, improving the coordination of items and services paid through Medicare FFS, encouraging provider investment in infrastructure and redesigned care processes for higher quality and more efficient service delivery, and incentivizing higher value care across the inpatient and post-acute care spectrum spanning the episode-of-care (80 FR 73276). However, improving value in the EPMs through these means requires a cohort of beneficiaries with similar clinical features such that coordination and care redesign efforts can be targeted. Therefore, we proposed EPM episodes built on common pathologic and treatment processes; that is, beneficiaries included in both the AMI and CABG models have cardiovascular pathologies that drive their clinical courses during the episodes, and SHFFT model beneficiaries all share similar diagnoses of hip fracture and treatment with hip fixation that drive their clinical courses during their respective episodes.

The following is a summary of the comments received on our overall proposal of three new EPMs in which participation would be required and our responses.

Comment: Many commenters commended CMS for its continued commitment to testing episode-based payments demonstrated through the proposal to implement three new EPMs. MedPAC identified conditions with high post-acute care use as an appropriate setting to test bundled payments that would offer ample opportunities to improve care and lower spending. MedPAC also suggested that another consideration for bundled payments is whether the condition has a relatively uniform clinical pathway that simplifies the rules defining and pricing the bundle. In addition, MedPAC emphasized that conditions that lend themselves to patient selection should be avoided in bundled payment models, at least in the near term, to limit the undesirable provider responses to financial incentives that may occur. Other commenters expressed appreciation for the opportunity to test innovative care models under the Innovation Center authority. They stated that EPMs could hold significant promise for furthering the Triple Aim goals of providing high quality care at lower cost to produce better outcomes and advance population health.

However, some commenters expressed concern about the pace of changes proposed by CMS through its models and the associated expectation and burden that rapid changes in the delivery system and related payment structure place on hospitals and providers. Some commenters noted that CMS has been swift in releasing rules aimed at improving the quality of care delivered, reducing the cost of care, and coordinating patient care across multiple settings. The commenters pointed out the large volume of significant requirements announced by CMS over the last 2 years, including MACRA, the CJR model, and the proposed Part B drug payment model, as well as alternative payment models and programs, including the Shared Savings Program, Next Generation ACOs, BPCI initiative, and OCM, coupled with state level initiatives. The commenters believe the breadth and amount of new activities make it difficult to understand how the various models and program will interact with each other and impact individual delivery systems. While directed toward laudable goals, the commenters encouraged CMS to be vigilant in its review and analysis of these models and programs and to consider the impact and burden on hospitals as it continues to release models and programs impacting the hospital community. The commenters believe it is in everyone's best interest that these models are successful, yet the pace and complexity of implementation likely will be a critical factor in the achievement of these goals. Therefore, they encouraged CMS to slow the pace of EPM implementation to establish “proof of concept” through the CJR model and BPCI Model 2 results before implementing new EPMs where participation is required. Without adequate time to understand the appropriate role these payment innovations play in transforming care delivery and build upon lessons learned and best practices, the commenters Start Printed Page 198concluded that both CMS and the provider community would miss an important opportunity to create programs that will advance patient care and successfully transform systems of care.

The commenters recommended that CMS establish a solid framework upon which to build payment initiatives and transform care. Before finalizing any more bundled payment initiatives, some commenters believe that CMS should articulate its vision and set a clear path for innovative payment models, establishing a consistent, predictable and transparent framework, giving providers the necessary tools to succeed in creating a higher-quality, more efficient health care system. The commenters suggested that the framework should include tools such as incorporating a predictable pricing trend factor so that participants can make decisions about investing in care design in the context of stable future prices; providing necessary risk adjustment methodologies; releasing consistent quality measures and reporting requirements and reliable target pricing; and holding fast to the principle of attributing no more than one patient to one bundled payment initiative at a time.

A few commenters expressed concerns about CMS' proposal to test three new bundled payment models. The commenters contended that the proposed EPMs would make treatment more difficult to access for high need patients; discourage truly innovative approaches to managing underlying health problems; encourage unnecessary surgeries; encourage further consolidation in the health care industry; provide fewer choices for consumers; and result in higher prices for private payers. One commenter requested that CMS present a much more comprehensive analytic work to understand the prevalence and needs of the beneficiaries who have serious illness or disabilities prior to and during the episode and who therefore require substantial attention to the elements of comprehensive care and quality measurement that are tailored for these beneficiaries prior to implementing the EPMs. Several commenters recommended CMS not to limit alternative payment models to episode payment approaches because for many types of patients, the biggest opportunity for improving quality and achieving savings is avoiding unnecessary episodes and events, and not simply paying differently for episodes and events when they occur. Some commenters strongly cautioned against EPMs that may subordinate future provider-led models. Other commenters recommended CMS to develop and implement payment reform models that incorporate population-based models, rather than look exclusively at episode payment models which can hamper growth of population-based models by limiting their financial opportunity.

Response: We appreciate the support of many commenters for CMS' continued development of new episode payment models and agree with these commenters that episode payment models provide substantial opportunity to improve the quality and efficiency of care for specific clinical conditions. We also agree that bundled payment models are just one strategy to incentivize the health care system moving toward the provision of more accountable, coordinated, high-value care, while provider-led and population-based models, as well as other types of payment reform models, play complementary roles. The Innovation Center is continuing to develop, implement, and evaluate a variety of different types of models that test different approaches to achieving better care, lower costs, and improved health. The three EPMs are part of that portfolio of models. Issues of concern raised by some of the commenters about the proposed EPMs, including the implementation timeline, are discussed in the specific sections of this final rule that address the relevant policies.

b. SHFFT Model

The SHFFT model was selected to complement the CJR model. We proposed to test the SHFFT model in most of the same hospitals participating in the CJR model as discussed in section III.B.4. of the proposed rule (81 FR 50794), so that all surgical treatment options for Medicare beneficiaries with hip fracture (hip arthroplasty and fixation) would be included in episode payment models. Hip fracture is a serious and sometimes catastrophic event for Medicare beneficiaries. In 2010, 258,000 people aged 65 and older were admitted to the hospital for hip fracture, with an estimated $20 billion in lifetime cost for all hip fractures in the United States in a single year.[17] In 2013, fracture of the neck of the femur (the most common location for hip fracture) was the eighth most common principal discharge diagnosis for hospitalized Medicare FFS beneficiaries, constituting 2.7 percent of discharges.[18] Mortality associated with hip fracture is 5-10 percent after 1 month and approximately 33 percent at 1 year.[19] Hip arthroplasty and hip fixation, or “hip pinning,” represent the two broad surgical options for treating hip fractures.[20] The CJR episodes begin with admission to acute care hospitals for LEJR procedures assigned to MS-DRG 469 (Major joint replacement or reattachment of lower extremity with major complications or comorbidities) or MS-DRG 470 (Major joint replacement or reattachment of lower extremity without major complications or comorbidities) upon beneficiary discharge and paid under the IPPS, including total and partial hip replacement in the setting of hip fracture (80 FR 73280). Therefore, the SHFFT model, which would test an additional episode payment for hip fixation, provides an opportunity to complete the transition to episode payment for the surgical treatment and recovery of the significant clinical condition of hip fracture.

The following is a summary of the comments received and our responses.

Comment: Some commenters expressed support for the SHFFT model, which CMS proposed to implement in the same MSAs as the CJR model, which was implemented beginning in April 2016, and in particular expressed appreciation for the design consistency proposed for the SHFFT model with the CJR model and the two proposed cardiac EPMs. Analysis by MedPAC found that most SHFFT episodes include at least some post-acute care services use and that the spending on post-acute care services comprises a sizable share of total episode spending, about one-third. MedPAC concluded that SHFFT was a good candidate for bundled payment. MedPAC also reasoned that the SHFFT episode would give hospitals already participating in the CJR model the experience of managing care for hip and femur fracture cases that typically present emergently, rather than as the planned, elective surgery that is most common for lower extremity joint replacement. MedPAC, which recommended proceeding only with the SHFFT model in the context of CMS' proposal for three new EPMs, maintained that this Start Printed Page 199would simplify the set of models that providers are adapting to and simplify the administrative requirements for CMS because CMS would not need to select new markets for testing the cardiac EPMs. Other commenters found it positive that CMS noted that there are differences between CJR and SHFFT beneficiaries, notably the latter being more likely to have multiple chronic conditions and frailty.

However, many commenters opposed CMS' proposal for the SHFFT model, encouraging CMS either to abandon the model altogether or to substantially delay implementation pending additional CJR model experience and evaluation results from BPCI Model 2 regarding SHFFT episodes. These commenters recommended that CMS proceed at a more deliberate pace and simplify the proposed rule for the three different EPMs by eliminating the SHFFT model because CMS is already testing an episode payment model that requires participation through the CJR model. Therefore, they believe that CMS should test only a cardiac bundled payment model in a different clinical area as a next step in required bundled payment models. The commenters stated that the SHFFT model would be overly burdensome to providers who just began participating in the CJR model in April 2016 and had insufficient financial safeguards for hospitals and quality safeguards for beneficiaries, including no quality measures specific to SHFFT model beneficiaries, to substantially improve beneficiaries' care experience through successful surgery and recovery. Several commenters stated that the proposed SHFFT model was not a true value-based payment model because the clinical outcome quality measures that were proposed did not capture hip fracture patients. Given CMS' proposal to implement the SHFFT model in the same MSAs as the CJR model, the commenters stated that due to limited implementation time of the CJR model, it would be inappropriate to add the very sick and frail SHFFT cohort to the relatively stable CJR model cohort without substantial investigation as to how to proceed with adequate monitoring against harm. They also recommended not proceeding without risk adjustment to account for variable costs experienced by hospitals treating different populations of SHFFT model beneficiaries. Several commenters claimed that because SHFFT beneficiaries would receive emergency care, care coordination would be less predictable and no planning would be possible prior to hospital admission, so the burden on potential family caregivers would be escalated in comparison to the CJR model if there was only a short hospital and/or SNF stay. The commenters stated that in comparison with beneficiaries undergoing elective LEJR, those with hip fracture require more time and resources from providers to optimize planning and rehabilitation and, therefore, limited efficiencies would be possible for SHFFT model beneficiaries without significant risk to the quality of care.

Response: We appreciate the perspective of some commenters that the opportunities for care redesign to improve quality and reduce spending are substantial for Medicare beneficiaries undergoing SHFFT procedures. We agree with those commenters about the potential value of the SHFFT model for beneficiaries, providers, and CMS to complement the CJR model by testing bundled payment for beneficiaries requiring emergency lower extremity joint surgery compared to testing episode payment for lower extremity surgeries that are mainly elective. We also acknowledge the concerns of the commenters around various proposed design elements of the SHFFT model, specifically the lack of risk adjustment to protect SHFFT model participants from undue financial risk for complex beneficiaries and the lack of quality measures that are specific to SHFFT beneficiaries in the pay-for-performance methodology to reward SHFFT model participants that improve quality for these beneficiaries and protect SHFFT beneficiaries from harm due to the model. We refer to sections III.D.4.b.(2) and III.E.2.d. of this final rule for further discussion of the comments on these issues and our responses.

We also appreciate the concerns of commenters regarding the proposed implementation of the SHFFT model in the same MSAs as CJR participant hospitals, and the additional responsibilities this model would place on participants early in their CJR model implementation experience. However, we continue to believe that there are efficiencies in care redesign that can be achieved by testing the models concurrently at the same hospitals. We note that those commenters opposing CMS' proposal to implement the SHFFT model did not dispute the care redesign opportunities identified by CMS for such a model. We refer to section III.D.2.a. of this final rule for a discussion of the comments on the proposed implementation timeline for the SHFFT model and our responses.

Final Decision: After consideration of the public comments received, we are finalizing the proposal to implement the SHFFT model, with modifications to specific policies as described throughout this final rule. We refer to section III.D.2.a. of this final rule for the implementation timeline that applies to the SHFFT model.

c. AMI and CABG Models

The AMI and CABG models, which we proposed to be tested at a single set of hospitals as discussed in section III.B.5. of the proposed rule (81 FR 50794), were selected to include all beneficiaries who have an AMI treated medically or with revascularization with PCI, as well as all beneficiaries who undergo CABG (whether performed during the care of an AMI or performed electively for stable ischemic heart disease or other indication). Both cardiac models represent clinical conditions that result in a significant burden of morbidity and expenditures in the Medicare population. CABG typically is the preferred revascularization modality for patients with ST (the part of an electrocardiogram between the QRS complex and the T wave) elevation AMI where the coronary anatomy is not amenable to PCI or there is a mechanical complication (for example, ventricular septal defect, rupture of the free wall of the ventricle, or papillary-muscle rupture with severe mitral regurgitation); for patients with CAD other than ST elevation AMI where there is left main coronary artery disease or multivessel disease with complex lesions; and for patients with clinically significant CAD in at least one vessel and refractory symptoms despite medical therapy and PCI.[21] Despite the greater acute morbidity related to major cardiothoracic surgery, CABG is associated with lower longer-term rates of major adverse cardiac and cerebrovascular events in comparison to PCI for certain groups of patients.[22] Moreover, a recent study found that in a group of patients with ischemic cardiomyopathy, the rates of death from any cause, death from cardiovascular causes, and death from any cause or hospitalization for cardiovascular causes were significantly lower over 10 years among patients who underwent CABG in addition to receiving medical Start Printed Page 200therapy than among those who received medical therapy alone.[23] While about 30 percent of CABGs are performed during the care of AMIs, we proposed to include these particular AMI beneficiaries generally in the same episode as CABG for other indications, rather than in the AMI episode, since we anticipate hospitals will seek to improve the quality and efficiency of care for that surgical intervention, regardless of indication.[24]

We proposed AMI as the episode for an EPM because we recognized it as a significant clinical condition for which evidence-based clinical guidelines are available for the most common AMI scenarios that begin with a beneficiary's presentation for urgent care, most commonly to a hospital emergency department. The hospital phase involves medical management for all patients, as well as potential revascularization, most commonly with PCI. Secondary prevention and plans for long-term management begin early during the hospitalization, extend following hospital discharge, and are addressed in clinical guidelines.[25 26] The AMI model is the first Innovation Center episode payment model that includes substantially different clinical care pathways (medical management and PCI) for a single clinical condition in one episode in a model and, as such, represents an important next step in testing episode payment models for clinical conditions which involve a variety of different approaches to treatment and management.

The American Heart Association estimates that every 42 seconds, someone in the United States has a myocardial infarction.[27] AMI remains one of the most common hospital diagnoses among Medicare FFS beneficiaries, and almost 20 percent of beneficiaries discharged for AMI are readmitted within 30 days of hospital discharge.[28 29] In 2013, AMI was the sixth most common principal discharge diagnosis for hospitalized Medicare FFS beneficiaries, constituting 2.9 percent of discharges.[30] Of the approximately 395,000 Medicare FFS beneficiaries with short-term acute care hospital discharges (excluding Maryland) for AMI in FY 2014, 60 percent were discharged under MS-DRGs proposed to be included in the AMI model, specifically 33 percent under AMI MS-DRGs and 25 percent under PCI MS-DRGs.[31] An additional 3 percent of beneficiaries were in MS-DRGs for death from AMI in the hospital. Although 5 percent of beneficiaries with hospital discharges for AMI were discharged under CABG MS-DRGs, we note that because both PCI and fibrinolysis can restore blood flow in an acutely occluded coronary artery more quickly than CABG, these interventions are currently preferred to CABG in most cases of AMI. Furthermore, over recent years cardiovascular clinical practice patterns have generally shifted away from surgical treatment of coronary artery occlusion toward percutaneous, catheter-based interventions.[32] The remaining 34 percent of beneficiaries with AMI diagnoses were distributed across a heterogeneous group of over 300 other MS-DRGs, such as septicemia, respiratory system diagnosis with ventilator support, and major cardiovascular procedures. For this latter group of beneficiaries, the AMI diagnosis appeared in a secondary position on the hospital claim in more than 90 percent of the cases, therefore most likely representing circumstances where the beneficiary while hospitalized for another clinical condition experienced an AMI during the hospital stay. By focusing the AMI model on AMIs treated medically or with revascularization with PCI, we proposed to test a condition-specific EPM that was discretely defined and includes a significant majority of beneficiaries with AMI in the AMI model. In CYs 2012-2014, the average Medicare spending for an AMI episode that extends 90 days post-hospital discharge was approximately $24,200.[33] From the AMI model, we expect to better understand the impact that such an EPM can have on efficiency and quality of care for beneficiaries across the entire spectrum of AMI care, including diagnosis, treatment, and recovery, as well as short-term secondary prevention.

Beneficiaries in the AMI and CABG models will all have CAD. In 2010 in the U.S., the prevalence of CAD in the population 65 years and older was about 20 percent.[34] Patients with CAD also often experience other significant health conditions, including diabetes. To improve care for patients with CAD, most approaches in the private and public sectors focus on improving the efficiency and quality of care around procedures such as PCI and CABG. The BPCI models are an example of such an approach. As discussed previously in this section, our proposal for the AMI model extends beyond a procedure-based EPM to include beneficiaries hospitalized for medical management or PCI for AMI in a single EPM, and we proposed to test the CABG model, which also would include beneficiaries with AMI, at the same participant hospitals. We believe that hospitalization for AMI, whether accompanied solely by medical management or including revascularization during the initial hospitalization or in a planned CABG Start Printed Page 201readmission, is a sentinel event indicating the need for an increased focus on condition-specific management, as well as on care coordination and active management to prevent future acute events, both during the AMI and CABG episodes and beyond. We also believe that improving the quality and efficiency of CAD care over a long period of time is important given the chronic nature of this condition that has serious implications for beneficiary health.

The AMI and CABG models provide an opportunity for us to incentivize CAD-specific care management and care coordination for AMI and CABG model beneficiaries that lays the groundwork for longer-term improvements in quality and efficiency of care for beneficiaries with CAD. We note that the quality measures proposed for use in the pay-for-performance methodologies of the AMI and CABG models do not currently include longer-term outcomes or patient experience outside of the AMI or CABG episode itself, as discussed in sections III.E.2.b. and c. of the proposed rule (81 FR 50794), although we were interested in comments about potential future measures that could incorporate longer-term outcomes. Moreover, as discussed in section VI. of the proposed rule (81 FR 50794), we also proposed to test a cardiac rehabilitation (CR)/intensive cardiac rehabilitation (ICR) incentive payment, hereinafter CR incentive payment, in AMI and CABG model participants located in some of the MSAs selected for AMI and CABG model participation, as well as in hospitals located in some of the MSAs that are not selected for AMI or CABG model participation. We proposed to evaluate the effects of the CR incentive payment in the context of an episode payment model and Medicare FFS on utilization of CR/ICR, as well as short-term (within the period of time extending 90 days following hospital discharge from an AMI or CABG hospitalization) and longer-term outcomes. We believe this test may result in valuable findings about effective strategies to increase utilization of CR/ICR services that have a strong evidence-base for their effectiveness but a long history of underutilization.

The following is a summary of the comments received and our responses.

Comment: A number of commenters expressed support for the proposed AMI and CABG models, characterizing the proposals as a good first step toward achieving greater focus not only on cardiac care quality improvement but also care coordination for the anchor admission through post-acute care management of patients and families. Several commenters believe that CMS' proposal to implement separate models for beneficiaries undergoing treatment for AMI versus CABG surgery was sensible given the typical recovery pathways experienced by beneficiaries. One commenter noted that while the majority of beneficiaries with AMI or CABG have CAD, not all will have this condition as CMS stated in the proposed rule (81 FR 50807).

Several commenters commended CMS for developing a clinically appropriate definition for AMI because AMI is a condition that can require a range of treatments, including both medical treatments and PCI. The commenters observed that the combination of AMI medical management and PCI into a single AMI episode is likely to present AMI model participants with greater opportunity than if the hospital managed just one of the MS-DRG groupings. They stated that the proposal to include both medical and PCI MS-DRG groupings in the AMI model would increase each hospital's AMI episode volume relative to a single MS-DRG grouping, and further noted that sufficient volume in any bundled payment model is key to ensuring that financial results are not primarily driven by random variation.

Several commenters observed that the proposed AMI model would be the first Innovation Center bundled payment model to combine medical and procedural care in a single episode and that the majority of beneficiaries in the AMI model would be experiencing a life-threatening emergency. These commenters believe the proposed AMI model has the potential for patient harm and serious unintended consequences and recommended CMS to maintain a dialogue with practicing clinicians from medical specialty and subspecialty societies so that unintended consequences are caught early. One commenter recommended that CMS refocus the proposed AMI model to be treatment-based, separating beneficiaries with AMI into two different treatment-based EPMs based on medical management or PCI. The commenter contended that this approach would be more straightforward for model participants and allow CMS to conduct longer-term analyses of BPCI-like models in a more representative cross-section of hospitals.

Other commenters recommended that CMS pursue only the CABG model, arguing that the proposed AMI model, with complex, care pathway-dependent prices and transfer pathways, would influence attribution and result in serious uncertainties for AMI model participants. One commenter reasoned that isolated CABG procedures are particularly well-positioned for a bundled payment model that requires participation because, despite the availability of robust clinical guidelines, variability in the costs and outcomes of CABG persist. The commenter noted that other entities, such as Arkansas and Tennessee Medicaid, Washington State's Bree Collaborative, and commercial payers, have seen the potential to improve the cost and quality of CABG through the implementation of bundled payments. Several commenters stated that initial implementation of the CABG model alone would allow CABG model participants to focus efforts on a specific population that includes the opportunity to excel in the care of CAD and gain some experience in the care of emergent patients. This limited implementation strategy would allow model participants to start to develop systems and models of care that address the unique needs of these populations in a value-driven equation. The commenters added that as hospitals work through implementation and gain experience with the CABG model, CMS could then phase in the inclusion of the much more complicated AMI model, which would introduce a myriad of factors that would add to the complexity of EPMs in which the hospital was a participant.

Another commenter who did not favor implementation of the proposed AMI model reasoned that, in addition to the built-in incentives of MS-DRGs that currently reward hospitals and physicians for complications that occur during the beneficiary's hospitalization by providing a higher IPPS payment for beneficiaries with complications, the proposed AMI model lacked incentives to manage beneficiaries to reduce CAD complications such as AMI. Instead, the commenter stated that the proposed AMI model would incentivize admitting patients who are marginally symptomatic for AMI that is a complication of CAD, contrary to the overall goals of EPMs to lower the incidence of complications. The commenter cited a body of research that has shown that optimal management of CAD can significantly lower the incidence of AMI. The commenter recommended CMS to move toward condition-specific episode payment defined by diagnosis codes, and to halt implementation of an event-based EPM for AMI that is, in itself, a complication from the lack of optimal management of CAD. The commenter also stated that CMS should implement site-agnostic Start Printed Page 202PCI episodes so the incentives under the model would be to provide care in the place of service best suited for the patient. Another commenter expressed concerns about bundling AMI care, as it encompasses a broad spectrum of many different complex illnesses. Several commenters observed that while some AMI patients require less complex care, other patients are admitted with multiple comorbidities and require a higher intensity of care, which may involve multiple organs and a variety of care resources. Other commenters believe that if CMS implements the AMI model as proposed, more beneficiaries would move into the CABG model because of the AMI model financial incentives, which would not be in the best interests of beneficiaries.

While some commenters recommended a short implementation delay for the AMI and/or CABG models, several other commenters recommended that CMS delay the AMI and CABG models, with recommendations ranging from 6 to 36 months. These commenters believe this delay would provide sufficient time for CMS to incorporate known best practices from the Healthcare Payment Learning and Action Network (LAN) Clinical Episode Payment (CEP) Work Group and lessons learned from both the BPCI and CJR models into the design of the cardiac EPMs. Otherwise, the commenters were concerned that the cardiac EPMs would both put beneficiaries at risk and disadvantage providers, as the episodes would be built using designs that were not supported by CMS' own panel of industry experts.

Some commenters expressed concern about expanding EPMs to complex conditions such as AMI and CABG, where treatment can follow multiple evidence-based care pathways. One commenter pointed out that the proposed AMI and CABG models would generally include beneficiaries receiving unplanned care due to an acute event, making the population's care difficult to manage. The commenter requested that CMS not implement the proposed cardiac EPMs. Several commenters stated that the complexity of the proposed cardiac EPMs was so great that CMS had essentially proposed a completely different payment system for cardiac care and would provide EPM participants with little time to prepare and plan for implementation. The commenters believe that decisions about appropriate care should be made by physicians and their patients and should be based on each patient's medical necessity and care preferences. They stated that bundling clinically complex episodes with multiple care pathways may lead to factors other than medical necessity and care preferences influencing the decisions that providers make, and that such decisions could have a long-term impact on a patient's health and well-being and may increase costs in the long run while achieving the short-term goal of reducing episodic costs. The commenters believe that this potentially serious issue warranted immediate attention by CMS, given the lack of evidence on the impact of the EPMs on key patient-centered outcomes, and concluded that the proposed EPMs require further consideration and study before additional bundling initiatives are implemented.

MedPAC stated that the proposed AMI episodes did not appear to be a promising place to further test bundled payment because AMI episodes have relatively low post-acute care use and the associated post-acute care spending makes up a small share of total episode spending. They concluded that savings opportunities for participating providers would be smaller compared with other conditions. Consistent with the observations of a few other commenters, MedPAC stated that complex medical conditions such as AMI do not involve a single clinical pathway but rather can involve patient transfers to hospitals with more intensive cardiac capabilities and subsequent readmissions for CABG. While MedPAC acknowledged that CMS' proposed rule addressed these issues, they noted that if the benchmark prices are not accurate, the prices could inadvertently shape clinical practice or encourage selective admissions. Instead of an EPM, MedPAC suggested that CMS consider allowing hospitals to share savings with physicians as a way to focus physicians on reducing the cost of the inpatient stay for AMI care.

MedPAC further concluded that CABG was also not an ideal condition for testing bundled payment models because, although the majority of beneficiaries undergoing CABG go on to use post-acute care services, the spending on post-acute care services is relatively low compared to other clinical conditions. They noted that with the inpatient stay comprising the vast majority of total episode spending, the opportunities to realize savings by changing clinical practice would be small. MedPAC presented an additional concern regarding the potential for undesirable provider responses to financial incentives, including patient selection, in the proposed CABG model. They claimed that providers of cardiac care have been shown to engage in patient selection and expressed concern that, with larger savings at stake, these behaviors could increase. They recommended that CMS delay testing the CABG model until the benefits of episode efficiency outweigh the concerns about patient selection.

Response: We appreciate the support of some of the commenters for our proposal to implement the AMI and CABG models. The proposed cardiac models represent clinical conditions that result in a significant burden of morbidity and expenditures in the Medicare population. However, we acknowledge the great diversity of views about the AMI and CABG models reflected in the comments.

We proposed AMI as the episode for an EPM because we recognized it as a significant clinical condition for which evidence-based clinical guidelines are available for the most common AMI scenarios that begin with a beneficiary's presentation for urgent care, most commonly to a hospital emergency department. The hospital phase involves medical management for all patients, as well as potential revascularization, most commonly with PCI. As commenters observed, the AMI model is the first Innovation Center episode payment model that includes substantially different clinical care pathways (medical management and PCI) for a single clinical condition in one episode in a model. In this sense the AMI model is a condition-specific EPM, although it is not focused on the underlying CAD condition that puts some beneficiaries at risk for the AMI but rather on the AMI itself. While we recognize that AMI may be a complication of care from inadequately managed CAD, we continue to believe that there is an important role for the AMI model in testing bundled payment for beneficiaries with AMI who follow a variety of clinical pathways because AMI is a sentinel event indicating the need for an increased focus on condition-specific management. The proposed 90 day post-discharge episode duration would provide a springboard to heighten the focus on CAD-specific management. While future models may focus on CAD management itself, including reducing the risk of AMI, in addition to the current Million Hearts® Cardiovascular Risk Reduction Model, we believe that the proposed AMI model also plays an important role in testing an EPM for this clinical condition which is not always avoidable even in the context of the best practices to manage CAD on an ongoing basis.[35]

We believe that it is important to test EPMs like the AMI model where Start Printed Page 203beneficiaries can follow multiple clinical pathways, including transfers among hospitals with different cardiac care capacity because, more commonly than not, beneficiaries who are hospitalized for an emergent clinical condition do not constitute as homogeneous a group as those who choose to undergo elective surgery. However, there likely are significant opportunities to improve the quality and efficiency of episode care through care redesign that improves care coordination and management for beneficiaries unexpectedly hospitalized for treatment following a cardiac event. We disagree with the commenter who recommended that we create two treatment-based EPMs, AMI medical management and PCI, because, in the context of our proposed pricing methodology that sets MS-DRG-specific EPM-episode benchmark prices and quality-adjusted target prices as discussed in section III.D.4.b.(1). of this final rule, we believe we can appropriately include beneficiaries following the two different treatment approaches in the same EPM without concern that the financial incentives of the EPM are influencing the treatment choice for beneficiaries.

We appreciate the support of many commenters for the proposed CABG model. We believe that CABG may play a role for some beneficiaries with symptomatic CAD, either with or without AMI, because CABG is associated with lower longer-term rates of major adverse cardiac and cerebrovascular events in comparison to PCI for certain groups of patients. As a number of commenters pointed out, multiple other entities, including states, are testing CABG bundled payment models due to the variability in costs and outcomes despite robust clinical guidelines.

In response to those commenters who recommended that the AMI and CABG models be delayed in order to incorporate known best practices from the LAN CEP Work Group, we note that the LAN is a public-private partnership established by the U.S. Department of Health and Human Services (HHS) to increase the adoption of APMs that promote better care, smarter spending, and healthier people. The LAN has a voluntary collaborative structure and its consensus recommendations do not necessarily reflect the views of its individual participants. Representatives from CMS, along with representatives from states, purchasers, providers, commercial payers, and consumers, were active participants in the CEP Work Group and developed, with input from the broader LAN network, a set of recommendations that reflect a consensus view, balancing innovation with current practice to move the health care delivery system forward. The CEP Work Group full recommendations have not yet been tested in the market. The LAN CEP Work Group recommendations and the proposed CMS CABG and AMI EPMs, although incorporating different design features, both support the implementation of episode-based payment models for cardiac care. We anticipate that both the LAN recommendations and the CMS AMI and CABG models will expand provider experience and expertise regarding the necessary resources and most effective strategies for providing high quality, efficient care through episode-based payment models and will help prepare the market for further adoption of innovative payment models in the future. Therefore, we believe that best practices for episode payment models are continuously being identified and refined based on providers' actual implementation experiences with episode payment models of various designs. Rather than redesigning the proposed cardiac care models to conform to the LAN CEP Work Group recommendations, we look forward to testing the AMI and CABG models based on the policies included in this final rule and sharing our evaluation findings with stakeholders to inform other episode payment models for cardiac care.

We do not agree with MedPAC's conclusion that the proposed AMI and CABG models do not hold promise because of limited post-acute care spending in AMI episodes and the high percentage of CABG episode spending due to the anchor hospitalization in CABG episodes coupled with the risk of patient selection due to the financial incentives of the CABG model. While care redesign to improve the efficiency of post-acute care use may be an obvious strategy to address variation in episode spending for those episodes, such as SHFFT and LEJR episodes with high utilization of post-acute care services, AMI and CABG beneficiaries have substantial episode spending during 90 days post-discharge from the anchor hospitalization as a result of complications, further treatment, and ongoing care management of their underlying chronic conditions. We believe that increased efficiencies in the post-discharge care and improved care coordination represent a significant opportunity to improve the quality and reduce the cost of AMI and CABG episodes.

As commenters pointed out, the cardiac EPMs create some risks of harm to beneficiaries from patient selection and different treatment choices EPM participants could adopt based on the financial incentives under the EPMs, although we believe these concerns are generally present for every episode payment model that sets a price that Medicare pays for an episode-of-care. As discussed further in sections III.G.4. through 6. of this final rule, we will take steps to prevent potential harm by monitoring for access to care, quality of care, and delayed care under the EPMs and may take remedial action against EPM participants if we find evidence that supports concerns in these areas. In addition, the evaluation as discussed in section IV. of this final rule will analyze beneficiary outcomes and their relationship to clinical pathways under the EPMs.

We refer to section III.D.2.a. of this final rule for a discussion of the comments on the proposed implementation timeline for the AMI and CABG models and our responses.

Final Decision: After consideration of the public comments received, we are finalizing the proposal to implement the AMI and CABG models, with modifications to specific policies as described throughout this final rule. We refer to section III.D.2.a. of this final rule for the implementation timeline that applies to the AMI and CABG models.

2. Advanced Alternative Payment Model Considerations

For ease of reading the subsequent sections regarding our proposals and our final policies around the EPMs as Advanced APMs, we first present the proposals outlined in the Quality Payment Program proposed rule (81 FR 28161) followed by the policies outlined in the Quality Payment Program final rule with comment period (81 FR 77008).

a. Overview for the EPMs

The MACRA created two paths for eligible clinicians to link quality to payments: The MIPS and Advanced APMs. These two paths create a flexible payment system called the Quality Payment Program as proposed by CMS in the Quality Payment Program proposed rule (81 FR 28161 through 28586).

As proposed in the Quality Payment Program proposed rule, an APM must meet three criteria to be considered an Advanced APM (81 FR 28298). First, the APM must provide for payment for covered professional services based on quality measures comparable to measures described under the performance category described in section 1848(q)(2)(B)(i) of the Act, Start Printed Page 204which is the MIPS quality performance category. We interpret this criterion to require the APM to incorporate quality measure results as a factor when determining payment to participants under the terms of the APM. Under the Quality Payment Program proposed rule, we proposed that the quality measures on which the Advanced APM bases payment for covered professional services (as that term is defined in section 1848(k)(3)(A) of the Act) must include at least one of the following types of measures, provided that they have an evidence-based focus and are reliable and valid (81 FR 28302):

  • Any of the quality measures included on the proposed annual list of MIPS quality measures.
  • Quality measures that are endorsed by a consensus-based entity.
  • Quality measures developed under section 1848(s) of the Act.
  • Quality measures submitted in response to the MIPS Call for Quality Measures under section 1848(q)(2)(D)(ii) of the Act.
  • Any other quality measures that CMS determines to have an evidence-based focus and be reliable and valid.

As we discussed in the Quality Payment Program proposed rule, because the statute identifies outcome measures as a priority measure type and we wanted to encourage the use of outcome measures for quality performance assessment in APMs, we further proposed in that rule that, in addition to the general quality measure requirements, an Advanced APM must include at least one outcome measure if an appropriate measure is available on the MIPS list of measures for that specific QP Performance Period, determined at the time when the APM is first established (81 FR 28302 through 28303).

Second, the APM must either require that participating APM Entities bear risk for monetary losses of a more than nominal amount under the APM or be a Medical Home Model expanded under section 1115A(c) of the Act. Except for Medical Home Models, we proposed in the Quality Payment Program proposed rule that, for an APM to meet the nominal amount standard, the specific level of marginal risk must be at least 30 percent of losses in excess of expected expenditures; a minimum loss rate, to the extent applicable, must be no greater than 4 percent of expected expenditures; and total potential risk must be at least 4 percent of expected expenditures (81 FR 28306).

Third, the APM must require participants to use CEHRT (as defined in section 1848(o)(4) of the Act), as specified in section 1833(z)(3)(D)(i)(I) of the Act, to document and communicate clinical care with patients and other health care professionals. Specifically, where the APM participants are hospitals, the APM must require each hospital to use CEHRT (81 FR 28298 through 28299).

In the proposed rule (81 FR 50794), we proposed to adopt two different tracks for the EPMs—Track 1 in which EPMs and EPM participants would meet the criteria for Advanced APMs as proposed in the Quality Payment Program proposed rule, and Track 2 in which the EPMs and EPM participants would not meet those proposed criteria. For the proposed AMI, CABG, and SHFFT models, we proposed pay-for-performance methodologies that use quality measures that we believe would meet the proposed Advanced APM quality measure requirements in the Quality Payment Program proposed rule. As discussed in sections III.E.2. and 3. of the proposed rule (81 FR 50794), all but one of the AMI, CABG, and SHFFT model measures used in the EPM pay-for-performance methodologies are NQF-endorsed and have an evidence-based focus and are reliable and valid. Therefore, we believe they would meet the proposed Advanced APM general quality measure requirements. The Excess Days in Acute Care after Hospitalization for AMI (AMI Excess Days) measure, which was proposed for the AMI model, is not currently NQF-endorsed, but was reviewed, recommended for endorsement, and is expected to be formally endorsed within the first quarter of 2017. We believe it meets the measure requirements by having an evidence-based focus and being reliable and valid because this measure has been proposed and adopted through rulemaking for use in the Hospital Inpatient Quality Reporting (HIQR) Program.

Each of the proposed EPM pay-for-performance methodologies included one outcome measure that is NQF-endorsed, has an evidence-based focus, and is reliable and valid. The EPM quality measures were discussed in detail in section III.E. of the proposed rule (81 FR 50794), where we assigned the quality measures to quality domains. For the AMI model, we proposed to use the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute Myocardial Infarction (NQF #0230) (MORT-30-AMI) outcome measure. For the CABG model, we proposed to use the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft (CABG) Surgery (NQF# 2558) (MORT-30-CABG) outcome measure. Finally, for the SHFFT model, we proposed to use the Hospital-level RSCR following elective primary THA and/or TKA (NQF #1550) (Hip/Knee Complications) outcome measure. Thus, based on the proposed use of these three outcomes measures in the EPMs, we believed the proposed AMI, CABG, and SHFFT models would meet the requirement proposed for Advanced APMs in the Quality Payment Program proposed rule for use of an outcome measure that also meets the general quality measure requirements.

In terms of the proposed nominal risk criteria for Advanced APMs, beginning in performance year 2 for episodes ending between April 1, 2018 and December 31, 2018, we proposed that EPM participants would begin to bear downside risk for excess actual EPM-episode spending above the quality-adjusted target price as discussed in section III.D.2.c. of the proposed rule (81 FR 50794). The marginal risk for excess actual EPM-episode spending above the quality-adjusted target price would be 100 percent over the range of spending up to the stop-loss limit, which would exceed 30 percent marginal risk, and there would be no minimum loss rate. As a result, we believed the EPMs would meet the marginal risk and minimum loss rate elements of the nominal risk criteria for Advanced APMs proposed in the Quality Payment Program proposed rule. We proposed that total potential risk for most EPM participants would be 5 percent of expected expenditures beginning in the second quarter of performance year 2, and increasing in subsequent performance years as discussed in section III.D.7.b. of the proposed rule (81 FR 50794). Therefore, in the proposed rule, we stated our belief that the total proposed potential risk applicable to most EPM participants, with the lowest total potential risk being 5 percent for EPM episodes ending on or after April 1, 2018 in performance year 2, would meet the total potential risk element of the nominal risk amount standard for Advanced APMs proposed in the Quality Payment Program proposed rule because it was greater than the value of at least 4 percent of expected expenditures.

We note that we proposed that EPM participants that are rural hospitals, sole community hospitals (SCHs), Medicare Dependent Hospitals (MDHs) and Rural Referral Centers (RRCs) would have a stop-loss limit of 3 percent beginning in the second quarter of performance year 2 as discussed in section III.D.7.c. of the proposed rule (81 FR 50794). Because 3 percent was less than the proposed Start Printed Page 205threshold of at least 4 percent of expected expenditures for total potential risk proposed for Advanced APMs in the Quality Payment Program proposed rule, those rural hospitals, SCHs, MDHs, and RRCs that are EPM participants subject to special protections would be in Track 2 EPMs that would not meet the proposed nominal risk standard for Advanced APMs for performance year 2. We recognized that this proposal might initially limit the ability of rural hospitals, SCHs, MDHs, and RRCs to be in Track 1 EPMs that are Advanced APMs. In the proposed rule, we explained our belief that this potential limitation on rural hospitals, SCHs, MDHs, and RRCs is appropriate for the following reasons: (1) Greater risk protections for these hospitals proposed for the EPMs beginning in the second quarter of performance year 2 and subsequent performance years compared to other EPM participants are necessary, regardless of their implications regarding Advanced APMs based on the nominal risk standard proposed in the Quality Payment Program proposed rule, because these hospitals have unique challenges that do not exist for most other hospitals, such as being the only source of health care services for beneficiaries or certain beneficiaries living in rural areas or being located in areas with fewer providers, including fewer physicians and post-acute care facilities; and (2) under the risk arrangements proposed for the EPMs, these hospitals would not bear an amount of risk in performance year 2 that we determined to be more than nominal in the Quality Payment Program proposed rule. However, we sought comment on whether we should allow EPM participants that are rural hospitals, SCHs, MDHs, or RRCs to elect a higher stop-loss limit for the part of performance year 2 where downside risk applies in order to permit these hospitals to be in Track 1 EPMs for that part of performance year 2. We noted that by performance year 3, the stop-loss limit for these hospitals with special protections under the EPMs would increase to 5 percent under our proposal, so these hospitals could be in Track 1 EPMs based on the nominal risk standard proposed in the Quality Payment Program proposed rule.

As addressed in the Quality Payment Program proposed rule, it would be necessary for an APM to require the use of CEHRT in order to meet the criteria to be considered to be an Advanced APM. Therefore, according to the requirements proposed in the Quality Payment Program proposed rule, so that the EPMs may meet the proposed criteria to be Advanced APMs, we proposed to require EPM participants to use CEHRT (as defined in section 1848(o)(4) of the Act) to participate in Track 1 of the EPMs. We proposed that Track 1 EPM participants must use certified health IT functions, in accordance with the definition of CEHRT under our regulation at § 414.1305 (81 FR 77537), to document and communicate clinical care with patients and other health care professionals as proposed in the Quality Payment Program proposed rule (81 FR 28299). We believed this proposal would allow Track 1 EPMs to be able to meet the proposed criteria to be Advanced APMs.

Without the collection of identifying information on eligible clinicians (physicians, non-physician practitioners, physical and occupational therapists, and qualified speech-language pathologists) who would be considered Affiliated Practitioners as proposed in the Quality Payment program proposed rule under the EPMs, CMS would not be able to consider participation in the EPMs in making determinations as to whom could be considered a QP (81 FR 28320). As detailed in the Quality Payment Proposed rule, these determinations are based on whether the eligible clinician meets the QP threshold under either the Medicare Option starting in payment year 2019 or the All-Payer Combination Option, which is available starting in payment year 2021 (81 FR 28165). Thus, we made proposals in the following sections to specifically address these issues that might otherwise preclude the EPMs from being considered Advanced APMs, or prevent us from operationalizing them as Advanced APMs. Based on the proposals for Advanced APM criteria in the Quality Payment Program proposed rule, we sought to align the design of the proposed EPMs with the proposed Advanced APM criteria and enable CMS to have the necessary information on eligible clinicians to make the requisite QP determinations.

For ease of reading the subsequent sections regarding our proposals and final policies for the EPMs as Advanced APMs, we present the following definitions from § 414.1305 that have now been finalized in the Quality Payment Program final rule with comment period (81 FR 77008).

Alternative Payment Model (APM) means any of the following: (1) A model under section 1115A of the Act (other than a health care innovation award); (2) The shared savings program under section 1899 of the Act; or (3) A demonstration under section 1866C of the Act. (4) A demonstration required by federal law.

Episode payment model means an APM or other payer arrangement designed to improve the efficiency and quality of care for an episode of care by bundling payment for services furnished to an individual over a defined period of time for a specific clinical condition or conditions.

APM Entity means an entity that participates in an APM or payment arrangement with a non-Medicare payer through a direct agreement or through Federal or State law or regulation.

Advanced Alternative Payment Model (Advanced APM) means an APM that CMS determines meets the criteria set forth in § 414.1415.

Advanced APM Entity means an APM Entity that participates in an Advanced APM or Other Payer Advanced APM.

Participation List means the list of participants in an APM Entity that is compiled from a CMS-maintained list.

Eligible Clinician means “eligible professional” as defined in section 1848(k)(3) of the Act, as identified by a unique TIN and NPI combination and, includes any of the following: (1) A physician; (2) A practitioner described in section 1842(b)(18)(C) of the Act; (3) A physical or occupational therapist or a qualified speech language pathologist; or (4) A qualified audiologist (as defined in section 1861(ll)(3)(B) of the Act).

Affiliated Practitioner means an eligible clinician identified by a unique APM participant identifier on a CMS-maintained list who has a contractual relationship with the Advanced APM Entity for the purposes of supporting the Advanced APM Entity's quality or cost goals under the Advanced APM.

Affiliated Practitioner List means the list of Affiliated Practitioners of an APM Entity that is compiled from a CMS-maintained list.

Qualifying APM Participant (QP) means an eligible clinician determined by CMS to have met or exceeded the relevant QP payment amount or QP patient count threshold under § 414.1430(a)(1), (a)(3), (b)(1), or (b)(3) for a year based on participation in an Advanced APM Entity.

QP Patient Count Threshold means the minimum threshold score specified in § 414.1430(a)(3) and (b)(3) that an eligible clinician must attain through a patient count methodology described in §§ 414.1435(b) and 414.1440(c) to become a QP for a year.

QP Payment Amount Threshold means the minimum threshold score specified in § 414.1430(a)(1) and (b)(1) that an eligible clinician must attain through the payment amount methodology described in Start Printed Page 206§§ 414.1435(a) and 414.1440(b) to become a QP for a year.

Threshold Score means the percentage value that CMS determines for an eligible clinician based on the calculations described in § 414.1435 or § 414.1440.

Merit-based Incentive Payment System (MIPS) means the program required by section 1848(q) of the Act.

MIPS APM means an APM that meets the criteria specified under § 414.1370(b).

Improvement Activities means an activity that relevant MIPS eligible clinicians, organizations and other relevant stakeholders identify as improving clinical practice or care delivery and that the Secretary determines, when effectively executed, is likely to result in improved outcomes.

Based on the proposals for Advanced APM criteria in the Quality Payment Program proposed rule (81 FR 28161), we sought to align the design of the proposed EPM Advanced APM track with the proposed Advanced APM criteria and enable CMS to have the necessary information on Eligible Clinicians to make the requisite QP determinations. As detailed in the Quality Payment Program final rule with comment period, QP determinations are based on whether the Eligible Clinician meets the QP threshold under either the Medicare Option starting in payment year 2019 or the All-Payer Combination Option, which is available starting in payment year 2021 (81 FR 77013). Eligible clinicians seeking QP determinations as early as performance year 2 would need to meet the QP threshold under the Medicare Option. The three criteria for an Advanced APM were finalized in the Quality Payment Program final rule with comment period (81 FR 77008), and we continue to align the design of the finalized EPMs with the finalized Advanced APM criteria so that EPM participants who choose to use and attest to use of CEHRT may participate in an EPM that meets the criteria of an Advanced APM. To be determined to be an advanced APM, an APM must meet three Advanced APM criteria identified in § 414.1415 and discussed specifically later in this section.

First, the APM must require participants to use CEHRT (as defined in section 1848(o)(4) of the Act), as specified in section 1833(z)(3)(D)(i)(I) of the Act, to document and communicate clinical care with patients and other health care professionals (81 FR 77406). Specifically, where the APM participants are hospitals, the APM must require each hospital to use CEHRT. As addressed in the Quality Payment Program final rule with comment period, it is necessary for an APM to require the use of CEHRT in order to meet the criteria to be considered to be an Advanced APM. Therefore, according to the requirements now finalized in the Quality Payment Program final rule with comment period, so that the EPMs may meet the finalized criteria to be Advanced APMs, we proposed that those EPM participants who choose to participate in Track 1 of the EPMs must use certified health IT functions, in accordance with the definition of CEHRT under our regulation at 42 CFR 414.1305, to document and communicate clinical care with patients and other health care professionals. We believe that this proposal set forth in the EPM proposed rule would allow EPM participants who use and attest to use of CEHRT to be in an EPM that meets the first finalized Advanced APM criterion.

Second, the APM must provide for payment to participants based on performance on quality measures comparable to measures described under the performance category described in section 1848(q)(2)(B)(i) of the Act, which is the MIPS quality performance category. We interpret this criterion to require the APM to incorporate quality measure results as a factor when determining payment to participants under the terms of the APM as described in the Quality Payment Program final rule with comment period (81 FR 77414). In order to align the EPMs with the Quality Payment Program final rule with comment period, the quality measures on which the Advanced APM bases payment to participants must include at least one of the following types of measures, provided that they have an evidence-based focus and are reliable and valid (81 FR 77418):

Any of the quality measures included on the proposed annual list of MIPS quality measures.

Quality measures that are endorsed by a consensus-based entity.

Quality measures developed under section 1848(s) of the Act.

Quality measures submitted in response to the MIPS Call for Quality Measures under section 1848(q)(2)(D)(ii) of the Act.

Any other quality measures that CMS determines to have an evidence-based focus and be reliable and valid.

As we discussed in the Quality Payment Program final rule with comment period, because the statute identifies outcome measures as a priority measure type and we want to encourage the use of outcome measures for quality performance assessment in APMs, we further finalized in that rule that, in addition to the general quality measure requirements, an Advanced APM must include at least one outcome measure if an appropriate measure is available on the MIPS list of measures for that specific QP Performance Period, determined at the time when the APM is first established (81 FR 77418). Therefore, according to the requirements finalized in the Quality Payment Program final rule with comment period and the quality measures finalized in section III.E of this final rule that are the proposed EPM quality measures with an additional voluntary measure for the CABG model, the EPMs will meet the second finalized criterion of the Advanced APM criteria.

Third, the Quality Payment Program final rule with comment period requires that for an APM to meet the Advanced APM criteria, the APM must either require that participating APM Entities bear risk for monetary losses of a more than nominal amount under the APM or be a Medical Home Model expanded under section 1115A(c) of the Act. For the purposes of the EPM, the generally applicable nominal amount standard for an Advanced APM in the Quality Payment Program final rule with comment period (81 FR 77425) means the total amount an APM Entity potentially owes CMS or foregoes under an APM must be at least equal to 3 percent of the expected expenditures for which an APM Entity is responsible under the APM. The generally applicable financial risk standard (81 FR 77422) means when an APM Entity's actual expenditures for which the APM Entity is responsible under the APM exceed expected expenditures during a specified QP Performance Period, the APM Entity is required to owe payment(s) to CMS. We refer to the Quality Payment Program final rule with comment period for a discussion regarding why we did not finalize the specific level of marginal risk or minimum loss rate (81 FR 77426). However, consistent with the commitments we made to adhere to the proposed marginal risk and minimum loss rate requirements in the Quality Payment Program proposed rule, we note that the financial risk in this final rule when the EPMs involve downside risk exceeds the proposed marginal risk and minimum loss rate requirements proposed for the Quality Payment Program. As discussed in sections III.D.7.b. and c. and displayed in Table 12 of this final rule, the final total initial risk of expected expenditures for EPM participants of 5 percent, and 3 percent for rural hospitals, SCHs, MDHs, RRCs, Start Printed Page 207and EPM volume protection hospitals subject to separate stop-loss protections, beginning in performance year 3 when downside risk for all participants first applies, would meet the total potential risk element of the nominal risk amount standard for Advanced APMs finalized in the Quality Payment Program final rule with comment period (81 FR 77427) because they are greater than or equal to the value of at least 3 percent of expected expenditures. Those EPM participants who elect voluntary downside risk beginning in performance year 2 will be subject to the same total risk of expected expenditures in performance year 2 and, therefore, will be in an EPM that meets the total potential risk element of the nominal risk amount standard for Advanced APMs beginning in performance year 2. Therefore, according to the requirements finalized in the Quality Payment Program final rule with comment period and the payment methodology for EPM participants finalized in section III.D of this final rule, those EPM participants who voluntarily elect downside risk for EPM episodes ending on or after January 1, 2018 will be in an EPM that meets the third finalized criterion of the Advanced APM criteria in performance year 2. All other EPM participants will be in an EPM that meets the third finalized criterion of the Advanced APM criteria in performance year 3.

Finally, we finalized in the Quality Payment Program final rule with comment period (81 FR 77442) that for Advanced APMs, such as episode payment models, in which there are some Advanced APM Entities that include Eligible Clinicians on a Participation List and other Advanced APM Entities that identify Eligible Clinicians only on an Affiliated Practitioner List, we will identify Eligible Clinicians for QP determinations based on the composition of the Advanced APM Entity. In the scenario that applies to the EPM which includes only hospitals as Advanced APM Entities on the Participation List, for those Advanced APM Entities where there is an Affiliated Practitioner List that identifies Eligible Clinicians, that Affiliated Practitioner List will be used to identify the Eligible Clinicians for purposes of QP determinations, and those Eligible Clinicians will be assessed individually. Thus, to operationalize the EPM as an Advanced APM, our proposal for the EPM to identify Eligible Clinicians on a clinician financial arrangements list to construct the Affiliated Practitioner list would identify those Eligible Clinicians for purposes of QP determination, consistent with the policies finalized in the Quality Payment Program final rule with comment period.

We received a number of public comments on our proposals for the EPMs as Advanced APMs. A few commenters requested changes to the policies proposed by CMS in the Quality Payment Program proposed rule and not to specific proposals for the EPMs set forth in the EPM proposed rule. These comments are out of scope for this rulemaking and no responses are provided in this final rule. Nevertheless, we have summarized this feedback related to the Quality Payment Program proposed rule, as CMS will continue work to improve the Quality Payment Program in part through future notice and comment rulemaking.

One commenter requested change to the definition of Affiliated Practitioner to include rehabilitation therapists. Many commenters requested changes to the definitions of the Affiliated Practitioner List and/or Participation List to identify Eligible Clinicians for the purposes of Advanced APMs, MIPS APMs, and the assignment by CMS of an Improvement Activities score, which fulfills one of four categories for MIPS assessment of cost and quality. Another commenter requested changes to the performance period or the December 31 date by which an Eligible Clinician could qualify for automatic credit for incentive payment and/or clinical Improvement Activities performance. This commenter reasoned that such changes would permit more Eligible Clinicians to receive a QP determination, which may qualify them for an APM incentive payment under MACRA. One commenter expressed uncertainty regarding the process by which Eligible Clinicians could receive a QP determination for the efforts of the EPM participant, and requested that CMS clarify on the pathway for participating physicians to be in an Advanced APM generally. Another commenter suggested CMS replace the QP determination with the proposal that, for EPM providers who meet the CEHRT use requirement and have 50 or more Medicare beneficiaries attributed to these EPMs, the threshold for Advanced APMs would be met automatically. A few commenters wanted CMS to use the Meaningful Use program to gather attestation to CEHRT use from hospitals. A few commenters strongly recommended CMS lower the patient count and payment revenue thresholds used in the calculation of the Threshold Score to meet QP Threshold Status as specified in the Quality Payment Program proposed rule. Many commenters urged CMS to work closely with the affected professional organizations and/or physician specialty societies to design QP thresholds. One commenter requested changes to the APM Entity such that the APM Entity lose the right to all or part of otherwise guaranteed payment or payments as one of the options if the APM Entity's actual aggregate expenditures exceed expected aggregate expenditures. A few commenters requested changes to the categorical exclusion that Medicare Advantage (MA) and other private plans paid to act as insurers on the Medicare program's behalf are not Advanced APMs, in light of the amount of risk taken by physicians in MA. Finally, one commenter requested changes to the allow Independence at Home participants who use CEHRT to qualify for Advanced APM incentive payments.

The following is a summary of the comments received on our proposals and our responses.

Comment: MedPAC commented that the EPM and CJR models should not be considered Advanced APMs for the purposes of MACRA. MedPAC stated they believe the following six principles should apply to Advanced APMs: the Advanced APM entity should assume the financial risk and enroll clinicians; be at financial risk for total Part A and Part B spending; be responsible for a beneficiary population sufficiently large to detect changes in spending and quality; have the ability to share savings with beneficiaries; be provided certain regulatory relief by CMS; and the enrolled clinicians should receive an incentive payment only if the Advanced APM entity in which they participate is successful in controlling cost, improving quality, or both. Under the proposed EPMs, MedPAC believes the proposed rule contemplates large, loosely connected groups of clinicians who may have very little involvement with the beneficiaries in EPMs and hence have little reason to change their practice patterns or reduce inappropriate episodes. If CMS intends for clinicians to bear risk, MedPAC made the alternative proposal that they could do so directly without having the hospital as the intermediary.

Response: While we appreciate the principles for Advanced APMs offered by MedPAC, we note that according to the Advanced APM definition in the Quality Payment Program final rule with comment period (81 FR 77008), the Track 1 EPMs that we proposed qualify as Advanced EPMs as discussed previously in this section.

While we recognize EPM participants are the participating APM Entities for Start Printed Page 208the purposes of the Quality Payment Program, CMS will consider participation of Eligible Clinicians in the Track 1 EPMs through collection of identifying information from Track 1 EPM participants on clinician financial arrangements lists as discussed in section III.A.2.c. of this final rule who would then be included on the Affiliated Practitioner List as defined in the Quality Payment Program final rule with comment period at § 414.1305 (81 FR 77537), in order to determine who could be considered a QP. The requirements for Eligible Clinicians to be reported on the clinician financial arrangements lists help ensure that these clinicians have specific involvement in caring for EPM beneficiaries and advancing the goals of the EPMs to improve the quality and reduce the cost of care. Finally, Eligible Clinicians can only be considered Qualifying Professionals or Partial Qualifying Professionals and, therefore, potentially be exempt from MIPS, if the Eligible Clinician meets the QP threshold or partial QP threshold as described in the Quality Payment Program final rule with comment period (81 FR 77433). Additionally, while we recognize the concerns with EPM participants or CJR participant hospitals intermediating the APM incentive payments, we believe that the QP threshold incentivizes Eligible Clinicians to work with such participants to improve health care delivery for Medicare beneficiaries.

The qualification of the CJR model as an Advanced APM is discussed in section V.O. of this final rule.

Comment: Many commenters expressed support for all organizations to have the opportunities to participate as Advanced APMs and noted that as proposed, rural hospitals, SCHs, MDHs, and RRCs that are EPM participants would not potentially qualify for participation in an Advanced APM until performance year 3 due to the proposed lower stop-loss limits for these hospitals under the EPMs. Additionally, one commenter recommended that a distinct CEHRT program be developed and funding be allocated for non-physician and non-prescribing professionals as soon as possible, as the cost of acquisition, implementation, and maintenance of an EHR is a significant barrier to adoption, particularly for small practices. One commenter observed this proposal as an important illustration of why CMS must be flexible in its definition of nominal risk, and how nominal will not mean the same thing for every provider. As such, commenters supported retention of the proposed stop-loss limits under the EPMs as the default rule for these hospitals, thus enabling them to meet the nominal financial risk standard for Track 1 EPMs (Advanced APMs) in performance year 3 rather than performance year 2 when other EPM participants would be eligible for Track 1 EPMs. However, commenters also believe CMS should also explore options to allow these hospitals with additional stop-loss protection under the EPMs to voluntarily elect a higher stop-loss limit in order to participate in Track 1 EPMs in performance year 2.

Response: The Quality Payment Program final rule with comment period (81 FR 77427) finalized the policy that an APM would meet the nominal amount standard for an Advanced APM if, under the terms of the APM, the total annual amount that an APM Entity potentially owes us or foregoes is equal to at least 3 percent of the expected expenditures for which an APM Entity is responsible under the APM. Therefore, rural hospitals, SCHs, MDHs, RRCs, as well as EPM volume protection hospitals as discussed in section III.D.7.c of this final rule, that are EPM participants with special stop-loss limits could potentially qualify as being in an Advanced APM as participants in a Track 1 EPM in performance year 3, along the same timeframe as all other EPM participants when downside risk for all participants is implemented, or in performance year 2 when voluntary downside risk may be elected by EPM participants (section III.D.2.c. of this final rule), based on the stop-loss limits finalized in this rule for these hospitals as discussed in section III.D.7.c. of this final rule.

Comment: Commenters proposed alternative processes by which a QP determination could be made, including collective assessment of QP status across both the AMI and CABG models, so as not to create siloed EPMs. In cases where there is an overlap of beneficiaries in more than one CMS model or program, other commenters proposed that beneficiaries should be counted toward a physician's QP Threshold Score (a part of a QP determination) if a beneficiary would have been assigned to a particular model if it were not for the fact that a different model that has required participation overlapped.

Response: The QP determination discussed in the Quality Payment Program final rule with comment period depends on the level of payments or patients furnished services through an Advanced APM based on the calculations described in § 414.1435 and § 414.1440, as applicable. Under certain Advanced APMs such as a Track 1 EPM, the responsibility of cost and quality measurement and reporting is with EPM participants that are hospitals rather than Eligible Clinicians. However, we have specified that Eligible Clinicians who are on Affiliated Practitioner Lists may also be assessed for a QP determination based on their Affiliated Practitioner status if there are no eligible clinicians on an Advanced APM's Participation List. Therefore, as finalized in the Quality Payment Program final rule with comment period (81 FR 77443), if an Eligible Clinician participates in multiple Advanced APM Entities during a QP Performance Period, and is not determined to be a QP based on participation in any of those Advanced APM Entities, then we will assess the Eligible Clinician individually using combined information for services associated with that individual's NPI and furnished through all the Eligible Clinician's Advanced APM Entities during the QP Performance Period. This includes all Advanced APM Entities for which the Eligible Clinician is represented on either a Participation List or Affiliated Practitioner List that CMS uses for QP determinations. We will make adjustments to ensure that patients and payments for services that may be counted in the QP calculations for multiple Advanced APM Entities (for example, payments for services furnished to a beneficiary attributed to an ACO that are also part of an episode in an episode payment model) are not double-counted for the individual. We believe that this policy maintains the general principles behind Advanced APM Entity-level QP determinations, while acknowledging the broader commitment of individual Eligible Clinicians who are participating in multiple Advanced APMs. We believe considering these Eligible Clinicians individually is the most reasonable approach to capturing the multiple potential permutations of participation in Advanced APMs and providing Eligible Clinicians an equitable opportunity to become a QP.

Thus, with respect to the commenters' concerns that CMS would only make a model-specific QP determination for the Track 1 AMI model and Track 1 CABG model and not a collective determination across the two models, for Advanced APMs for which there is not a Participation List that identifies eligible clinicians and there is an Affiliated Practitioner List that identifies eligible clinicians, the Quality Payment Program final rule with comment period (81 FR 77442) notes that Affiliated Practitioner List will be Start Printed Page 209used to identify the eligible clinicians for purposes of QP determinations. Eligible clinicians on an Affiliated Practitioner List will be assessed individually, unlike eligible clinicians on a Participation List who are assessed as a group. Thus, we could make a determination across the two models if an Eligible Clinician was not determined to be a QP based on participation in any one of the Track 1 EPMs. Finally, as specified in the Quality Payment Program final rule with comment period (81 FR 77013), QPs are Eligible Clinicians in an Advanced APM who have a certain percentage of their patients or payments through an Advanced APM. Thus, we will only count beneficiaries attributed to an Advanced APM Entity toward a clinician's QP Threshold Score and will not count those beneficiaries who would have been attributed to an Advanced APM Entity if it were not for the fact that a different model overlapped. Beneficiary attribution is further discussed in the Quality Payment Program final rule with comment period (81 FR 77436)

b. EPM Participant Tracks

To be considered an Advanced APM, the APM must require participants to use CEHRT (as defined in section 1848(o)(4) of the Act), as specified in section 1833(z)(3)(D)(i)(I) of the Act. We proposed that all EPM participants must choose whether to meet the CEHRT use requirement. EPM participants that do not choose to meet and attest to the CEHRT use requirement would be in Track 2 of the EPMs. EPM participants selecting to meet the CEHRT use requirement would be in Track 1 of the EPMs and would be required to attest in a form and manner specified by CMS to their use of CEHRT that meets the definition in our regulation at § 414.1305 (81 FR 77537) to document and communicate clinical care with patients and other health professionals, consistent with the proposal in the Quality Payment Program proposed rule for the CEHRT requirement for Advanced APMs (81 FR 28299). EPM participants choosing not to meet and attest to the CEHRT use requirement would not be required to submit an attestation.

We believe that the voluntary selection by EPM participants to elect downside risk for EPM episodes ending on or after January 1, 2018, and to meet and attest to the CEHRT use requirement would create no significant additional administrative burden on EPM participants. Moreover, the choice of whether to meet and attest to the CEHRT use requirement would not otherwise change any EPM participant's requirements or opportunity under the EPM. However, to the extent that eligible clinicians who enter into financial arrangements related to EPM participants in the Track 1 EPM are considered to furnish services through an Advanced APM, those services could be considered for purposes of determining whether the eligible clinicians are QPs.

The proposals for CEHRT use and attestation for EPM participants were included in proposed § 512.120(a). We sought comment on our proposals for EPM participant CEHRT use requirements.

The following is a summary of the comments received and our responses.

Comment: Commenters expressed appreciation for CMS' efforts to expand the Advanced APM participation opportunities as they commented that the 5 percent Advanced APM incentive payment is time-limited under current law. They applauded the proposal to expand the list of eligible Advanced APMs through Track 1 EPMs as it provides an incentive for physicians to collaborate with hospital participants in the EPM and could provide specialists, who otherwise may have limited avenues, to participate in an Advanced APM. Other commenters requested specifically that CMS clarify the steps necessary when a provider group wishes to change from Track 2 to Track 1 in the EPMs.

Response: We appreciate the commenters' support for our proposal of the Track 1 EPMs as Advanced APMs and agree that providing greater opportunities for physician participation in Advanced APMs is an important goal that can be advanced through our proposal. We remind commenters that only the EPM participant can choose to participate in a Track 1 EPM by using and attesting to use of CEHRT. If Eligible Clinicians enter into a financial arrangement associated with a Track 1 EPM participant, then the EPM participant must submit a clinician financial arrangements list that determines the Eligible Clinicians to be included on the Affiliated Practitioner List for the purposes of the Track 1 EPM that is an Advanced APM. Therefore, a provider group interested in their members becoming Affiliated Practitioners with an Advanced EPM Entity in an Advanced APM could work with a Track 1 EPM participant to enter into a financial arrangement with that EPM participant so that the members of the provider group could be included in the clinician financial arrangements list submitted by the Track 1 EPM participant to CMS.

Comment: While commenters appreciated the proposal to include two tracks for EPM participants and CJR participant hospitals, other commenters made additional proposals to CMS to help operationalize these tracks. A few commenters urged CMS to go further to align the EPMs and the CJR model with the proposed Quality Payment Program and configure Track 2 (the Non-Advanced APM) so that it could qualify as a MIPS APM. In addition to the request that CMS reconfigure Track 2, commenters also proposed that Track 2 EPM participants must also submit a clinician financial arrangements list, so that Eligible Clinicians could receive credit for Improvement Activities under MIPS and/or satisfy criteria to be considered participants in MIPS APMs, for which the Quality Payment Program applies unique scoring rules. One commenter believes that the multiple options due to the proposed tracks increases the level of complexity and administrative burden on the hospitals for activities such as record keeping.

Response: We disagree that the presence of two EPM tracks increases administrative burden as we continue to believe that the proposed tracks allow flexibility for EPM participants to choose to participate in an Advanced APM. While a Track 1 EPM participant needs to attest to CEHRT and submit a clinician financial arrangements list to meet the requirements for participation in an Advanced APM and allow us to operationalize the Track 1 EPM as an Advanced APM, we do not believe that these additional requirements create significantly increased administrative burden on the Track 1 EPM participant versus a Track 2 EPM participant in view of the documentation and record access and retention requirements for all EPM participants, which require EPM participants to maintain a subset of that list that constitutes the Eligible Clinicians, nor that the requirements to identify and maintain related lists regarding collaboration agents and downstream collaboration agents is a substantial burden. Beyond these additional activities for Track 1 EPM participants, the policies of the EPMs are the same for Track 1 and Track 2 EPM participants.

In addition, we disagree with the suggestion by commenters that we add the requirement for Track 2 EPM participants to submit to CMS clinician financial arrangements lists, information that we did not propose to require Track 2 EPM participants to submit to us. Submission of clinician financial arrangements lists is not necessary for Start Printed Page 210implementation of the Track 2 EPMs, and Track 2 EPM participants do not meet the definition of Advanced APM Entities in the Quality Payment Program final rule with comment period at § 414.1305 (81 FR 77537). To require Track 2 EPM participants to submit such a list would create unnecessary additional administrative burden on these participants. Furthermore, a Track 2 EPM does not meet the criteria of a MIPS APM in § 414.1370(b) of the Quality Payment Program final rule with comment period. Specifically, the MIPS APM criteria requires at least one Eligible Clinician on a Participation List for the APM, while currently all EPM and CJR participants are hospitals. Thus, the EPM and CJR Participation Lists do not include Eligible Clinicians and, therefore, a Track 2 EPM and the Track 2 CJR model are not MIPS APMs. As a result, EPM or CJR collaborators, collaboration agents, and downstream collaboration agents are not engaged with Track 2 EPM participants or Track 2 CJR participant hospitals in a MIPS APM. Therefore, we will not adopt a requirement in regulation for Track 2 EPM participants or Track 2 CJR participant hospitals to submit clinician financial arrangements lists at this time.

We agree with commenters that we should continue to consider whether there are opportunities for additional APMs, including episode payment models, to become MIPS APMs. We will continue to consider the balance in models between the most appropriate, streamlined model design for the intended model participants to advance the goals of the model and the requirements for models to be MIPS APMs or Advanced APMs as we strive to create more opportunities for Eligible Clinicians to participate in MIPS APMs and Advanced APMs.

Comment: Commenters urged CMS to consider reversing the proposed Track 1 and Track 2 designations to represent an APM and Advanced APM, respectively, or identifying an alternative naming convention as the term “tracks” are already used in the Shared Savings Program.

Response: We appreciate the perspective of the commenters but believe that our proposed designations of a Track 1 EPM as an Advanced APM and a Track 2 EPM as a Non-Advanced APM under the EPMs are straightforward and appropriate for the distinctions we make between Advanced and Non-Advanced EPMs. The track designations for the EPMs are relevant to the EPM participants in the specific track of the EPM and the individuals and entities that have financial arrangements under the EPMs. We never intend to refer solely to the term Track 1 or Track 2 in the context of the EPMs but always in combination with the term EPM as a Track 1 EPM or Track 2 EPM. Therefore, we do not believe that Track 1 EPMs or Track 2 EPMs will be confused with tracks in the Shared Savings Program. We will be working closely with EPM participants and other stakeholders during EPM implementation to explain the various requirements of the EPMs in general and the tracks of the EPMs in particular.

Comment: Additional proposals were submitted by commenters that encouraged CMS to work further by creating additional tracks, including a MIPS APM track and accommodating those that may wish to accept financial risk sooner in order to qualify as an Advanced APM. Commenters believe CMS should continue to develop pathways and provide assistance to organizations who wish to develop or become participants in Advanced APMs; and to expand beyond the current inpatient-based episode payment model tracks to include not only a physician-focus but also a focus that meaningfully incorporates additional roles and activities, for example, specialty service providers, rehabilitation therapy providers, BPCI early adopters, home health care, and transitional care.

Response: We appreciate the suggestions of commenters. We respond earlier in this section on requests for additional MIPs APMs and for voluntary election of early increased downside risk to allow rural hospitals, SCHs, MDHs, and RRCs with special stop-loss limits under the EPMs to be in a Track 1 EPM at the same time as other EPM participants without special stop-loss limits under the EPM. We will continue our efforts to develop pathways and provide assistance to organizations who wish to develop or become participants in Advanced APMs. We refer the commenters to section III.A.3 of this final rule for additional considerations for future EPMs.

Comment: Commenters expressed appreciation for the proposed alignment resulting from use of the same definition of CEHRT across the EPM and Quality Payment Program, and acknowledged that CMS' proposal to permit those EPM participants who do not use CEHRT to be in a different track of the EPM offers appropriate flexibility. A few commenters requested that CMS consider using a process through the Medicare EHR Incentive Program to gather the attestations from the hospitals.

Response: We appreciate the recognition from commenters of CMS' efforts to utilize the flexibilities of the Quality Payment Program for Eligible Clinicians to link quality to payments through meaningful participation in an Advanced APM.

We also appreciate the suggestions by the commenters about existing processes and information CMS might use to streamline CEHRT use attestation for EPM participants in Track 1 EPMs. We reiterate that EPM participants choose to attest to CEHRT use and submit a clinician financial arrangements list beginning in performance year 3 and, therefore, be a Track 1 EPM participant (or elect voluntary downside risk in performance year 2, attest to CEHRT use, and submit a clinician financial arrangements list, and therefore, be a Track 1 EPM participant beginning in performance year 2), or choose not to attest to CEHRT use and be a Track 2 EPM participant. We will consider the feedback from commenters on CEHRT attestation methodologies as we develop the operational information for EPM participants about EPM processes and procedures. We further note that CMS and ONC also offer continued support and guidance through educational resources to support participating in and reporting CEHRT use to CMS models and programs, such as the EHR Incentive Program. We will communicate closely with EPM participants about the form and manner of attestation to CEHRT use for Track 1 EPMs early in the process of EPM implementation.

Comment: Many commenters urged CMS to consider the significant upfront investments in health IT infrastructure that providers must make to participate and be successful in the Quality Payment Program and EPMs or CJR model, given that, as one commenter stated, this investment exists even in upside-only models. As a result, these commenters recommended that CMS consider permitting EPM participants to be Advanced APM Entities in performance year 1 and/or that entry into Track 1 for EPM participants and CJR participant hospitals begin as soon as possible. Other commenters pointed out the lack of resources/support for Eligible Clinicians, such as therapists, to adopt EHRs. The commenters believe that Eligible Clinicians participating in an Advanced APM where the Advanced APM Entity is a hospital must also use and attest to use of CEHRT, and further stated that such a requirement would put these professionals at a significant disadvantage. To this end, a few commenters requested that CMS clarify whether the CEHRT requirement only applies to the hospitals that are EPM Start Printed Page 211participants and whether Eligible Clinicians who have entered into sharing arrangements as EPM collaborators will potentially meet the requirements to attest to use of CEHRT for participating in an Advanced APM under the Quality Payment Program.

Response: Like the commenters, we appreciate the important role health IT may play in meeting the goals of Advanced APMs, including Track 1 EPMs, to improve the quality and reduce the cost of care. As a result of the Quality Payment Program final rule with comment period (81 FR 28306), in order for an APM to be considered an Advanced APM, the APM must either require that participating APM Entities bear risk for monetary losses of a more than nominal amount under the APM or be a Medical Home Model expanded under section 1115A(c) of the Act. As a result of this final rule, a Track 1 CJR participant hospital will be considered to be participating in an Advanced APM, and could qualify as an Advanced APM Entity beginning in performance year 2 for episodes ending on or after January 1, 2017, the time at which CJR participant hospitals would begin to bear downside risk for excess actual CJR episode spending above the quality-adjusted target price. Track 1 EPM participants will be considered to be participating in an Advanced APM, and could qualify as an Advanced APM Entity beginning in performance year 2 for episodes ending on or after January 1, 2018, the time at which EPM participants in performance year 2 would begin to bear downside risk for excess actual episode spending above the quality-adjusted target price.

The Advanced APM criteria established in the Quality Payment Program final rule with comment period at § 414.1415 (81 FR 77549) require that for APMs in which hospitals are the APM Entities, such as the EPMs, each hospital must use CEHRT to document and communicate clinical care to their patients or other health care providers to meet the CEHRT use requirement for Advanced APMs. Thus, there is no requirement that Eligible Clinicians who would be included on an Affiliated Practitioner List for Track 1 EPMs attest to CEHRT use and, therefore, we will not develop CEHRT attestation processes for Eligible Clinicians in Track 1 EPMs nor will we provide funds to support EHR adoption. In addition, we encourage participants to consider utilizing any shared savings obtained as part of the model to invest in health IT infrastructure that can help EPM collaborators improve care coordination for beneficiaries.

Final Decision: After consideration of the public comments received, we are finalizing the proposal to include in § 512.120(a) the CEHRT use and attestation for EPM participants, with modification to specify that the policy applies for performance year 2 if the EPM participant elects downside risk, and to use the term “specified” for consistency with CEHRT attestation in other CMS programs.

For performance year 2 if the EPM participant elects downside risk and for performance years 3 through 5, EPM participants choose either of the following:

  • CEHRT use. EPM participants attest in a form and manner specified by CMS to their use of CEHRT as defined in § 414.1305 of this chapter to document and communicate clinical care with patients and other health professionals.
  • No CEHRT use. EPM participants do not attest in a form and manner specified by CMS to their use of CEHRT as defined in § 414.1305 of this chapter to document and communicate clinical care with patients and other health professionals.

c. Clinician Financial Arrangements Lists Under the EPMs

In order for CMS to make determinations as to eligible clinicians who could be considered QPs based on services furnished under the EPMs (to the extent the models are determined to be Advanced APMs), we require accurate information about eligible clinicians who enter into financial arrangements under the Track 1 EPMs under which the Affiliated Practitioners support the participants' cost or quality goals as discussed in section III.I. of this final rule. We note that eligible clinicians could be EPM collaborators engaged in sharing arrangements with an EPM participant; PGP members who are collaboration agents engaged in distribution arrangements with a PGP that is an EPM collaborator; or PGP members who are downstream collaboration agents engaged in downstream distribution arrangements with a PGP that is also an ACO participant in an ACO that is an EPM collaborator. These terms as they apply to individuals and entities with financial arrangements under the EPMs are discussed in section III.I. of this final rule. A list of physicians and nonphysician practitioners in one of these three types of arrangements could be considered an Affiliated Practitioner List of eligible clinicians who are affiliated with and support the Advanced APM Entity in its participation in the Advanced APM as proposed in the Quality Payment Program proposed rule. Therefore, this list could be used to make determinations of who would be considered for a QP determination based on services furnished under the EPMs (81 FR 28320).

Thus, we proposed that each EPM participant that chooses to meet and attest to the CEHRT use requirement must submit to CMS a clinician financial arrangements list in a form and manner specified by CMS on a no more than quarterly basis. The list must include the following information for the period of the EPM performance year specified by CMS:

  • For each EPM collaborator who is a physician, nonphysician practitioner, or provider of outpatient therapy services during the period of the EPM performance year specified by CMS:

++ The name, tax identification number (TIN), and national provider identifier (NPI) of the EPM collaborator.

++ The start date and, if applicable, end date, for the sharing arrangement between the EPM participant and the EPM collaborator.

  • For each collaboration agent who is a physician or nonphysician practitioner of a PGP that is an EPM collaborator during the period of the EPM performance year specified by CMS:

++ The TIN of the PGP that is the EPM collaborator, and the name and NPI of the physician or nonphysician practitioner.

++ The start date and, if applicable, end date, for the distribution arrangement between the EPM collaborator that is a PGP and the physician or nonphysician practitioner who is a PGP member.

  • For each downstream collaboration agent who is a physician or nonphysician practitioner member of a PGP that is also an ACO participant in an ACO that is an EPM collaborator during the period of the EPM performance year specified by CMS:

++ The TIN of the PGP that is the ACO participant, and the name and NPI of the physician or nonphysician practitioner.

++ The start date and, if applicable, end date, for the downstream distribution arrangement between the collaboration agent that is both PGP and an ACO participant and the physician or nonphysician practitioner who is a PGP member.

  • If there are no individuals that meet the requirements to be reported as EPM collaborators, collaboration agents, or downstream collaboration agents, the EPM participant must attest in a form and manner required by CMS that there Start Printed Page 212are no individuals to report on the clinician financial arrangements list.

As discussed in the Quality Payment program proposed rule, those physicians or nonphysician practitioners who are included on the Affiliated Practitioner List as of December 31 of a performance period would be assessed to determine whether they qualify for APM Incentive Payments (81 FR 28320). The Quality Payment Program final rule with comment period (81 FR 77444) modified this process to identify eligible clinicians on the Affiliated Practitioner List for QP determinations at any one of three snapshots. The first snapshot will be on March 31 of the QP Performance Period, the second snapshot will be on June 30 of the QP Performance Period, and the third snapshot will be on August 31, which will be the last day of the QP Performance Period.

We noted that while the required submission of this information might create some additional administrative requirements for certain EPM participants, we expected that EPM participants in a Track 1 EPM could modify their contractual relationships with their EPM collaborators and, correspondingly, require those EPM collaborators to include similar requirements in their contracts with collaboration agents and in the contracts of collaboration agents with downstream collaboration agents.

The proposal for the submission of a clinician financial arrangements list by EPM participants that meet and attest to the CEHRT use requirement for the EPM was included in § 512.120(b). We sought comments on the proposal for submission of this information. We were especially interested in comments about approaches to information submission, including the periodicity and method of submission to CMS that would minimize the reporting burden on EPM participants while providing CMS with sufficient information about eligible clinicians in order to facilitate QP determinations to the extent EPMs are considered Advanced APMs.

The following is a summary of the comments received and our responses.

Comment: While some commenters supported CMS' plans to recognize Eligible Clinicians who participate in APMs from an Affiliated Practitioner List, others raised concerns about the means to identify Eligible Clinicians as Affiliated Practitioners of Advanced APMs. A few commenters disagreed with the development of an Affiliated Practitioner List from a clinician financial arrangements list. Some commenters believe that to assume risk-taking threatens the financial viability of most physician-led entities. Other commenters expressed concern that the definition of such an agreement suggests that risk must be shifted to the clinicians to achieve QP status. These commenters agreed that the clinicians must support the cost or quality goals of the Advanced APM, but do not believe that to be included on the Affiliated Practitioner List the clinician must take risk. Other commenters assumed that Eligible Clinicians must assume risk under the EPM to qualify for QP incentive payment under the Quality Payment Program, and suggested that CMS base the risk requirements on physician practice or APM organization revenues. One commenter noted that not all physicians bound contractually to the requirements of the EPMs would be captured on clinician financial arrangements lists, as hospitals may have agreements with their employed physicians that cascade the programmatic requirements of the EPMs, but do not necessarily alter their underlying compensation or include gainsharing/risk-sharing/internal cost savings parameters. Instead, commenters offered alternatives to the submission of clinician financial arrangements lists, including such proposals as modeling the EPM along the lines of the Medical Home Model standard and using claims data to identify and attribute Eligible Clinicians to populate the EPM Affiliated Practitioner List for the purposes of the Quality Payment Program.

Response: Under Track 1 EPMs, the Advanced APM Entity is always a hospital, and no physicians are EPM participants. As we discussed in the Quality Payment Program final rule with comment period (81 FR 77442), for Advanced APMs, such as episode payment models, in which there are some Advanced APM Entities that include Eligible Clinicians on a Participation List and other Advanced APM Entities that identify Eligible Clinicians only on an Affiliated Practitioner List, we will identify Eligible Clinicians for QP determination based on the composition of the Advanced APM Entity: (1) For Advanced APM Entities that include and identify Eligible Clinicians on a Participation List, that Participation List will be used to define the Advanced APM Entity group, regardless of whether or not there is also an Affiliated Practitioner List or other list of Eligible Clinicians, and those Eligible Clinicians will be assessed as a group; (2) for Advanced APM Entities that do not include and identify Eligible Clinicians on a Participation List and there is an Affiliated Practitioner List that identifies Eligible Clinicians, that Affiliated Practitioner List will be used to identify the Eligible Clinicians for purposes of QP determinations, and those Eligible Clinicians will be assessed individually. Track 1 EPMs fall into the second category because the EPMs do not include and identify Eligible Clinicians on a Participation List so, therefore, we will use an Affiliated Practitioner List for Track 1 EPMs to identify Eligible Clinicians for purposes of QP determinations.

In the Quality Payment Program final rule with comment period in § 414.1305 (81 FR 77537), an Affiliated Practitioner is defined as an Eligible Clinician identified by a unique APM participant identifier on a CMS-maintained list who has a contractual relationship with the Advanced APM Entity for the purposes of supporting the Advanced APM Entity's quality or cost goals under the Advanced APM. Furthermore, in the Quality Payment Program final rule with comment period (81 FR 77440), we provided the example that an Affiliated Practitioner List comprised of gainsharers under an APM might include Eligible Clinicians whereas a Participation List may only include hospitals. We believe this example applies to the Track 1 EPMs.

We believe that constructing the Affiliated Practitioner List from the list of clinicians with financial arrangements submitted by each EPM participant that chooses to use and attest to use of CEHRT allows us to appropriately identify clinicians for the Affiliated Practitioner List under the EPMs. All of these clinicians have contractual relationships under the EPMs, and because the determination of the amount of gainsharing payment, distribution payment, or downstream distribution payment under their arrangement is required to be substantially based on quality of care and the provision of EPM activities (activities related to promoting accountability for the quality, cost, and overall care for EPM beneficiaries, including managing and coordinating care; encouraging investment in infrastructure, enabling technologies, and redesigned care processes for high quality and efficient service delivery; the provision of items and services during an EPM episode in a manner that reduces costs and improves quality; or carrying out any other obligation or duty under the EPM), we believe that their contractual relationship supports the cost and quality goals of the Track 1 EPM participant and, therefore, that they meet the definition of Affiliated Practitioner.Start Printed Page 213

Regarding those commenters who were concerned that constructing the Affiliated Practitioner List in this way would shift the financial risk of the APM Entity (Track 1 EPM participant) to the clinician in order for the clinician to be eligible for a QP determination, we want to emphasize that distribution arrangements and downstream distribution arrangements allow only distribution of payments that may be comprised of hospital internal cost savings and/or reconciliation payments for savings beyond the quality-adjusted target price under the EPMs, without allowing the collaboration agent or downstream collaboration agents to assume any downside risk. Sharing arrangements may include the sharing of upside and downside risk with EPM collaborators, but we note that in our experience with other bundled payment models, sharing with individual physicians has generally been upside risk only. We understand that the Quality Payment Program final rule with comment period does not require that an Affiliated Practitioner take on upside or downside risk to be eligible for a QP determination, while our proposed methodology to identify Eligible Clinicians for the EPM Affiliated Practitioner List requires those clinicians to have a financial arrangement under the EPM. However, we based our proposal on the most streamlined approach to identifying Eligible Clinicians under the Track 1 EPM who meet the definition of Affiliated Practitioner to build off policies that apply across the EPMs in general, in order to limit any additional administrative burden on EPM participants for Track 1 participation. Under the EPMs, the only contractual relationships for which we specify requirements as part of the model design for all participants and which ensure the Eligible Clinicians meet the Affiliated Practitioner definition are financial arrangements. Therefore, under our proposal for identifying Eligible Clinicians for each EPM participant that chooses to use and attest to use of CEHRT we would use the clinician financial arrangements list submitted to us to construct the EPM Affiliated Practitioner List.

In terms of constructing the Affiliated Practitioner List from claims data based on those clinicians furnishing services to EPM beneficiaries, we would not be able to know if such physicians, nonphysician practitioners, or therapists had a contractual relationship with the EPM participant to support the EPM participant's cost or quality goals under the Track 1 EPM (the requirement for Affiliated Practitioners), so we are unable to adopt this suggestion by the commenters. Moreover, we believe we can only know the information about contractual relationships between an EPM participant and an Eligible Clinician if the EPM participant reports this to us as we do not otherwise require such reporting under the EPMs.

We understand that there are circumstances where an EPM participant might want to enter into a contract with a clinician to support the cost or quality goals of the EPM. At this point, EPM participants that choose to use and attest to use of CEHRT may not report these clinicians to us through the clinician financial arrangements list for inclusion on the Affiliated Practitioner List because we made no specific proposals about what such contractual relationships would entail. As discussed previously in this section, MedPAC expressed concern that the EPMs contemplate large, loosely connected groups of clinicians who may have very little involvement with the beneficiaries in EPMs and hence have little reason to change their practice patterns or reduce inappropriate episodes. Thus, in order to identify the circumstances in which Eligible Clinicians without financial arrangements under a Track 1 EPM participant could meet the definition of Affiliated Practitioner, we will further consider the scenarios raised by the commenters and intend to propose an additional methodology for EPM participants to identify other Eligible Clinicians who may be included on the Affiliated Practitioner List in future rulemaking. This additional methodology would be targeted for implementation in performance year 3 when downside risk for all participants under the EPMs applies.

We are finalizing our proposal to construct the EPM's Affiliated Practitioner List from the clinician financial arrangements lists submitted by those EPM participants that attest to CEHRT use.

Comment: Several commenters urged CMS to identify Eligible Clinicians through a streamlined reporting process, and ensure that a minimum burden is applied to EPM participants when providing lists. To this end, the commenters proposed alterations to the proposed contents of the clinician financial arrangements list, including the recommendation that CMS require EPM participants or CJR participant hospitals to submit an electronic form listing all collaborators, collaboration agents, and downstream collaboration agents and their tax identification numbers (TIN) on a yearly basis. Finally, some commenters requested that CMS enable more frequent updates to the list.

Response: We appreciate the interest of the commenters in creating the minimal necessary reporting burden on EPM participants and CJR participant hospitals. For those EPM participants that choose to use and attest to use of CEHRT and are required to submit a clinician financial arrangements list, we agree with the commenters that the most streamlined process that provides us with the timely, necessary information is desirable. We proposed that the submission must occur on a no more than quarterly basis and we continue to believe that this timing is the most appropriate. It establishes the maximum required submission burden on EPM participants of quarterly in view of the three planned “snapshots” of the Affiliated Practitioner List each year (81 FR 77444) to capture timely new Affiliated Practitioners that were not previously identified for the EPM participant, while allowing us the flexibility to determine a lower reporting periodicity for EPM participants whose list does not change during the EPM performance year. We also note that while under our proposal we could not require submission of the list more than quarterly, the submission timing requirement does not preclude us from accepting more frequent than quarterly voluntary updates to the list if EPM participants have more frequent changes to their list of clinicians with financial arrangements under the EPM.

We proposed that Eligible Clinicians on the clinician financial arrangements list that we would use to construct an Affiliated Practitioner List would be EPM collaborators who are physicians, nonphysician practitioners, and providers of outpatient therapy services engaged in sharing arrangements with an EPM participant; PGP members who are physicians and nonphysician practitioners who are collaboration agents engaged in distribution arrangements with a PGP that is an EPM collaborator; and PGP members who are physicians and nonphysician practitioners who are downstream collaboration agents engaged in downstream distribution arrangements with a PGP that is also an ACO participant in an ACO that is an EPM collaborator. To reflect our final policies for financial arrangements discussed in section III.I. of this final rule, and taking into consideration the issues discussed later in this section, we are revising the categories of individuals who qualify as Eligible Clinicians and clarifying the information to be reported on the clinician financial arrangements list in this final rule. It was our intention in Start Printed Page 214the proposed rule and our policy in this final rule that the full complement of physicians, nonphysician practitioners, and therapists who have financial arrangements under the EPMs be reported on the EPM participant's clinician financial arrangements list. We see no reason to treat physicians, nonphysician practitioners, or therapists differently for purposes of being considered Eligible Clinicians based on their specific type of financial arrangement under the EPM as the requirements for each type of contractual relationship are aligned with the cost and quality goals of the EPM.

We proposed that providers of outpatient therapy services that are EPM collaborators be reported on the clinician financial arrangements list, although the term provider of outpatient therapy services also encompassed entities that were not individual therapists and that, therefore, could not be Eligible Clinicians. However, as discussed in section III.I.3. of this final rule we are adopting the specific term therapist in private practice for those individual therapists who are EPM collaborators. Thus, we are refining the reporting of EPM collaborators on the clinician financial arrangements list to include physicians, nonphysician practitioners, and therapists in private practice to focus on individual therapists in private practice, who may be Eligible Clinicians under the provisions of the Quality Payment Program final rule with comment period, rather than all providers of outpatient therapy services.

In addition, our proposal did not identify as Eligible Clinicians therapists who are collaboration agents and downstream collaboration agents as members of PGPs or ACO providers/suppliers who are physicians, nonphysician practitioners, or therapists who are collaboration agents. While we did not propose that therapists who are collaboration agents or downstream collaboration agents as members of PGPs be reported on the clinician financial arrangements list, we did propose that a therapist could be a PGP member and we note that therapists can also be Eligible Clinicians under the provisions of the Quality Payment Program final rule with comment period. We also did not identify in our proposal that physicians, nonphysician practitioners, and therapists who are collaboration agents and ACO providers/suppliers in an ACO that is an EPM collaborator would be Eligible Clinicians on the clinician financial arrangements list. This was an oversight as we intended to include all collaboration agents who are physicians, nonphysician practitioners, and therapists on the clinician financial arrangements list, regardless of the entity that is their associated EPM collaborator. Moreover, our proposal did not take into account the provisions of this final rule that allow NPPGPs and TGPs to be EPM collaborators or collaboration agents and, therefore, we did not propose that the nonphysician practitioners and therapists who have financial arrangements with these entities would also be Eligible Clinicians on the clinician financial arrangements list. Therefore, in this final rule we are clarifying that all physicians, nonphysician practitioners, and therapists who are collaboration agents or downstream collaboration agents are reported on the clinician financial arrangements list, without regard to the type of entity that is the associated party with which the collaboration agent or downstream collaboration agent has his or her distribution arrangement or downstream distribution arrangement. We note that we proposed to require that physicians and nonphysician practitioners who are members of a PGP that is an EPM collaborator or members of a PGP that is also an ACO participant in an ACO that is an EPM collaborator and that have a distribution arrangement or downstream distribution arrangement, respectively, with the PGP be reported on the list. Therefore, we believe there is only a small additional burden on EPM participants to report on the list all collaboration agents or downstream collaboration agents that are physicians, nonphysician practitioners, or therapists with distribution arrangements or downstream distribution arrangements, in order to ensure that the clinician financial arrangements list reports all Eligible Clinicians with financial arrangements under the EPM.

We proposed that the information to be reported on the clinician financial arrangements list would include the name and NPI and, in some cases the TIN, of the Eligible Clinician with the financial arrangement under the EPM. We also proposed to collect the TIN of the PGP that is an EPM collaborator or collaboration agent and with which the physician or nonphysician practitioner reported on the list has a financial relationship, which would have provided us with information for purposes of monitoring and compliance on some of the entities related to the contracts of those physicians or nonphysician practitioners under the EPM. While we did not propose to similarly require information be submitted on the ACO that would be an EPM collaborator for those Eligible Clinicians that are collaboration agents or downstream collaboration agents, in this final rule, we are clarifying that the name and NPI of the entity (that is, the PGP, NPPGP, TGP, or ACO) that is an EPM collaborator and the entity (that is, the PGP, NPPGP, or TGP) that is a collaboration agent, if applicable, must also be reported on the clinician financial arrangements list for each Eligible Clinician who is a collaboration agent or downstream collaboration agent. Thus, the final requirements provide us with sufficient information to monitor the full series of related financial relationships under the EPM that result in the reporting of an Eligible Clinician on the clinician financial arrangements list. Because we do not expect that EPM participants will enter into sharing arrangements with many ACOs, due to the limited number of ACOs to which beneficiaries are typically assigned in a given geographic area, we do not believe that requiring the reporting of the name and TIN of the ACO that is an EPM collaborator is a significant additional burden on the EPM participant submitting the list to CMS.

In summary, based on the previous discussion, for purposes of clarity and consistency we are streamlining the requirements for reporting information on the clinician financial arrangements list. For each physician, nonphysician practitioner, or therapist that is an EPM collaborator, collaboration agent, or downstream collaboration agent, we require the name, TIN, and NPI to be reported, in addition to the start date and, if applicable, end date, for the individual's sharing arrangement, distribution arrangement, or downstream distribution arrangement. We further require for a collaboration agent that the name and TIN of the EPM collaborator be reported and that for a downstream collaboration agent the name and TIN of the EPM collaborator and the name and TIN of the collaboration agent be reported.

We will be working closely with EPM participants on the format and process for submission of clinician financial arrangements lists, including the potential for electronic submission of the required information, during the early phases of EPM implementation, seeking to ensure that the format and process is as streamlined as possible for EPM participants that choose to use and attest to use of CEHRT, while meeting CMS' need to maintain an EPM Affiliated Practitioner List that can be used to identify Eligible Clinicians for a QP determination.Start Printed Page 215

Final Decision: After consideration of the public comments received, we are finalizing the proposal in § 512.120(b) for EPM participants that use and attest to use of CEHRT to submit to CMS a clinician financial arrangements list on a no more than quarterly basis, with modification to include on that list information on all physicians, nonphysician practitioners, and therapists with financial arrangements under the EPM and, if applicable, identifying information for the related parties with sharing arrangements, distribution arrangements, and downstream distribution arrangements under the EPM as finalized in section III.I. of this final rule.

Each EPM participant that chooses CEHRT use must submit to CMS a clinician financial arrangements list in a form and manner specified by CMS on a no more than quarterly basis. The list must include the following information on individuals and entities for the period of the EPM performance year specified by CMS:

  • EPM collaborators. For each physician, nonphysician practitioner, or therapist in private practice who is an EPM collaborator during the period of the EPM performance year specified by CMS:

++ The name, TIN, and NPI of the EPM collaborator.

++ The start date and, if applicable, end date, for the sharing arrangement between the EPM participant and the EPM collaborator.

Collaboration agents. For each physician, nonphysician practitioner, or therapist who is a collaboration agent during the period of the EPM performance year specified by CMS:

++ The name and TIN of the EPM collaborator and the name, TIN, and NPI of the collaboration agent.

++ The start date and, if applicable, end date, for the distribution arrangement between the EPM collaborator and the collaboration agent.

  • Downstream collaboration agents. For each physician, nonphysician practitioner, or therapist who is a downstream collaboration agent during the period of the EPM performance year specified by CMS:

++ The name and TIN of the EPM collaborator, the name and TIN of the collaboration agent and the name, TIN, and NPI of the downstream collaboration agent.

++ The start date and, if applicable, end date, for the downstream distribution arrangement between the collaboration agent and the downstream collaboration agent

  • Attestation to no individuals. If there are no individuals that meet the requirements to be reported, as specified in paragraphs (b)(1) through (3) of this section, the EPM participant must attest in a form and manner required by CMS that there are no individuals to report on the clinician financial arrangements list.

d. Documentation Requirements

For each EPM participant that chooses to meet and attest to CEHRT use, we proposed that the EPM participant must maintain documentation of their attestation to CEHRT use and clinician financial arrangements lists submitted to CMS. These documents would be necessary to assess the completeness and accuracy of materials submitted by an EPM participant in the Track 1 EPM and to facilitate monitoring and audits. For the same reason, we further proposed that the EPM participant must retain and provide access to the required documentation in accordance with § 512.110.

The proposal for documentation of attestation to CEHRT use and clinician financial arrangements lists submitted to CMS was included in § 512.120(c). We sought comment on this proposal for required documentation.

Final Decision: We did not receive comments pertaining to § 512.120(c). Therefore, we are finalizing the proposal, without modification, for EPM participant documentation of attestation to CEHRT use and clinician financial arrangements lists submitted to CMS.

The following documentation requirements apply to EPM participants choosing to use and attest to use of CEHRT.

  • Each EPM participant that chooses CEHRT use must maintain documentation of their attestation to CEHRT use and clinician financial arrangements lists.
  • The EPM participant must retain and provide access to the required documentation in accordance with § 512.110.

3. Future Directions for Episode Payment Models

a. Refinements to the BPCI Initiative Models

The BPCI initiative Models 2, 3, and 4 would not currently qualify as Advanced APMs based on two of the Advanced APM criteria in the Quality Payment Program (QPP) final rule with comment period (81 FR 77008), payment based on quality measures and CEHRT use. Specifically, BPCI participants are not currently required to use CEHRT, and although CMS examines the quality of episode care in the BPCI evaluation, BPCI episode payments are not specifically tied to quality performance. Instead, BPCI episode payments are based solely on episode spending performance, although we expect that reductions in spending would generally be linked to improved quality through reductions in hospital readmissions and complications. However, building on the BPCI initiative, the Innovation Center intends to implement new bundled payment model for CY 2018 where the model(s) would be designed to meet the criteria to be an Advanced APM.

The following is a summary of the comments received and our responses.

Comment: A number of commenters expressed support for a new voluntary bundled payment model in CY 2018. Specifically, commenters expected any new design to include the ability of the BPCI Initiative to qualify as meeting the requirements for an advanced APM under the QPP. Commenters also requested that data be provided by CMS on a monthly basis with quarterly reconciliation reports to allow participants to meaningfully engage in reforms to the delivery of health care. Consistent with the existing BPCI model, CMS was encouraged by commenters to continue assigning precedence to self-selected model participants over participants in assigned models. Additional recommended features included financial stop-gain and stop-loss limits and the incorporation of composite quality score similar to that used in the CJR model. Other specific features included recommendations for additional post-acute care bundles and the exclusion of ACOs.

More broadly, CMS received several recommendations calling for increased stakeholder input in the design, implementation, and evaluation of new voluntary bundled payment models. Commenters requested that hospitals currently participating in BPCI should be allowed to test additional episodes, and new hospitals should be allowed to enter the program. While ranging in degree, most commenters highlighted a need for input from external clinical experts in addition to consumers, patients, and purchasers as well as institutional stakeholders such as QIOs. To better align with other available EHR incentive payments, several commenters stated a need for future bundled payment models to include CEHRT measures.

Response: We appreciate these considerations as we design a new voluntary bundled payment model.

Comment: A few commenters suggested that since post-acute care Start Printed Page 216providers are the predominant care provider for LEJR patients, post-acute care should play a more prominent role in the BPCI initiative.

Response: CMS thanks the commenters for this suggestion.

Comment: One commenter recommended CMS use a consistent policy to address overlap of all Medicare bundled payment initiatives and population-based payment models. The commenter raised concerns with respect to overlap of beneficiaries in the EPMs, CJR model, and BPCI initiative, and suggested that, in a future BPCI initiative, beneficiaries should be excluded from bundled payments unless a collaborative agreement exists between an ACO and a hospital that is not a participant in that ACO. The commenter also had concerns for the extent to which Medicare beneficiaries benefit from allowing private for-profit awardee conveners to absorb the risk for providers. Therefore, the commenter recommended also that CMS exclude for-profit risk-taking conveners which do not provide patient care.

Response: We acknowledge and appreciate all comments, and specifically recognize the shared interest in improving Medicare for its beneficiaries.

Comment: A few commenters requested that CMS take into consideration several additional pricing flexibilities and regulatory waivers for a new voluntary bundled payment model. Specifically, commenters believed that reducing costs and increasing shared savings could be difficult, therefore, participants should have the flexibility in a new voluntary bundled payment model to modify practice or utilization patterns by reducing length of stay or intensity of services. Commenters stated that the next iteration of BPCI should feature program elements such as caps on total losses that gradually increase over time, variable discounts based on quality scoring, and elimination of financial responsibility for payments above a threshold. Other commenters proposed that CMS adopt a method of population risk stratification, as this could provide incentive to providers by reimbursing more for greater comorbidities. Finally, in setting the bundled payment amounts, commenters recommended that CMS incorporate clinical practice guidelines and appropriate use criteria to ensure that patients are not receiving inadequate care. One commenter suggested that CMS provide patient navigators to Medicare beneficiaries receiving items or services paid under an EPM. Additionally, the regulatory waivers requested included the home health homebound requirement, the IRF 60 percent rule, the IRF 3-hour therapy intensity rule, and the LTCH 25 day average length of stay restriction. One commenter suggested that occupational therapy be recognized as a “qualifying service” under the Medicare home health care benefit and occupational therapists could, in future APMs be permitted to open `therapy only' cases if occupational therapy is in the physician's order.

Response: We recognize commenters' requests for consideration of additional flexibilities in care redesign efforts as part of a new voluntary bundled payment model.

Final Decision: As we did not propose changes to the BPCI initiative in the proposed rule, we do not have any changes to finalize in this final rule.

b. Potential Future Condition-Specific Episode Payment Models

In the context of our proposal for the AMI and CABG models that include beneficiaries with CAD who experience an acute event or a major surgical procedure, we sought comment on model design features for potential future condition-specific episode payment models that could focus on an acute event or procedure or longer-term care management, including other models for beneficiaries with CAD that may differ from the design of the EPMs proposed in the proposed rule (81 FR 50794). We believe such future models may have the potential to be Advanced APMs that emphasize outpatient care and, like the proposed AMI and CABG models, could incentivize the alignment of physicians and other eligible professionals participating in the Advanced APM through accountability for the costs and quality of care. Such condition-specific episode payment models may provide for a transition from hospital-led EPMs to physician-led accountability for episode quality and costs, especially given the importance of care management over long periods of time for beneficiaries with many chronic conditions.

We requested that commenters provide specific information regarding all relevant issues for potential future condition-specific episode payment models, including identifying beneficiaries for the model; including services in the episode definition; beginning and ending episodes; pricing episodes, including risk-adjustment; designating the accountable entity for the quality and cost of the episode, including the role of physician-led opportunities; sharing of responsibility for quality and spending between primary care providers, specialty physicians, and other health care professionals; incentivizing the engagement of physicians and other providers and suppliers in episode care; measuring quality and including quality performance and improvement in the payment methodology; interfacing with other CMS models and programs responsible for population health and costs, such as ACOs and Primary Care Medical Homes (PCMHs); other considerations specific to identifying future models as Advanced APMs; and any other issues of importance for the design of such an EPM.

The following is a summary of the comments received and our responses.

Comment: A few commenters requested that in future condition-specific EPMs, CMS should consider episodes beginning before a hospitalization, as one commenter believed that this earlier future EPM episode trigger would engage more meaningful shared care planning. Other commenters stated that future condition-specific EPMs should be based on episodes that are not necessarily tied to a hospital stay. One commenter noted that there is a great degree of variation in cardiac care beyond the two proposed EPM episodes. For example, the commenter noted regional differences in ambulatory and hospital care for heart failure, which the commenter did not believe are explained by disease severity and therefore the commenter suggested such additional cardiac care may become a favorable population-based payment model. Several commenters provided recommendations and perspectives on future condition-specific episode payment models based on MS-DRGs, including examples such as sepsis. However, other commenters suggested the alternative to use the Episode Grouper for Medicare (EGM) for future condition-specific EPMs. The framework for the EGM involves organizing administrative claims data into episodes-of-care, or simply episodes, which are sets of services provided to care for an illness or injury during a defined period of time. One commenter stated that the EGM organizes Medicare beneficiary total cost around two constructs—episodes for specific conditions and episodes for specific treatments. For condition-specific episodes, each episode would be defined by one or more diagnosis codes, however, treatment episodes would be defined by a combination of procedure and diagnosis codes. A few commenters provided specific diagnoses that could be attributable to organized future EPMs, including but not limited to gastroesophageal reflux disease and Start Printed Page 217obesity. Another commenter disagreed, stating it is inappropriate to expand the current EPM approach to future treatment of chronic conditions because, the commenter suggested, a bigger opportunity for improving quality and achieving savings is avoiding unnecessary episodes and events. In turn, the costs of treatment episodes could be packaged into the costs of managing underlying condition episodes. Commenters stated further that the EGM should also examine utilization patterns, perform comparative analyses for similar conditions, and identify care-improvement opportunities. As such, commenters suggested that the EGM would be better suited to pricing and resource allocation while identifying chronic conditions.

Response: We thank the commenters for their suggestion.

Comment: Another commenter, referencing the Program of All-Inclusive Care for the Elderly (PACE), recommended that CMS consider a comprehensive episode payment model for services for medical care that could be tied with private payment, enrollment in available community services, or an arrangement with Medicaid. Beneficiaries requiring daily help or supervision would serve as a qualifying condition, which could extend for varying durations.

Response: We appreciate the commenter's support for PACE and will work internally to incorporate lessons learned from existing programs in the proposal of future condition-specific EPMs.

Comment: Highlighting the efforts of national medical specialty societies, several commenters provided several condition-specific EPMs which may be successful in reducing emergency department visits, hospital admissions, and excessive testing. Specifically, several commenters gave such examples as coronary artery disease, headache, epilepsy, asthma, opioid use disorder, diabetes, and specialty medical home. Of note, commenters stated that CMS should give additional consideration to defined episode triggers. For example, some commenters suggested that each new episode should be accompanied by time criteria and have a unique but expected time course. These efforts, commenters suggested, might further result in disease prevention, reduced exacerbations, and improved care.

Response: We appreciate commenters' eagerness to participate in this dialogue and to be a part of transforming care.

Comment: Commenters believed that CMS should view organized provider models as qualifying for condition-specific EPMs. Other commenters suggested that CMS simply include more types of participants, including examples such as ACOs and PCMHs. Still, others commented that participation in future condition-specific EPMs be limited to those organizations that are fully committed to coordinated care planning, shared decision-making, comparative quality information, chronic disease management, transparent payments and care transition support. As an alternative approach to considering future condition-specific EPMs, MedPAC suggested that CMS consider allowing hospitals to share savings with physicians as a way to focus doctors on reducing the cost of the inpatient stay.

Response: We acknowledge and appreciate the suggestion to incorporate more participant types in future condition-specific EPMs.

Comment: Additionally, MedPAC recommended that for conditions that are not promising for bundled payments, CMS could focus on an array of other strategies to support providers in lowering costs while improving patient outcomes. For example, the Medicare spending per beneficiary (MSPB) measure in the hospital value-based purchasing (VBP) program encourages lower spending and improved care coordination. Alteration of the “weight” of the MSPB could be increased to further incentivize hospitals to reduce spending. Furthermore, MedPAC noted that the hospital readmission policy already encourages hospitals to avoid readmissions for AMIs and CABGs. To increase the pressure to reduce readmissions, it was suggested that CMS move forward with readmission policies in all sectors to increase the penalties for providers with high risk- adjusted potentially avoidable readmission rates.

Response: We appreciate any recommendations MedPAC can provide and will continue to collaborate with stakeholders to develop additional means to improve patient outcome measures. Furthermore, we will work internally to find additional alignment between Innovation Center programs and Medicare payment policies.

Comment: One commenter recommended consideration of an episode that should address behavioral health integration with primary care. The commenter suggested that guidelines which embed behavioral health measurements into any care setting would equip providers with quantification necessary to impact both physical and mental health of patients.

Response: We appreciate the commenter's proposal. We appreciate the many comments received regarding the request for comment and while we did not propose any changes to this section of the final rule, we intend to continually seek to connect those interested to further information on consideration of future condition-specific EPMs that would result in improvement in care for Medicare beneficiaries.

c. Potential Future Event-Based Episode Payment Models for Procedures and Medical Conditions

Given the proposed EPM methodology discussed in section III.C.4.a. of this final rule for the three models that would begin the episodes with initial hospitalizations, the proposed AMI, CABG, and SHFFT episodes are similar to the LEJR episodes in the CJR model because they reflect clinical conditions for which care is almost always begun during an inpatient hospitalization, either on an emergency or elective basis. In addition, the clinical conditions represented by these EPM episodes generally result in straightforward assignment to MS-DRGs at discharge that are specific to clinical conditions included in the episodes. This contrasts with procedure-related clinical conditions for which the site-of-service can be inpatient or outpatient (for example, elective PCI for non-AMI beneficiaries) or hospitalization for medical conditions for which the ultimate MS-DRG assigned is less clear at the beginning of an episode (for example, hospitalization for respiratory symptoms which may lead to discharge from heart failure, pneumonia, or other MS-DRGs based on reporting of ICD-CM diagnosis codes on hospital claims).

To address the issues related to the development of future episode payment models for a broader range of clinical conditions, we sought comment on model design features that would be important for episode payment models targeting procedures that may be performed in both the inpatient and outpatient setting, as well as models focused on hospitalization for acute medical conditions which may overlap or interact (for example, sepsis related to pneumonia or acute kidney injury related to congestive heart failure exacerbation). In particular, episode payment models must clearly define the beginning of the episode as well as set an episode price that is appropriate for beneficiaries included in the episode, which has commonly been based on historical spending for such beneficiaries in both existing CMS models and the three proposed EPMs. These parameters pose specific challenges as the variety of clinical Start Printed Page 218conditions targeted for episode payments expands beyond lower extremity orthopedic procedures and acute cardiac conditions, and we expect that such potential future models would need to be designed differently than the CJR model or the EPMs in this rulemaking.

For example, because procedures such as PCI for non-AMI beneficiaries or cardioverter defibrillator implantations can occur in the inpatient or outpatient setting, an episode payment model would need to include beneficiaries receiving such procedures at all sites-of-service so as to not influence decisions on where procedures are performed based on payment-related rather than clinical considerations. Episode payment models that begin with the same procedure performed in the inpatient or outpatient setting would require methodological development beyond the approaches that have been used thus far in CMS' other EPMs that rely upon the MS-DRG for a hospitalization to begin an episode and identify historical episodes for setting episode prices. Such models that involve episode payment for procedures furnished in the inpatient or outpatient setting may allow for significant physician-led opportunities that would allow the models to be identified as Advanced APMs. We sought comment on how these types of procedures could be included in future episode payment models, including identifying the accountable entity, and the role of physician-led opportunities; defining the episode beginning and end; setting episode prices; applying risk-adjustment to account for differences in expected episode spending for a heterogeneous population of beneficiaries; and any other issues of importance for the design of such an episode payment model.

We also sought comment on potential future episode payment models that would include care for medical conditions that result in the serious health event of an inpatient hospitalization, which often represents, regardless of the specific reason for the hospitalization, a common pathway that includes failure of outpatient care management and care coordination for beneficiaries with chronic conditions. While we include beneficiaries who solely receive medical treatment in the proposed AMI model, we note that beneficiaries with AMI are almost always hospitalized and their MS-DRGs at discharge are generally predictable and consistent based on their AMI diagnoses. This is not the case for a number of medical conditions for which grouping by MS-DRGs is more complicated or less consistent. Many non-procedural hospitalizations of Medicare beneficiaries are ultimately categorized based on the principal ICD-CM diagnosis code reported on a claim, which in turn is mapped to a Major Diagnostic Category (MDC) based on the involved organ system, which then leads to the assignment of any of various specific MS-DRGs based on the medical groups in the MDC. For example, the medical groups for the Respiratory System MDC are pulmonary embolism, infections, neoplasms, chest trauma, pleural effusion, pulmonary edema and respiratory failure, chronic obstructive pulmonary disease, simple pneumonia, RSV pneumonia and whooping cough, interstitial lung disease, pneumothorax, bronchitis and asthma, respiratory symptoms and other respiratory diagnoses.[36] Unlike a beneficiary who undergoes a surgical procedure or who is hospitalized for a specific medical condition such as AMI, the ultimate MS-DRG at discharge assigned to a beneficiary hospitalized for diagnosis and management of respiratory symptoms may not be clear during the hospitalization itself, or even afterward, until the inpatient claim is submitted and paid by Medicare. This makes it challenging for providers to engage in care delivery redesign targeted to a specific patient population identified by MS-DRG. Additionally, it is possible that beneficiaries hospitalized for certain medical conditions also may follow common clinical pathways before and after discharge for which similar care redesign strategies could be developed and used despite those beneficiaries' assignments to different MS-DRGs for their anchor hospitalizations. Thus, we believe that hospitalization for most medical conditions would require special consideration in the development of potential future episode payment models that goes beyond CMS's current approach of relying upon the MS-DRG for the anchor hospitalization to begin an episode and identify historical episodes for setting episode prices. We sought comment on design features needed to address these considerations, including defining the beginning and end of episodes; setting episode prices, including risk-adjustment, that would support the provision of appropriate and coordinated care for beneficiaries following hospital discharge for a period of time during the episode; and any other issues of importance for the design of such an episode payment model.

The following is a summary of the comments received and our responses.

Comment: Many commenters expressed support for the continued commitment of the Agency to testing episode-based payment models under a range of settings. One commenter suggested that CMS generally consider both clinical and economic expertise as well as include large databases as part of the development of future event-based EPM. While recommendations included both specific surgical procedures, such as PCI or spine surgery, chronic conditions, such as diabetes, and discrete events including colonoscopy and an arm arthroplasty, several commenters submitted more general suggestions that CMS take an expansive approach in general for the consideration of future models and not limit alternative payment models to episode payment approaches. When considering future models to qualify as Advanced APMs, one commenter suggested that CMS count capitated MA relationships in MACRA's APM threshold calculation.

Some commenters preferred an emphasis on future EPMs that consider the role of preventative efforts. For example, one commenter suggested that conditions such as osteoporosis could include efforts to improve bone health and functional level to achieve meaningful reduction in falls and subsequent fracture. The commenter followed that concerns such as fracture prevention be included in future models. To this end, one commenter stated that CMS should take a “bottom-up approach” that encourages providers to develop alternative payment models.

Response: We thank the commenters for their remarks, and will continue to apply the bottom-up approach to improving the coordination among providers in future EPMs.

Comment: Some commenters expressed concern about the continuation of hospital-based models and recommended that future expansions should include more types of participants, including physicians, and participation should be voluntary. Physicians, one commenter suggested, are best suited to ensure efficient utilization of resources while preserving patient quality by virtue of their direct relationship with the patient during an acute episode. One commenter suggested expansion of physician-focused payment models beyond the Focused Payment Model Technical Advisory Committee (PTAC). In a parallel thought process, many other commenters expressed a desire for CMS to consider post-acute care bundles, ACO based models, and shared Start Printed Page 219accountability payment models for Inpatient Rehabilitation Facilities (IRFs). One commenter strongly recommended CMS to allow manufacturers to enter into voluntary agreements with CMS to link payment to outcomes. One such outcome proposed by the commenter was the long-term revision rates for total joint arthroplasty (TJA). Any shared savings relative to the average rate of revision among Medicare patients, the commenter suggested, could be shared between implanting surgeons, hospitals and medical device manufacturers. Commenters stated that these additional types of participants could provide a means to ensure efficient utilization within a particular market. In addition, another commenter noted that procedures performed in ambulatory surgical centers may be better situated to serve as the financially accountable entity in order to optimize care coordination to better achieve the goals envisioned by episode-based payment models.

Response: We thank the commenters for their commitment to working with CMS in developing future episode payment models.

Comment: Commenters commonly recommended that future bundles be sensitive to considering risk adjustment, appropriate use criteria, patient expectations, stage of disease progression, treatment options, and appropriate quality measures regardless of setting. Commenters also recommended that future measures in future condition-specific payment models should be more directly related to the condition of the beneficiaries within the EPM. To this end, one commenter recommended that CMS include measures of patient engagement and shared care planning. Another commenter suggested that those who participate in geriatric fracture programs and/or obtain CORE Certification, be incentivized to continue such progress. Even as CMS proposed to exclude IPPS new technology add-on payments and OPPS transitional pass-through payments for medical technologies from EPM episodes, one commenter requested that future EPM episodes include additional innovative technologies to qualify for a payment adjustment similar to the Medicare New-Technology add-on payment.

Many commenters stressed the importance of shared decision-making in the development of future models. One commenter, for example noted the Clinical Practice Improvement Activities Category of the MIPS could be an important first step to greater shared decision-making across healthcare delivery and recommended CMS look to research conducted by PCORI and others for future direction. Specifically, one commenter also noted that shared decision-making and patient engagement tools could be especially informative in situations not triggered by an acute care hospitalization. Several other commenters further strongly encouraged the participation of hospitals, physicians, patients, and other stakeholders in the development, implementation, and testing of future models. Additionally, in future EPM models, a few comments directed CMS to consider directly extending the risk to the other providers, including clinicians as physicians shape the spending during the hospital stay and the selection of the initial post-acute care provider but are not required to be at risk for the 90-day episode spending. Similarly, some commenters noted that post-acute care providers can influence how much spending for post-acute care services is used and the rate of hospital readmissions but are not directly at risk for the 90-day episode spending. Therefore, these commenters suggested such changes to future EPMs would ensure that the financial incentives of the key actors shaping care are aligned.

In addition to model design, one commenter recommended that QIOs serve in a technical assistance role for model participants to include data analyses, convening providers in the area, structuring implementation of improvement activities, and monitoring tests of improvement.

Response: We thank the commenters for these suggestions and will consider the recommendations as we consider future event-based procedures and medical conditions to include in future rulemaking.

Comment: One commenter pointed to the Continuing Care Hospital model, and suggested CMS pilot future event-based episode payment models for procedures and medical conditions. The commenter stated that the CCH would allow predictable and reduced costs to the Medicare program.

Response: We thank the commenter for the reference.

Comment: One commenter suggested the implementation of an evaluation EPM, whereby the episode initiates when a beneficiary enters an inpatient setting with a set of symptoms that may be difficult to attribute to one or more MS-DRGs. Such an evaluation EPM, stated the commenter, would need to be limited to a specific set of symptoms, such as the example CMS provided regarding respiratory symptoms.

Response: We thank the commenter for this specific suggestion.

Comment: One commenter recommended CMS to exclude other potentially high cost drivers, such as psychiatric readmissions and high cost IV therapy, from future EPM bundles.

Response: We acknowledge this suggestion and will consider if it is applicable to specific future EPMs.

Comment: One commenter noted other considerations specific to identifying future models, specifically that CMS update the claims adjudication system and develop contracting tools. The commenter suggested that such changes would encourage participant providers to improve their care pathways and care coordination.

Response: We acknowledge these additional considerations and re-affirm our commitment to continuously engage stakeholders as we establish and operationalize future policies.

Comment: A few commenters requested a meeting with CMS to discuss the specifics of a future innovation model.

Response: We appreciate the interest in meeting with CMS to discuss future models. Commenters should note that ideas can also be submitted through https://innovation.cms.gov/​Share-Your-Ideas/​Submit/​index.html.

Final Decision: After seeking comments on future directions for episode payment models, we thank the public for these comments and will evaluate the suggestions for future consideration.

d. Health Information Technology Readiness for Potential Future Episode Payment Models

We are particularly interested in issues related to readiness of providers and suppliers that are not hospitals to take on financial responsibility for episode cost and quality in potential future episode payment models. We have some experience in BPCI Models 2 and 3 with non-hospital providers and suppliers, specifically post-acute care providers and physician group practices (PGPs), who assume financial responsibility for the cost of episode care. In BPCI Model 2, PGPs may directly bear financial responsibility for episode cost for up to 48 clinical conditions for the anchor inpatient admission and up to 90 days post-hospital discharge. In BPCI Model 3, PGPs and post-acute care providers, including skilled nursing facilities, home health agencies, inpatient rehabilitation facilities, and long-term care hospitals, may directly bear financial responsibility for episode cost for up to 48 clinical conditions for a duration that extends up to 90 days Start Printed Page 220following initiation of post-acute care following discharge from an inpatient hospitalization.

Under these circumstances, PGPs and post-acute care providers typically need to use health IT to assist them in effectively coordinating the care of BPCI beneficiaries across settings throughout the episodes. The risk-bearing entities participating in BPCI have expressed readiness to take on financial responsibility for episode cost, and they commonly rely upon health IT for assistance in managing the care for BPCI beneficiaries across settings for episodes that extend for a substantial period of time. However, a recent national survey of IT in nursing homes showed common use of IT for administrative activities but less use for clinical care.[37] Anecdotally, stakeholders have told us that accountable non-hospital providers and suppliers, especially those that are not integrated with health systems, may have less well-developed tools for following patients throughout episodes, potentially resulting in greater challenges in reducing the cost and improving the quality of episode care under the BPCI models. Therefore, we understand that limitations in the availability of health IT that can be used in beneficiary management across care settings may pose a significant barrier to the readiness of non-hospital providers and suppliers to assume financial responsibility for episodes in potential future episode payment models.

In the CJR model, acute care hospitals are financially responsible for cost and quality during LEJR episodes-of-care. CJR model participant hospitals may form partnerships with post-acute care providers such as skilled nursing facilities and home health agencies, as well as physicians and PGPs, to share financial risk and collaborate on care redesign strategies, as in BPCI. Although hospitals are the financially responsible entities under the CJR model, we recognize that partnerships with post-acute care providers could be a crucial driver of episode spending and quality, given that many beneficiaries in the CJR model receive post-acute care services after discharge from the hospital. We also recognize that tools such as health IT may be critical for certain care management and quality strategies targeted toward the goal of lower cost and higher quality episode care. Limitations in the availability of health IT may pose a barrier to effective post-acute care provider collaboration and sharing of financial risk in episode payment models even when hospitals are the financially responsible entities under such models, such as the CJR model and the three new EPMs in this rule.

We recognize that there is wide variation in the readiness of other providers and suppliers to bear financial responsibility for episodes, either directly or indirectly through sharing arrangements with the directly responsible entities where those arrangements may include upside and downside risk. For instance, adoption of health IT among providers in the post-acute care market, such as skilled nursing facilities, continues to lag behind hospitals and providers of ambulatory care services. In addition to facing significant resource constraints, post-acute care providers were not included as an eligible provider type under the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs. The recent extension of Medicaid 90/10 funding offers new opportunities for states to include post-acute care providers in projects focused on infrastructure development, but will not address the cost of health IT adoption among post-acute care providers.[38]

To ensure that post-acute care providers and other types of providers and suppliers can succeed under future episode payment models, either as the directly financially responsible entity or as collaborators with other directly financially responsible entities, we are interested in opportunities to increase provider readiness as part of the design of potential future episode payment models and the potential refinement of current episode payment models. Specifically, we would like to explore: Incentives to encourage post-acute care providers, as well as other providers and suppliers that furnish services to episode payment model beneficiaries, to make necessary investments in health IT infrastructure; payment mechanisms that could leverage savings achieved under episode payment models to contribute to these investments; and any other strategies to enhance the adoption, implementation, and upgrading of certified health IT. We sought comment on these ideas, as well as the following questions:

  • What are key challenges associated with the inclusion of post-acute care providers as the financially responsible entity or as collaborators with other financially responsible entities in episode payment models today?
  • What would be a sufficient financial incentive or bonus to enhance the adoption, implementation, and upgrading of certified health IT in post-acute care settings?
  • How else can episode payment models encourage the use of certified health IT and information sharing among providers and suppliers caring for episode payment model beneficiaries to improve care coordination and patient outcomes?
  • Within the existing CJR model, are there additional opportunities to encourage investment in adoption, implementation, and upgrading of certified health IT among post-acute care providers to support improvements in care coordination and patient outcomes? What CJR model refinements could enable direct investments to support these improvements, particularly among post-acute care providers who are unaffiliated with CJR model participant hospitals but who provide services to CJR model beneficiaries, including post-acute care providers who may enter into financial arrangements with CJR model participant hospitals as CJR collaborators?

The following is a summary of the comments received and our responses.

Comment: Commenters recognized the importance that health IT plays in the modern health care landscape, and overall supported the implementation of a more robust health IT system, as such a system may improve the ability to convey quick, accurate information from acute care hospitals related to the discharge MS-DRG and identification of patients who are under a bundled payment program. Many commenters expressed a need for future episode payment models to align with EHR incentive payments, and several commenters expressed concern that post-acute care providers were largely disadvantaged for health IT readiness relative to their inpatient counterparts. For example, commenters stated that post-acute care providers and nonphysician clinicians were marginalized by the Medicare and Medicaid EHR Incentive Programs. Some commenters believe this population represents a significant portion of the health care provider community without the technical and financial support necessary to adopt and implement EHRs in a meaningful way. As many of the measures used under meaningful use, such as e-prescribing, are not applicable to nonphysician practitioners, commenters suggested these and other clinicians have not had the benefit of experience with EHRs at the same rate as their peers who work Start Printed Page 221in hospitals. As a result, one commenter noted that small practices who may face financial responsibility, such as physical therapists, would face considerable challenges implementing health IT systems in their practices.

Several commenters recommended that CMS to consider all possible approaches to address this specific concern. One commenter, for example, recommended an approach similar to the ACO Investment Model program whereby participants could receive supplemental payments to offset their upfront investment. Other commenters preferred not to provide specific approaches as the sufficiency of financial incentives or bonus payments may differ for example among Skilled Nursing Facilities (SNFs), Home Health Agencies (HHAs), and institutional or hospital-based post-acute care providers, but highlighted the need for CMS to otherwise incentivize health IT adopters within future models. To effectively implement any such expansion, one commenter further stressed the need for health IT interoperability to be considered, while another commenter stressed instead that CMS should specifically cite the availability of the safe harbors of the Stark and Physician Self-Referral rules, through which health care organizations could choose to assist post-acute, or other providers, in making available EHRs meeting certain requirements in any potential approach. One commenter recommended that CMS continue to engage the long-term and post-acute care community to explore in more detail potential strategies to help overcome challenges providers face, such as the high costs of participating in health information exchange or the operational investment of an EHR system. Other comments on ways to incentivize health IT investment by post-acute care providers included: quicker or premium reimbursement for health IT adoption or upgrade, returning savings to post-acute care providers to offset health IT costs and incentive grants for training staff in health IT.

Response: We will consider these and other possible approaches to address the concerns and challenges associated with implementing health IT systems.

Final Decision: After consideration of the public comments received, we believe we have a better understanding of the issues related to readiness of providers and suppliers that are not hospitals to take achieve interoperability through CEHRT in potential future episode payment models.

B. Definition of the Episode Initiator and Selected Geographic Areas

1. Background

The new EPMs will complement the current CJR model and continue efforts to move Medicare towards paying providers based on quality and value. As discussed during rulemaking for the CJR model and in the EPMs proposed rule, CMS is interested in testing and evaluating the impact of an episode payment approach for a broad range of episodes in a variety of other circumstances. In addition to including hospitals that have not chosen to voluntarily participate in earlier models, we also are interested in expanding the range of episodes included beyond elective surgical procedures such that the impact on a broader range of beneficiaries, hospitals, and circumstances may be tested. We also are interested in evaluating the impact on hospitals when an increasing percentage of care to Medicare beneficiaries is paid for through alternative payment models.

As with CJR, we proposed in § 512.105(c) that the hospital be the accountable financial entity and that these episode payment models be implemented in all IPPS hospitals in the geographic areas selected, subject to exclusions as specified in §§ 512.230 and 512.240 of the proposed rule. While these are considered new episode payment models and do not reflect an expansion or extension of any previous models, they do intentionally build significantly upon the work of BPCI and, most significantly, the framework established for CJR under 42 CFR part 510 published on November 24, 2015 (80 FR 73274). Given the extensive consideration given to many of these issues during the CJR model planning and rulemaking periods, we believe this is important as we seek to build a model that is scalable across all providers and episode types. We also seek to limit the burden for hospitals and other providers that may be participating across multiple episode types. Therefore, to the extent applicable and appropriate, we have sought consistency with rules established for the CJR model. We sought comment on those areas where alternative options were proposed or should be considered that would not add additional operational burden or complexity. A summary of comments received and CMS' response to those comments are included in the following sections.

2. Definition of Episode Initiator

Under the proposed EPMs, consistent with our episode initiator definition under the CJR model, we proposed that episodes would begin with the admission to an IPPS acute-care hospital that triggers an AMI, CABG or SHFFT episode as specified in section III.C.4.a. of the proposed rule (81 FR 50834). As with the CJR model, we proposed that hospitals would be the only episode initiators in these episode payment models. For purposes of these episodes payment models. The term “hospital” means a hospital as defined in section 1886(d)(1)(B) of the Act. This statutory definition of hospital includes only acute care hospitals paid under the IPPS. Under this proposal, all acute care hospitals in Maryland would be excluded and payments to Maryland hospitals would be excluded in the regional pricing calculations as described in section III.D.4. of the proposed rule (81 FR 50847). This is the same policy that is being followed with the CJR model. In addition, we also proposed to exclude other all-payer state models which may be implemented in the future. We welcomed comments on this proposal and sought comment on potential approaches for including Maryland acute-care hospitals or, potentially, other hospitals in future all-payer state models in these episode payment models.

As implemented with the CJR model, we proposed to designate IPPS hospitals as the episode initiators to ensure that all services covered under FFS Medicare and furnished by EPM participant hospitals in selected geographic areas to beneficiaries who do not meet the exclusion criteria specified in section III.C.4. of the proposed rule (81 FR 50834) are included. In addition, the episodes must not be BPCI episodes that we are proposing to exclude as outlined in this section and in section III.C.4. of the proposed rule. We believe that utilizing the hospital admission as the episode initiator is a straightforward approach for these models because patients covered under these DRGs and diagnoses require hospital admission for these services, whether provided on an emergent or planned basis. Under these new models covering medical admissions and services that are not necessarily elective, as stated in the proposed rule, we will be able to expand our testing of a more generalized bundled payment model. Finally, as described in section III.B.4. of the proposed rule (81 FR 50815) our proposed geographic area selection approach relied upon our definition of hospitals as the entities that initiate episodes.Start Printed Page 222

The following is a summary of the comments received on our proposed episode definition and our responses.

Comment: We received many comments supporting our proposal to initiate these EPM episodes of care with the inpatient hospital admission. However, we also received multiple comments noting the important role that physicians play in managing patient care throughout the episode period including after discharge from the hospital. These same commenters expressed support for more physician based payment models so that physicians can have a more substantial role in managing episodes.

Response: We appreciate the support commenters expressed for initiating the EPM episodes with the inpatient hospital admission. While we acknowledge and understand that inpatient initiated episodes represent only one of many potential models for improving the quality of care while restraining the growth in costs, we continue to believe that the appropriate initiating point for the episodes in these EPMs is the inpatient admission. Hospitals play a central role in coordinating episode-related care and ensuring smooth transitions for beneficiaries undergoing services related to these episodes and a large portion of a beneficiary's recovery trajectory from an AMI or CABG or SHFFT begins during the hospital stay which is why we are finalizing the inpatient admission as the initiating event in the episode definition. We also note that CMS has supported and is supporting other voluntary demonstrations and models that focus on providing financial support for care coordination services as recommended by these commenters. In addition, in recent years, the range of services eligible for payment under the Medicare physician fee schedule has expanded to include care transition and chronic care management codes. For further discussion of future models, we refer the reader to section III.A.3. of this final rule, “Future Directions for Episode Payment Models.”

We did not receive any comments related to our exclusion of Maryland nor on the potential inclusion or exclusion of future all-payer state models. Therefore we are finalizing our proposal to exclude Maryland providers from this model.

Subsequent to the publication of this final rule CMS announced on October 26, 2016 the implementation of the Vermont All Payer ACO Model which will begin on January 1, 2017. Since this new Vermont model is an all payer model and since we proposed to exclude all of the all payer state models from the EPM we are also finalizing the exclusion of Vermont providers from selection for participation in the EPMs. We note that currently none of the MSAs in Vermont are participating in the CJR model and would, therefore, not have been selected to participate in the SHFFT EPM.

Final Decision: After consideration of the public comments received, we are finalizing the proposed episode definition, without modification, such that these EPM episodes will be initiated with the admission to an IPPS acute-care hospital that triggers an AMI, CABG or SHFFT episode as specified in section III.C.4.a. of this final rule. We are also finalizing the exclusion of hospitals in Maryland and Vermont from participation in the EPMs.

3. Financial Responsibility for the Episode of Care

As with the CJR model, and as discussed in the proposed rule, we continue to believe it is most appropriate to identify a single type of provider to bear financial responsibility for making repayment, if any, to CMS under the model. Therefore, we proposed to make hospitals, as the episode initiators, financially responsible for the episode of care for the following several reasons:

  • Hospitals play a central role in coordinating episode-related care and ensuring smooth transitions for beneficiaries undergoing services related to SHFFT, AMI and CABG episodes. A large portion of a beneficiary's recovery trajectory from an AMI, CABG, or SHFFT begins during the hospital stay.
  • Most hospitals already have some infrastructure related to health IT, patient and family education, and care management and discharge planning. This includes post-acute care coordination infrastructure and resources such as case managers, which hospitals can build upon to achieve efficiencies under these EPMs.
  • By definition, these episodes always begin with an acute care hospital stay. While often preceded by an emergency room visit and possible transfer from another hospital's emergency room, or followed by post-acute care, these parties are not necessarily always present and would not be appropriate to target as the financially responsible party for this purpose.

EPM episodes may be associated with multiple hospitalizations through transfers. When multiple hospitalizations occur, we proposed that the financial responsibility be given to the hospital to which the episode is attributed, as described in section III.C.4 of the proposed rule. We recognize that, particularly where the admission may be preceded by an emergency room visit and subsequent transfer to a tertiary or other regional hospital facility, patients often wish to return home to their local area for post-acute care. Many hospitals have recently heightened their focus on aligning their efforts with those of community providers, both those in the immediate area as well as more outlying areas from which they receive transfers and referrals, to provide an improved continuum of care. In many cases, this is due to the incentives under other CMS models and programs, including ACO initiatives such as the Shared Savings Program, the Hospital Readmissions Reduction Program (HRRP), and the CJR model. By focusing on the hospital as the accountable or financially responsible entity, we hope to continue encouraging this coordination across providers and sought comment on ways we can best encourage these relationships within the scope of these EPMs.

In support of our proposal that hospitals be the episode initiators under these EPMs, we believe that hospitals are more likely than other providers to have an adequate number of episode cases to justify an investment in episode management for these EPMs. We also believe that hospitals are most likely to have access to resources that would allow them to appropriately manage and coordinate care throughout these episodes. Finally, the hospital staff is already involved in discharge planning and placement recommendations for Medicare beneficiaries, and more efficient post-acute care service delivery provides substantial opportunities for improving quality and reducing costs under EPMs. For those hospitals that are already participating in CJR, we believe the efforts that have been put in place to support patients receiving LEJR will be supportive of the new EPMs proposed under this rule, particularly for SHFFT episodes which we proposed to implement in the same geographic areas as the CJR model.

Finally, as noted when planning for the CJR model, although the BPCI initiative includes the possibility of a physician group practice as a type of episode initiating participant, the physician groups electing to participate in BPCI have done so because their practice structure supports care redesign and other infrastructure necessary to bear financial responsibility for episodes. These physician groups are not necessarily representative of the typical group practice. As with the CJR Start Printed Page 223model, the infrastructure necessary to accept financial responsibility for episodes is not present across all physician group practices, and thus, as we stated in the proposed rule, we do not believe it would be appropriate to designate physician group practices to bear the financial responsibility for making repayments to CMS under the proposed EPMs. We sought comment on our proposal to establish financial responsibility and accountability under the AMI, CABG, and SHFFT EPMs consistent with our implementation of the CJR model.

Currently, there are SHFFT, AMI, and CABG episodes being tested in BPCI Models 2, 3 or 4. The last remaining BPCI Model 1 hospital will end December 31, 2016 and will, therefore, not overlap with EPM. In addition, under BPCI, there are episodes for PCI, which, if an AMI were also involved, would fall under the AMI model proposed. We proposed that IPPS hospitals located in an area selected for any one of the episode payment models proposed in the proposed rule (81 FR 50834) that also are episode initiators for episodes in the risk-bearing phase of BPCI Models 2 or 4 be excluded from participating in the AMI, CABG, or SHFFT EPMs if the applicable episode otherwise would qualify to be covered under BPCI. This exclusion would be in effect only during the time that the relevant qualifying episodes are included in one of the BPCI models. Likewise, we proposed that if the EPM participant is not an episode initiator for overlapping episodes under BPCI Models 2 or 4, but these same episodes are initiated during the anchor hospitalization by a physician group practice (PGP) under BPCI Model 2 (where the services are provided at the episode initiating hospital) then the episode also shall be covered under BPCI and be excluded from the EPMs proposed under the proposed rule (81 FR 50834). Otherwise qualifying EPM episodes (that is, those that are not part of an overlapping BPCI AMI, CABG, PCI or SHFFT episode) at the participant hospital would be included in these new EPMs. However, because BPCI participation is voluntary and participating providers may select which episodes to participate in, we proposed that a BPCI participating provider will participate in any of the proposed AMI, CABG, or SHFFT EPMs for any episodes not otherwise preempted under their BPCI participation. For example, a BPCI Model 2 hospital in an AMI episode model geographic area participating in BPCI only for CABGs will be an EPM participant in the AMI model. Similarly, an acute care hospital participating in BPCI for LEJR but not SHFFT episodes would be exempt from participation in the CJR model in a CJR model geographic area but would participate in the SHFFT model for SHFFT episodes. In addition, providers participating in BPCI may also collaborate with an EPM participant for episodes not covered under BPCI. It should be noted that due to differences in how the AMI episode is defined under the AMI model versus BPCI and the inclusion of PCI MS-DRGs under the latter, a patient with the same discharge MS-DRG and diagnoses may qualify for a PCI episode under BPCI and an AMI episode under the AMI model. As stated in the proposed rule, our intent is to give precedence to BPCI regardless of which episode a patient qualifies for if the patient would be covered under BPCI.

In section III.D.6. of the proposed rule we discussed in more detail how we proposed to handle situations when a beneficiary receives services that would qualify for inclusion in more than one CMS payment model during the same or overlapping periods of time. We welcomed input on how these overlaps should be handled to best encourage ongoing care coordination while minimizing the impact on other models and limiting confusion and operational burden for providers.

While we proposed that the EPM participant be financially responsible for the episode of care under these EPMs, we also stated that we believe that effective care redesign requires meaningful collaboration among acute care hospitals, post-acute care providers, physicians, and other providers and suppliers within communities to achieve the highest value care for Medicare beneficiaries. We continue to believe it is essential for key providers to be aligned and engaged, financially and otherwise, with the EPM participants, with the potential to share financial responsibility with those EPM participants. We noted that all relationships between and among providers and suppliers must comply with all relevant laws and regulations, including the fraud and abuse laws and all Medicare payment and coverage requirements unless otherwise specified further in this section and in sections III.I. and III.J. of the proposed rule. Depending on a hospital's current degree of clinical integration, new and different contractual relationships among hospitals and other health care providers may be important, although not necessarily required, for EPM success in a community. We acknowledge that financial incentives for other providers may be important aspects of the model in order for EPM participants to partner with these providers and incentivize certain strategies to improve episode efficiency.

While we acknowledged the important role of conveners in the BPCI model, and that AMI, CABG, and SHFFT model participants may wish to enter into relationships with EPM collaborators and other entities in order to manage the episode of care or distribute risk, we proposed that the ultimate financial responsibility of the episode would remain with the EPM participant. Exceptions to this general rule for beneficiaries covered under certain risk bearing ACO arrangements are outlined in section III.D.6. of this final rule. As with the CJR model, we did not intend to restrict the ability of EPM participants to enter into administrative or risk sharing arrangements related to these EPMs, except to the extent that such arrangements are already restricted or prohibited by existing law. We referred readers to section III.I. of the final rule for further discussion of model design elements that may outline financial arrangements between EPM participants and other providers and suppliers.

The following is a summary of the comments received and our responses.

Comment: We received numerous comments related to our proposal to have the hospital be the single accountable entity for the EPM episodes. Many commenters were supportive of this policy and, while not ignoring the importance of other providers, agreed that hospitals were best positioned to assume risk for these episodes. Other commenters were less supportive of this proposal, noting that hospitals could be disadvantaged if physicians and post-acute care providers were not also at risk or if conflicting interests hindered their willingness to collaborate. A few commenters expressed concern that while hospitals would bear the risk, hospitals might be limited in their ability to control that same risk. For example, one commenter referenced the penalty that hospitals already face for readmissions which may not be correlated to inpatient care. One commenter stated that post-acute care providers would be more motivated if they were required to share in even a small percentage of the incentives or risk directly. Another commenter noted that the current per-diem payment system for SNFs put SNF providers at particular risk. Although SNFs will invest resources to reduce/shorten SNF stays, which can create significant savings for the EPM participant, the Start Printed Page 224commenter stated SNF providers will be disadvantaged/harmed as the proposed regulations do not require proportional sharing of reconciliation payments by the EPM participant with post-acute care providers and requested that we amend the language to more clearly outline how reconciliation payments should be shared proportionally among all EPM collaborators, noting that this change would also likely require these same providers to share in downside risk as well.

Other commenters objected to the hospital holding sole financial accountability for the models as they believe that physicians, including hospitalists, surgeons, and internal medicine subspecialists are best positioned to impact the process of care. These commenters stated that CMS should be giving priority to physician-centered alternative payment models. One commenter believes that having the hospital in charge of the bundle could give the hospital inappropriate leverage over other participants and or lead to the exclusion of providers if they failed to agree to the hospital's terms. Other commenters wanted the flexibility for conveners to assume risk and organize groups of providers, as is allowed under BPCI.

One commenter specifically stated that determination of the accountable entity should be based not only on the ability to accept risk but also the ability to change care delivery patterns. While one commenter explicitly stated that “only physicians can make the determination as to what types of care could effectively address patients' needs,” that commenter also wanted payment to physicians to be predictable and physician financial accountability limited to “costs that are within their control.” The perspective that physicians were best positioned to manage the episode of care and desire for them to have the opportunity to bear risk, particularly as it might pertain to eligibility for advanced alternative payment model status, was expressed by a number of commenters although the focus in such comments was on voluntary models.

Response: We appreciate the support expressed by certain commenters for our proposed policy to hold the initiating hospital as the financially accountable entity for the EPM episodes. While we acknowledge the critical importance of physicians and other providers, in particular those providing post-acute care, in managing episodes which extend 90 days beyond discharge from the anchor hospitalization, we continue to believe the hospital should be the financially accountable entity for these models. For hospitals to be successful in managing EPMs, we firmly believe that they will need to actively solicit the support of physicians, post-acute care providers, and other clinical care providers in order to provide the best quality of care in a cost effective manner. In many, if not most situations, this may involve establishing collaborative agreements with a risk sharing arrangement. We support other types of providers assuming risk where they are financially able to do so and agree that providers that have a share in the risk, both positive and negative, may be more motivated to establish collaborative agreements. However, we do not believe that in a model with required participation, any other provider group is consistently as financially positioned to assume risk as is the hospital to which the episode is attributed. We also do not want to mandate a specific division of risk between providers or to direct the specific terms of any collaborator agreements that may be established. We disagree that the current proposal to make hospitals the financially accountable entity undermines the role of the physician, and in providing for a range of collaborator agreements, we hope that EPM participants will actively engage in gainsharing with others. We refer readers to section III.I of this final rule for a fuller discussion of allowable collaborator relationships. We believe that in order to be most successful, hospitals will reach out to other providers to establish agreements with collaborators, although we acknowledge that it may take time to negotiate and establish such arrangements. While some physician groups and post-acute care providers are in a position to take on risk, we continue to believe that many, particularly those in smaller groups and those in more rural areas, are not and, in fact, no commenter suggested that this was the case. Even where the focus of a comment was on providing more opportunities for physicians to assume risk, it was in the context of voluntary models such as BPCI. We appreciate those comments and, in fact, will give precedence to BPCI participants where there is such overlap. Readers are referred to section III.D.6. of this final rule, “Adjustments for Overlaps with Other Innovation Center Models and CMS Programs,” which addresses in more detail how situations where there is an overlap between EPMs and other episode based models will be handled. We address in section III.D.6.b.(2). of this final rule, how patients attributed to other physician-centric episode models will be attributed. We also note in section III.A.3 of this final rule opportunities for future alternative payment models which may be more physician-centric. We are committed to testing a number of alternative payment models, many of which may be voluntary and more appropriate for physicians or other providers to assume risk.

Comment: We received a few comments that not only advocated for more flexibility in which entity would be allowed to assume risk for the episode but also suggested that CMS more actively encourage collaboration by providing more specific operational guidance regarding how risk should be shared among different providers. A few commenters noted that financial agreements may not always be feasible. One commenter noted that in markets where physicians, hospitals and post-acute care providers already work well together, the foundation for effective gainsharing arrangements are more likely to be in place. Others noted that some organizations may be willing to share in any savings but not be willing to accept downside risk.

One commenter recommended that CMS require that EPM participants execute gainsharing arrangements with providers to establish a third party entity to receive and distribute reconciliation payments in accordance with the terms of such sharing agreements.

Response: We acknowledge the challenges that some EPM participants may have in establishing effective collaborative agreements. Similarly, we acknowledge the potential challenges that non-hospital providers such as physicians and post-acute care providers may have in getting EPM participants to share risk in a manner that is believed to be equitable to all. However, we do not believe it is appropriate for CMS to either require or establish specific criteria for the terms of such agreements nor to specify how they should be operationalized. We continue to believe, however, that the most successful EPMs will be motivated to engage other providers so that interests and incentives are aligned. We refer readers to section III.I. of this final rule, “Financial Arrangements under EPM,” for a full discussion of EPM financial arrangements.

Final Decision: After consideration of the public comments received, we are finalizing the proposal, without modification, to make hospitals the episode initiators and financially responsible for the episode of care.Start Printed Page 225

4. Geographic Unit of Selection and Exclusion of Selected Hospitals

In order to determine the geographic unit of selection for these episode payment models, we conducted an analysis similar to that used for the CJR model. For the CJR model, we considered using a stratified random sampling methodology to select: (1) Certain counties based on their Core-Based Statistical Area (CBSA) status; (2) certain zip codes based on their Hospital Referral Regions (HRR) status or (3) certain states. We concluded that selection based on MSAs provided the best balance between choosing smaller geographic units while still capturing the impact of market patterns reflecting the mobility of patients and providers and limiting the potential risk for patient shifting and steerage between MSAs. HRRs are based on where patients receive selected tertiary care services, which do not include orthopedic services. Therefore, HRRs may not be representative of where patients receive specialty orthopedic care or more routine orthopedic services such as hip and knee arthroplasty. Selection of states rather than MSAs would have greatly reduced the number of independent geographic areas subject to selection and, therefore, the statistical power of the evaluation. For similar reasons and to maintain consistency with the CJR model, we proposed implementation at the MSA level.

We also similarly considered whether these new models should be limited to hospitals where a high volume of these episodes occur, which would result in a more narrow test on the effects of an episode-based payment, or whether to include all hospitals in particular geographic areas, which would result in testing the effects of an episode-based payment approach more broadly across an accountable care community seeking to coordinate care longitudinally across settings. However, as with the CJR model, if we were to limit participation based on volume, there would be more potential for behavioral changes that could include patient shifting and steering between hospitals in a given geographic area that could impact the test. Additionally, this approach would provide less information on testing payments for these episodes across a wide variety of hospitals with different characteristics. Selecting geographic areas and including all IPPS hospitals in those areas not otherwise excluded due to BPCI overlap as previously described and in section III.D.6. of the proposed rule as model participants would help to minimize the risk of participant hospitals shifting higher cost cases out of the EPM.

In determining where to implement these EPMs, we also considered whether implementation of the CJR model in the same geographic area should be a factor. We realize that there is likely to be considerable overlap in the selection criteria between MSAs where the SHFFT EPM might be appropriate and those MSAs where the CJR model is now being implemented. While limiting burden on hospitals is an important consideration, we also believe that the infrastructure being put in place as a result of the CJR model presents significant advantages for implementation of the SHFFT model. For similar reasons, and in order to minimize patient steerage and/or transfer for reasons due solely to the implementation of these new payment models, we believe that it is appropriate to implement the AMI model and CABG model together in the same geographic areas, albeit not necessarily in the same areas as the CJR and SHFFT models.

Therefore, given the authority in section 1115A(a)(5) of the Act, which allows the Secretary to elect to limit testing of a model to certain geographic areas, we proposed that the SHFFT model be implemented in those MSAs where the CJR model is being implemented.

We also proposed that the AMI and CABG models be implemented in MSAs selected independently based on the criteria discussed in the proposed rule (81 FR 50815). This would result in four separate categories of MSAs: (1) MSAs where only the CJR and SHFFT model episodes are being implemented; (2) MSAs where only the CABG model and AMI model episodes are being implemented; (3) MSAs where the CJR as well as the AMI, CABG, and SHFFT models are being implemented; and (4) MSAs where neither CJR nor any of the new episode payment models are being implemented. We believe this will provide an opportunity to test the impact of implementing EPMs across not only a greater diversity of episodes but also as an increasing percentage of hospital discharges. We sought comment on our proposal to implement the SHFFT model in the same geographic region as the CJR model and to implement both the AMI model and the CABG model in the same MSAs, some of which may overlap with MSAs where the CJR and SHFFT models also are being implemented.

The following is a summary of the comments received and our responses.

Comment: While several commenters explicitly noted concurrence with our proposed method for selecting the MSAs where these models will be implemented, we did receive a few comments related to the selection of areas based on MSAs vs. other geographic units such as CBSAs as well as other recommended criteria upon which to base our selection. We address some of the specific factors in the comments located in this section. Independent of the selection methodology, several commenters requested that CMS publish a list of the hospitals CMS believed were in the selected MSAs and allow hospitals 60 days to comment. Other commenters requested that CMS publish the list of MSAs selected as soon as possible to allow those hospitals impacted additional preparatory time prior to the initial effective date of EPMs. Other commenters emphasized the importance of maintaining beneficiary freedom of choice in selecting where and how to receive care regardless of the beneficiary's geographic residence or the MSAs selected for EPMs.

Response: With regard to MSAs as the geographic unit of selection, we continue to believe, consistent with CJR, that MSAs allow us to observe the impact of the model in a variety of circumstances and provide the best balance between choosing smaller geographic units while still capturing the impact of market patterns reflecting the mobility of patients and providers. We also believe that MSAs limit the potential risk for patient shifting and steerage. As such, we see no reason to change the unit of selection or to be inconsistent with what has already been implemented with CJR. For an in depth discussion of this, we refer the reader to the final CJR rule (42 CFR part 510, 80 FR 73288). We concur that it is important that all participants clearly understand which hospitals will be impacted. Prior to implementation and in conjunction with the publication of this final rule, CMS will publish a list of hospitals that, based on the geographic location associated with the hospital's CMS Certification Number (CCN), we believe are located in the selected MSAs and will be subject to participation in these EPMs. Hospitals identified using this method will have the opportunity to correct any information CMS has on file that may impact whether they are or are not in a selected MSA by contacting epm@cms.hhs.gov within 45 days after the publication of the Final Rule. Finally, we concur that beneficiaries continue to have the freedom to choose where they will receive services, regardless of the payment model in place in a particular geographic area. We refer readers to Start Printed Page 226section III.G. of this final rule, “Monitoring and Beneficiary Protection,” for a discussion of these issues.

Comment: A number of commenters expressed concern about implementing the SHFFT EPMs in those MSAs where the CJR model is being implemented. Some commenters expressed concern that we were adding the SHFFT model to the existing CJR model. Other commenters expressed concern that sufficient time had not elapsed to allow hospitals or CMS to learn from their experience. Many believe they needed more time to be able to analyze the results from at least the first year of CJR as well as incorporating findings from the BPCI experience before adding the additional burden of implementing a new model with required participation. While both CJR and SHFFT involve some of the same providers and specialties, some commenters noted that the SHFFT patient population was distinctly different requiring different care pathways and resources. Because of the concern about additional burden on those MSAs where the CJR model has been implemented, some commenters believe that those same MSAs should, therefore, be exempt from implementing the additional cardiac EPMs.

Response: To clarify for commenters, the SHFFT model is separate and distinct from the CJR model although it is designed to run in the same MSAs in which the CJR model is currently operational. We acknowledge the challenges that hospitals implementing CJR may have in order to implement the SHFFT EPM. While recognizing that the patients covered under the SHFFT EPM may be frailer and potentially require different and/or a more intensive level of care, we also continue to believe that SHFFT is similar to CJR in that it involves many of the same specialties and provider types. While there may be different care pathways, we hope that much of the infrastructure and collaborator agreements put in place will provide a solid base upon which to build for SHFFT. As CMS seeks to move away from fee for service payment systems to more value based purchasing, we believe that SHFFT represents a reasonable next step in this transition.

We also acknowledge that in those MSAs where the cardiac EPMs will be alongside CJR and now SHFFT, EPM participants will face additional burdens and challenges. However, we do not believe that it is appropriate to exclude those MSAs where CJR and SHFFT will be implemented from eligibility for selection for the cardiac EPMs. Exclusion of these MSAs would result in a comparative over representation in the cardiac EPMs of lower cost and lower population MSAs due to the manner in which the CJR MSAs were selected. For a full discussion of the criteria for selecting cardiac EPMs, we refer readers to section III.B.5. of this final rule, “Overview and Options for Geographic Area Selection for AMI and CABG Episodes”. As we move towards more inpatient care being covered under these types of models, we will monitor and evaluate the impact on different types of hospitals implementing multiple EPMs so as to minimize operational burden and improve outcomes.

Comment: Several commenters did not disagree with the use of MSAs specifically, but did note the potential for negative impact on certain hospitals in a model where all hospitals in the MSA providing the covered services are required to participate. This included concern for both high performing regional and national referral centers which may already be providing high quality care at a lower cost as well as hospitals with more limited numbers of eligible discharges and/or those serving at risk populations which often have lower operating margins and thus may be at greater financial risk. These commenters suggested that demographic factors such as age, race, and poverty levels could be used to limit which MSAs were selected.

Response: We acknowledge that some hospitals may face particular challenges in implementing EPMs whether it be due to demographic factors related to their patient base, a lower number of potential EPMs each year, or other factors. A key reason for doing a model with required participation is, in fact, to examine and better understand the impact of a model on a broader range of facility types and communities than are usually included in a voluntary model. Although we do not believe that using specific demographic factors in MSA selection is appropriate, in response to comments on other sections of this rule around risk-adjustment, we are finalizing a timeframe for the implementation of downside risk that allows us time to look carefully at different approaches for recognizing and adjusting for risk in these models which we will discuss via notice and comment rulemaking for FY 2019 and we believe that these actions will help to resolve concerns expressed regarding greater financial risk for high performing regional and national referral centers.

A key rationale for conducting a model with required participation is the ability to examine variations in the impact of the model on a broad range of hospitals in a variety of different market conditions in order to better understand how the model operates in a variety of circumstances. Although demographic factors are not proposed to be part of the selection process for MSAs, we do consider, as noted in the proposed and this final rule, these factors to be important to the proper understanding of the impact of the models and where is more or less successful. The evaluation will consider the suggested demographic domains and other measures in determining which MSAs are appropriate comparison markets as well as for possible subgroup analyses.

Comment: A few commenters suggested eliminating those MSAs that had a higher penetration of Medicare Advantage plans or suggested that we select MSAs that will minimize overlap with BPCI and ACO participating hospitals.

Response: We note in this rule the reasons for aligning the MSAs where the SHFFT EPM will be implemented with those MSAs where the CJR model has already been implemented. In doing so, we accept the exclusion of those MSAs that were excluded from the CJR model due to the limited volume of LEJR procedures performed there.

In the proposed rule we similarly proposed elimination of some MSAs from selection for the cardiac EPMs due to having lower numbers of episodes and having a higher number of episodes covered under the BPCI models. We refer readers to section III.B.5. of this final rule for a full discussion of the selection criteria for MSAs where the cardiac episodes will be implemented.

Final Decision: After consideration of the public comments received, we are finalizing the proposal, without modification, to implement the SHFFT EPM in those MSAs where the CJR model is being implemented. Further, we are finalizing the proposal to implement the cardiac EPMs in randomly selected MSAs from among all those in the country meeting the criteria specified in section III.B.5. of this final rule.

5. Overview and Options for Geographic Area Selection for AMI and CABG Episodes

We proposed that the AMI and CABG EPMs be implemented together in the same MSAs. These AMI/CABG-participating MSAs may or may not also be CJR/SHFFT-EPM participating MSAs. The selection of MSAs for AMI/CABG EPMs would occur through a random selection of eligible MSAs.

We proposed to require participation in the AMI and CABG models of all hospitals, with limited exceptions as Start Printed Page 227previously discussed in section III.B.4. of the proposed rule, paid under the IPPS that are physically located in a county in an MSA selected through the methodology outlined in section III.B.5.b. of the proposed rule (81 FR 50815), to test and evaluate the effects of an episode-based payment approach for the proposed EPMs. We proposed to determine that a hospital is located in an area selected if the hospital is physically located within the boundary of any of the counties in that MSA as of the date the selection is made.

Although MSAs are revised periodically, with counties added or removed from certain MSAs, we proposed to maintain the same cohort of selected hospitals throughout the 5-year performance periods of the EPMs with limited exceptions as described later in this section. Thus, we proposed neither to add hospitals to an EPM if after the start of such EPM new counties are added to one of the selected MSAs nor to remove hospitals from an EPM if counties are removed from one of the selected MSAs. We believe that this approach will best maintain the consistency of the participants in the EPMs, which is crucial for our ability to evaluate their respective results. However, we retain the possibility of adding a hospital that is opened or incorporated within one of the selected counties after the selection is made and during the period of performance. (See section III.D. of this final rule for discussion of how target prices will be determined for such hospitals.)

The manner in which CMS tracks and identifies hospitals is through the CMS Certification Number (CCN). In keeping with this approach, these EPMs will administer model related activities at the CCN level including the determination of physical location. The physical location associated with the CCN at the time of an EPM's start will be used to determine whether that CCN is located in a selected MSA. For hospitals that share a CCN across various locations, all hospitals under that CCN would be required to participate in the applicable EPM if the physical address associated with the CCN is in the MSA selected, unless otherwise excluded. Similarly, all hospitals under the same CCN, even if some are physically located in the MSA selected for participation, would not participate in the applicable EPM if the physical address associated with the CCN is not in the MSA.

We considered including hospitals in a given MSA based on whether the hospitals were classified into the MSA for IPPS wage index purposes. However, such a process would be more complicated, and we could not find any compelling reasons favoring such approach. For example, we could assign hospitals to metro divisions of MSAs when those divisions exist. In addition, there is the IPPS process of geographic reclassification by which a hospital's payments can be based on a geographic area other than the one where the hospital is physically located. For the purpose of the EPMs, it is simpler and more straightforward to use a hospital's physical location as the basis of its assignment to a geographic unit. This decision would have no impact on a hospital's payment under the IPPS. We sought comment on our proposal to include a hospital as an EPM participant based on the physical location associated with the CCN of the hospital in one of the counties included in a selected MSA.

The following is a summary of the comments received and our responses.

Comment: One commenter expressed that implementing the two cardiac EPMs, CABG and AMI, in the same geographic areas would overburden participant hospitals. They stated that the two cardiac conditions are characterized by clinically different populations and require distinct care teams and the opportunities for common care redesign approaches are limited.

Response: We understand the amount of effort required to redesign care processes and that often these are specific to a condition and not always immediately transferrable between conditions. In regards to implementing two cardiac episodes there is an expectation that some economies of scale will present themselves with the cardiac episode-based approaches even though the care teams and patient populations are distinct.

As discussed in section III.C. of this final rule, the AMI and CABG model episodes primarily include beneficiaries with cardiovascular disease, a chronic condition which likely contributed to the acute events or procedures that initiate the episodes. Beneficiaries experiencing an AMI can be treated by different clinical modalities including medical management and surgical intervention such as PCI and CABG. The decision as to which treatment is medically appropriate for a given beneficiary is both complex and subject to evolving medical knowledge and practice norms. Furthermore, approximately 30 percent of CABGs are performed during the care of AMIs. Because of the close connection between these two models, CMS believes that testing the AMI and the CABG EPMs in the same markets decreases the probability that clinical decision making regarding the course of treatments would be unduly influenced by inclusion or exclusion in one of the two cardiac EPMs. If the two cardiac EPMs were in different areas, the AMI EPM would be structured in such a way as to include AMIs treated with CABG. Thus, the separation of the two cardiac EPMs into different MSAs would not reduce the burdens associated with hospitals who are simultaneously needing to manage patients treated under a variety of modalities. It would, on the other hand, conceivably increase the complexity of management for participants who would be faced with the situation of having only the 30 percent of CABGs done in conjunction with an AMI included in a model.

Comment: One commenter requested that if a health system had member hospitals within MSAs selected for inclusion in a cardiac EPM that they be allowed to have their member hospitals in non-selected areas also be included in the model. They stated that the ability to have all of their member hospitals in one model would allow for care to be provided under a unified system and would result in increased coordination.

Response: The cardiac EPMs are structured as required models. As such, they will require hospitals within selected geographic areas to participate (unless otherwise excluded as set forth in this final rule). Hospitals who are not in a selected MSA but are part of a health system that includes selected included hospitals will not subject to the EPM rules and incentives structures. However, if a health system wishes to implement certain care coordination activities across their entire spectrum of hospitals they would not be precluded from doing so as long as they comply with current regulations and law. The inclusion of additional hospitals outside of these selected areas would constitute a major change to the model that was not considered in the proposed rule. CMS previously offered solicited participation in the BPCI initiative, a bundled payment model. Please refer to section III.A.3. of this final rule for a discussion of the possibility of future bundled payment models.

Final Decision: After consideration of the public comments received, we are finalizing the proposal, without modification, to implement the CABG and the AMI EPMs in the same areas, and to administer model-related activities at the CCN level including the determination of physical location. The physical location associated with the CCN at the time of an EPM's start will Start Printed Page 228be used to determine whether that CCN is located in a selected MSA.

a. Exclusion of Certain MSAs

We considered whether certain MSAs should be exempt from the possibility of selection for the AMI/CABG EPMs' implementation. We considered exclusions based on the anticipated number of AMI episodes and CABG episodes in the MSA. We also considered exclusions based on the degree to which such EPMs' episodes would be impacted by overlaps with other payment initiatives, including BPCI and ACOs.

First, we considered the advisability of MSA exclusions based on the number of episodes in a year. We identified qualifying AMI and CABG episodes that initiated between January 1, 2014, and December 31, 2014. AMI and CABG episodes were attributed to an MSA based on the location of the CCN associated with the initiating hospital using the Provider of Service file. Due to the smaller number of relevant AMI and CABG episodes occurring in some MSAs, an exclusion rule that required a large number of episodes in each MSA would result in fewer MSAs eligible for selection than was necessary given the desired number of MSAs and the requirement to have 50 percent or more of MSAs remain in a pool of possible comparison MSAs. From the perspective of evaluating changes to utilization and spending under EPMs, there is no analytic need to eliminate MSAs with small numbers. In fact, including smaller MSAs has the analytic advantage of giving CMS more experience operating EPMs in the smaller-MSA contexts that will help us generalize our EPM-evaluation findings.

We have a strong interest in being able to observe how well EPMs operate in areas with a lower volume of episodes, and, in particular, the consequences of the models for AMI episodes where CABG is not commonly performed or where standard practice is to refer all CABGs outside of the MSA. Given our desire to assess the operation of the AMI EPM in areas with little or no CABG episodes and the desire to have the two cardiac EPMs be administered together in the same MSAs, we proposed that the MSA exclusion rules be based on the number of AMI episodes only. This will allow for the inclusion of MSAs with no CABGs.

There is no analytic requirement for a minimum number of cases and there are advantages to including smaller cities. At the same time, we acknowledge that areas with few AMI cases may believe that they will face challenges under the EPMs. Therefore, we proposed an exclusion rule that MSAs with fewer than 75 AMI episodes (determined as discussed in section III.C. of this final rule) will be removed from the possibility of selection. Cases in hospitals paid under either the CAH methodology or the Maryland All-Payer Model are not included in the count of eligible episodes. We examined a number of different minimum-episode-number cutoffs. The use of the 75 AMIs in a year was a designed to balance limiting the impact of outlier cases on the MSA average episode spending and the desire to retain a non-negligible representation of MSAs in the under 100,000 population and the 100,000 to 200,000 population ranges in our selection pool. The application of Exclusion Rule 1: “Less than 75 qualifying AMI episodes in the reference year” resulted in the removal of 49 MSAs from possible selection.

Second, we assessed exclusion rules based on overlap with BPCI. We proposed Exclusion Rule 2 such that MSAs are removed from possible selection if there were fewer than 75 non-BPCI AMI episodes in the MSA in the reference year. For the purposes of this exclusion, the number of non-BPCI episodes was estimated by subtracting BPCI cases from the total number of cases used in Exclusion Rule 1. BPCI cases for this purpose are ones during the reference year associated with a hospital or a PGP BPCI Model 2 or 4 episode initiator participating in an AMI, PCI, or CABG episode as of January 1, 2016. Such criterion removed an additional 26 MSAs from potential selection.

Third, we proposed to exclude MSAs from possible selection based on whether the number of non-BPCI AMI episodes calculated under Exclusion Rule 2 is less than 50 percent of the total number of AMI episodes calculated under Exclusion Rule 1. We anticipate that some degree of overlap in the BPCI and other EPMs will be mutually helpful. However, we acknowledge that some providers may have concerns that a BPCI Model 2 AMI and PCI participation rate of more than 50 percent may impair the ability of participants in either the EPMs or the BPCI models to succeed in the objectives of their respective initiatives. As a result of this third criterion, 13 additional MSAs were removed from possible selection.

We considered whether there should be an exclusion rule based on the anticipated degree of overlap between the AMI and CABG EPMs and patients who are aligned prospectively to ACOs that are taking two-sided risk, such as ACOs participating in the Next Generation ACO model or Track 3 of the Shared Savings Program. We examined numbers associated with ACOs meeting this status as of May 1, 2016, and this examination did not result in any additional MSAs falling below the threshold of 75 AMI episodes. Consequently, we did not propose any MSA exclusion rule based on the presence of ACOs.

Please refer to Table 1 for the status of each MSA based on these exclusion criteria, available at http://innovation.cms.gov/​initiatives/​epm. After applying these three exclusions, 294 MSAs out of 384 total MSAs are eligible for selection using our proposed selection methodology.

Table 1—MSA Exclusion Rule Status and Eligibility for Selection Status for Inclusion in AMI and CABG EPMs in the Proposed Rule

CBSA_OMBMSA nameRule 1: 75+ AMIsRule 2: 75+ non- BPCI AMIRule 3: <50% BPCI AMIMSA eligible for selection
10180Abilene, TXPassPassPassInclude.
10380Aguadilla-Isabela, PRFailFailPassExclude.
10420Akron, OHPassPassPassInclude.
10500Albany, GAPassPassPassInclude.
10540Albany, ORFailFailPassExclude.
10580Albany-Schenectady-Troy, NYPassPassFailExclude.
10740Albuquerque, NMPassPassPassInclude.
10780Alexandria, LAPassPassPassInclude.
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10900Allentown-Bethlehem-Easton, PA-NJPassPassPassInclude.
11020Altoona, PAPassPassPassInclude.
11100Amarillo, TXPassPassPassInclude.
11180Ames, IAPassPassPassInclude.
11260Anchorage, AKPassPassPassInclude.
11460Ann Arbor, MIPassPassPassInclude.
11500Anniston-Oxford-Jacksonville, ALPassPassPassInclude.
11540Appleton, WIPassPassPassInclude.
11640Arecibo, PRFailFailPassExclude.
11700Asheville, NCPassPassPassInclude.
12020Athens-Clarke County, GAPassPassPassInclude.
12060Atlanta-Sandy Springs-Roswell, GAPassPassPassInclude.
12100Atlantic City-Hammonton, NJPassPassPassInclude.
12220Auburn-Opelika, ALPassPassPassInclude.
12260Augusta-Richmond County, GA-SCPassPassPassInclude.
12420Austin-Round Rock, TXPassPassPassInclude.
12540Bakersfield, CAPassPassFailExclude.
12620Bangor, MEPassPassPassInclude.
12700Barnstable Town, MAPassPassPassInclude.
12940Baton Rouge, LAPassPassPassInclude.
12980Battle Creek, MIFailFailPassExclude.
13020Bay City, MIPassPassPassInclude.
13140Beaumont-Port Arthur, TXPassPassPassInclude.
13220Beckley, WVPassPassPassInclude.
13380Bellingham, WAPassPassPassInclude.
13460Bend-Redmond, ORPassPassPassInclude.
13740Billings, MTPassPassPassInclude.
13780Binghamton, NYPassFailFailExclude.
13820Birmingham-Hoover, ALPassPassPassInclude.
13900Bismarck, NDPassPassPassInclude.
13980Blacksburg-Christiansburg-Radford, VAFailFailPassExclude.
14010Bloomington, ILPassPassPassInclude.
14020Bloomington, INPassPassPassInclude.
14100Bloomsburg-Berwick, PAPassPassPassInclude.
14260Boise City, IDPassPassPassInclude.
14460Boston-Cambridge-Newton, MA-NHPassPassPassInclude.
14500Boulder, COPassFailPassExclude.
14540Bowling Green, KYPassFailFailExclude.
14740Bremerton-Silverdale, WAPassFailFailExclude.
14860Bridgeport-Stamford-Norwalk, CTPassPassPassInclude.
15180Brownsville-Harlingen, TXPassPassPassInclude.
15260Brunswick, GAPassPassPassInclude.
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15500Burlington, NCFailFailPassExclude.
15540Burlington-South Burlington, VTPassPassPassInclude.
15940Canton-Massillon, OHPassPassPassInclude.
15980Cape Coral-Fort Myers, FLPassPassPassInclude.
16020Cape Girardeau, MO-ILPassPassPassInclude.
16060Carbondale-Marion, ILPassPassPassInclude.
16180Carson City, NVPassPassPassInclude.
16220Casper, WYPassFailPassExclude.
16300Cedar Rapids, IAPassPassPassInclude.
16540Chambersburg-Waynesboro, PAPassPassPassInclude.
16580Champaign-Urbana, ILPassPassPassInclude.
16620Charleston, WVPassPassPassInclude.
16700Charleston-North Charleston, SCPassPassPassInclude.
16740Charlotte-Concord-Gastonia, NC-SCPassPassPassInclude.
16820Charlottesville, VAPassPassPassInclude.
16860Chattanooga, TN-GAPassPassPassInclude.
16940Cheyenne, WYPassPassPassInclude.
16980Chicago-Naperville-Elgin, IL-IN-WIPassPassPassInclude.
17020Chico, CAPassPassPassInclude.
17140Cincinnati, OH-KY-INPassPassPassInclude.
17300Clarksville, TN-KYPassPassPassInclude.
17420Cleveland, TNFailFailPassExclude.
17460Cleveland-Elyria, OHPassPassPassInclude.
17660Coeur d'Alene, IDPassPassPassInclude.
17780College Station-Bryan, TXPassPassPassInclude.
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17820Colorado Springs, COPassPassPassInclude.
17860Columbia, MOPassPassPassInclude.
17900Columbia, SCPassPassPassInclude.
17980Columbus, GA-ALPassPassPassInclude.
18020Columbus, INPassPassPassInclude.
18140Columbus, OHPassPassFailExclude.
18580Corpus Christi, TXPassPassPassInclude.
18700Corvallis, ORPassPassPassInclude.
18880Crestview-Fort Walton Beach-Destin, FLPassPassPassInclude.
19100Dallas-Fort Worth-Arlington, TXPassPassPassInclude.
19140Dalton, GAPassFailFailExclude.
19180Danville, ILFailFailPassExclude.
19300Daphne-Fairhope-Foley, ALPassPassPassInclude.
19340Davenport-Moline-Rock Island, IA-ILPassPassPassInclude.
19380Dayton, OHPassPassPassInclude.
19460Decatur, ALFailFailPassExclude.
19500Decatur, ILPassPassPassInclude.
19660Deltona-Daytona Beach-Ormond Beach, FLPassPassPassInclude.
19740Denver-Aurora-Lakewood, COPassPassPassInclude.
19780Des Moines-West Des Moines, IAPassPassPassInclude.
19820Detroit-Warren-Dearborn, MIPassPassPassInclude.
20020Dothan, ALPassPassPassInclude.
20100Dover, DEPassPassPassInclude.
20220Dubuque, IAPassFailFailExclude.
20260Duluth, MN-WIPassPassPassInclude.
20500Durham-Chapel Hill, NCPassPassPassInclude.
20700East Stroudsburg, PAPassFailPassExclude.
20740Eau Claire, WIPassPassPassInclude.
20940El Centro, CAFailFailFailExclude.
21060Elizabethtown-Fort Knox, KYPassPassPassInclude.
21140Elkhart-Goshen, INPassPassPassInclude.
21300Elmira, NYPassPassPassInclude.
21340El Paso, TXPassPassPassInclude.
21500Erie, PAPassPassPassInclude.
21660Eugene, ORPassPassPassInclude.
21780Evansville, IN-KYPassPassPassInclude.
21820Fairbanks, AKFailFailPassExclude.
22020Fargo, ND-MNPassPassPassInclude.
22140Farmington, NMPassPassPassInclude.
22180Fayetteville, NCPassPassPassInclude.
22220Fayetteville-Springdale-Rogers, AR-MOPassPassPassInclude.
22380Flagstaff, AZFailFailPassExclude.
22420Flint, MIPassPassPassInclude.
22500Florence, SCPassPassPassInclude.
22520Florence-Muscle Shoals, ALPassPassPassInclude.
22540Fond du Lac, WIFailFailPassExclude.
22660Fort Collins, COPassPassPassInclude.
22900Fort Smith, AR-OKPassPassFailExclude.
23060Fort Wayne, INPassPassPassInclude.
23420Fresno, CAPassPassPassInclude.
23460Gadsden, ALPassPassPassInclude.
23540Gainesville, FLPassPassPassInclude.
23580Gainesville, GAPassPassPassInclude.
23900Gettysburg, PAFailFailPassExclude.
24020Glens Falls, NYFailFailPassExclude.
24140Goldsboro, NCFailFailPassExclude.
24220Grand Forks, ND-MNPassPassPassInclude.
24260Grand Island, NEFailFailPassExclude.
24300Grand Junction, COPassPassPassInclude.
24340Grand Rapids-Wyoming, MIPassPassPassInclude.
24420Grants Pass, ORFailFailPassExclude.
24500Great Falls, MTFailFailPassExclude.
24540Greeley, COPassPassPassInclude.
24580Green Bay, WIPassPassPassInclude.
24660Greensboro-High Point, NCPassPassPassInclude.
24780Greenville, NCPassPassPassInclude.
24860Greenville-Anderson-Mauldin, SCPassPassPassInclude.
25020Guayama, PRFailFailPassExclude.
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25060Gulfport-Biloxi-Pascagoula, MSPassPassPassInclude.
25180Hagerstown-Martinsburg, MD-WVPassFailFailExclude.
25220Hammond, LAFailFailPassExclude.
25260Hanford-Corcoran, CAFailFailPassExclude.
25420Harrisburg-Carlisle, PAPassPassPassInclude.
25500Harrisonburg, VAPassFailFailExclude.
25540Hartford-West Hartford-East Hartford, CTPassPassPassInclude.
25620Hattiesburg, MSPassPassPassInclude.
25860Hickory-Lenoir-Morganton, NCPassPassPassInclude.
25940Hilton Head Island-Bluffton-Beaufort, SCPassPassPassInclude.
26140Homosassa Springs, FLPassPassPassInclude.
26300Hot Springs, ARPassPassPassInclude.
26380Houma-Thibodaux, LAPassPassPassInclude.
26420Houston-The Woodlands-Sugar Land, TXPassPassPassInclude.
26580Huntington-Ashland, WV-KY-OHPassPassPassInclude.
26620Huntsville, ALPassPassPassInclude.
26820Idaho Falls, IDPassPassPassInclude.
26900Indianapolis-Carmel-Anderson, INPassPassPassInclude.
26980Iowa City, IAPassPassPassInclude.
27060Ithaca, NYFailFailPassExclude.
27100Jackson, MIPassPassPassInclude.
27140Jackson, MSPassPassPassInclude.
27180Jackson, TNPassFailFailExclude.
27260Jacksonville, FLPassPassPassInclude.
27340Jacksonville, NCFailFailPassExclude.
27500Janesville-Beloit, WIPassPassPassInclude.
27620Jefferson City, MOPassPassPassInclude.
27740Johnson City, TNPassFailFailExclude.
27780Johnstown, PAPassPassPassInclude.
27860Jonesboro, ARPassPassPassInclude.
27900Joplin, MOPassPassPassInclude.
27980Kahului-Wailuku-Lahaina, HIFailFailPassExclude.
28020Kalamazoo-Portage, MIPassPassPassInclude.
28100Kankakee, ILPassPassPassInclude.
28140Kansas City, MO-KSPassPassPassInclude.
28420Kennewick-Richland, WAPassPassPassInclude.
28660Killeen-Temple, TXPassPassPassInclude.
28700Kingsport-Bristol-Bristol, TN-VAPassPassPassInclude.
28740Kingston, NYFailFailPassExclude.
28940Knoxville, TNPassPassPassInclude.
29020Kokomo, INFailFailPassExclude.
29100La Crosse-Onalaska, WI-MNPassPassPassInclude.
29180Lafayette, LAPassPassPassInclude.
29200Lafayette-West Lafayette, INPassPassPassInclude.
29340Lake Charles, LAPassPassPassInclude.
29420Lake Havasu City-Kingman, AZPassPassPassInclude.
29460Lakeland-Winter Haven, FLPassPassPassInclude.
29540Lancaster, PAPassFailFailExclude.
29620Lansing-East Lansing, MIPassPassPassInclude.
29700Laredo, TXPassFailPassExclude.
29740Las Cruces, NMPassPassPassInclude.
29820Las Vegas-Henderson-Paradise, NVPassPassPassInclude.
29940Lawrence, KSFailFailPassExclude.
30020Lawton, OKPassPassPassInclude.
30140Lebanon, PAPassFailPassExclude.
30300Lewiston, ID-WAFailFailPassExclude.
30340Lewiston-Auburn, MEPassPassPassInclude.
30460Lexington-Fayette, KYPassPassPassInclude.
30620Lima, OHPassPassPassInclude.
30700Lincoln, NEPassPassPassInclude.
30780Little Rock-North Little Rock-Conway, ARPassPassPassInclude.
30860Logan, UT-IDFailFailPassExclude.
30980Longview, TXPassPassPassInclude.
31020Longview, WAFailFailPassExclude.
31080Los Angeles-Long Beach-Anaheim, CAPassPassPassInclude.
31140Louisville/Jefferson County, KY-INPassPassPassInclude.
31180Lubbock, TXPassPassPassInclude.
31340Lynchburg, VAPassPassPassInclude.
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31420Macon, GAPassPassPassInclude.
31460Madera, CAFailFailPassExclude.
31540Madison, WIPassPassPassInclude.
31700Manchester-Nashua, NHPassPassPassInclude.
31740Manhattan, KSFailFailPassExclude.
31860Mankato-North Mankato, MNFailFailPassExclude.
31900Mansfield, OHPassPassPassInclude.
32420Mayagüez, PRFailFailPassExclude.
32580McAllen-Edinburg-Mission, TXPassPassFailExclude.
32780Medford, ORPassPassPassInclude.
32820Memphis, TN-MS-ARPassPassPassInclude.
32900Merced, CAFailFailPassExclude.
33100Miami-Fort Lauderdale-West Palm Beach, FLPassPassPassInclude.
33140Michigan City-La Porte, INPassPassPassInclude.
33220Midland, MIPassPassPassInclude.
33260Midland, TXPassFailPassExclude.
33340Milwaukee-Waukesha-West Allis, WIPassPassPassInclude.
33460Minneapolis-St. Paul-Bloomington, MN-WIPassPassPassInclude.
33540Missoula, MTPassPassPassInclude.
33660Mobile, ALPassPassPassInclude.
33700Modesto, CAPassPassPassInclude.
33740Monroe, LAPassPassPassInclude.
33780Monroe, MIPassPassPassInclude.
33860Montgomery, ALPassPassPassInclude.
34060Morgantown, WVPassPassPassInclude.
34100Morristown, TNFailFailPassExclude.
34580Mount Vernon-Anacortes, WAPassFailPassExclude.
34620Muncie, INPassPassPassInclude.
34740Muskegon, MIPassPassPassInclude.
34820Myrtle Beach-Conway-North Myrtle Beach, SC-NCPassPassPassInclude.
34900Napa, CAPassFailFailExclude.
34940Naples-Immokalee-Marco Island, FLPassPassPassInclude.
34980Nashville-Davidson—Murfreesboro—Franklin, TNPassPassPassInclude.
35100New Bern, NCPassPassPassInclude.
35300New Haven-Milford, CTPassPassPassInclude.
35380New Orleans-Metairie, LAPassPassPassInclude.
35620New York-Newark-Jersey City, NY-NJ-PAPassPassPassInclude.
35660Niles-Benton Harbor, MIPassPassPassInclude.
35840North Port-Sarasota-Bradenton, FLPassPassPassInclude.
35980Norwich-New London, CTPassPassPassInclude.
36100Ocala, FLPassPassFailExclude.
36140Ocean City, NJFailFailPassExclude.
36220Odessa, TXPassPassPassInclude.
36260Ogden-Clearfield, UTPassPassPassInclude.
36420Oklahoma City, OKPassPassPassInclude.
36500Olympia-Tumwater, WAPassPassPassInclude.
36540Omaha-Council Bluffs, NE-IAPassPassPassInclude.
36740Orlando-Kissimmee-Sanford, FLPassPassFailExclude.
36780Oshkosh-Neenah, WIFailFailPassExclude.
36980Owensboro, KYPassPassPassInclude.
37100Oxnard-Thousand Oaks-Ventura, CAPassPassFailExclude.
37340Palm Bay-Melbourne-Titusville, FLPassPassPassInclude.
37460Panama City, FLPassPassPassInclude.
37620Parkersburg-Vienna, WVPassPassPassInclude.
37860Pensacola-Ferry Pass-Brent, FLPassPassPassInclude.
37900Peoria, ILPassPassPassInclude.
37980Philadelphia-Camden-Wilmington, PA-NJ-DE-MDPassPassPassInclude.
38060Phoenix-Mesa-Scottsdale, AZPassPassPassInclude.
38220Pine Bluff, ARFailFailPassExclude.
38300Pittsburgh, PAPassPassPassInclude.
38340Pittsfield, MAPassFailPassExclude.
38540Pocatello, IDFailFailPassExclude.
38660Ponce, PRFailFailPassExclude.
38860Portland-South Portland, MEPassPassPassInclude.
38900Portland-Vancouver-Hillsboro, OR-WAPassPassPassInclude.
38940Port St. Lucie, FLPassPassPassInclude.
39140Prescott, AZPassPassPassInclude.
39300Providence-Warwick, RI-MAPassPassPassInclude.
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39340Provo-Orem, UTPassPassPassInclude.
39380Pueblo, COPassPassPassInclude.
39460Punta Gorda, FLPassPassPassInclude.
39540Racine, WIFailFailPassExclude.
39580Raleigh, NCPassPassPassInclude.
39660Rapid City, SDPassPassPassInclude.
39740Reading, PAPassPassPassInclude.
39820Redding, CAPassPassPassInclude.
39900Reno, NVPassPassPassInclude.
40060Richmond, VAPassPassPassInclude.
40140Riverside-San Bernardino-Ontario, CAPassPassPassInclude.
40220Roanoke, VAPassPassPassInclude.
40340Rochester, MNPassPassPassInclude.
40380Rochester, NYPassPassPassInclude.
40420Rockford, ILPassPassPassInclude.
40580Rocky Mount, NCPassPassPassInclude.
40660Rome, GAPassPassPassInclude.
40900Sacramento—Roseville—Arden-Arcade, CAPassPassPassInclude.
40980Saginaw, MIPassPassPassInclude.
41060St. Cloud, MNPassPassPassInclude.
41100St. George, UTPassPassPassInclude.
41140St. Joseph, MO-KSPassPassPassInclude.
41180St. Louis, MO-ILPassPassPassInclude.
41420Salem, ORPassPassPassInclude.
41500Salinas, CAPassPassPassInclude.
41540Salisbury, MD-DEPassPassPassInclude.
41620Salt Lake City, UTPassPassPassInclude.
41660San Angelo, TXPassPassPassInclude.
41700San Antonio-New Braunfels, TXPassPassFailExclude.
41740San Diego-Carlsbad, CAPassPassPassInclude.
41860San Francisco-Oakland-Hayward, CAPassPassPassInclude.
41900San Germán, PRFailFailPassExclude.
41940San Jose-Sunnyvale-Santa Clara, CAPassPassPassInclude.
41980San Juan-Carolina-Caguas, PRFailFailPassExclude.
42020San Luis Obispo-Paso Robles-Arroyo Grande, CAPassPassPassInclude.
42100Santa Cruz-Watsonville, CAPassFailFailExclude.
42140Santa Fe, NMPassPassPassInclude.
42200Santa Maria-Santa Barbara, CAPassPassPassInclude.
42220Santa Rosa, CAPassPassPassInclude.
42340Savannah, GAPassPassPassInclude.
42540Scranton—Wilkes-Barre—Hazleton, PAPassPassPassInclude.
42660Seattle-Tacoma-Bellevue, WAPassPassPassInclude.
42680Sebastian-Vero Beach, FLPassPassPassInclude.
42700Sebring, FLPassPassPassInclude.
43100Sheboygan, WIFailFailPassExclude.
43300Sherman-Denison, TXPassPassPassInclude.
43340Shreveport-Bossier City, LAPassPassPassInclude.
43420Sierra Vista-Douglas, AZPassFailFailExclude.
43580Sioux City, IA-NE-SDPassPassPassInclude.
43620Sioux Falls, SDPassPassPassInclude.
43780South Bend-Mishawaka, IN-MIPassFailFailExclude.
43900Spartanburg, SCPassPassPassInclude.
44060Spokane-Spokane Valley, WAPassPassPassInclude.
44100Springfield, ILPassPassPassInclude.
44140Springfield, MAPassPassFailExclude.
44180Springfield, MOPassPassPassInclude.
44220Springfield, OHFailFailPassExclude.
44300State College, PAFailFailPassExclude.
44420Staunton-Waynesboro, VAPassPassPassInclude.
44700Stockton-Lodi, CAPassPassPassInclude.
44940Sumter, SCFailFailFailExclude.
45060Syracuse, NYPassPassPassInclude.
45220Tallahassee, FLPassPassPassInclude.
45300Tampa-St. Petersburg-Clearwater, FLPassPassPassInclude.
45460Terre Haute, INPassPassPassInclude.
45500Texarkana, TX-ARPassPassFailExclude.
45540The Villages, FLPassPassPassInclude.
45780Toledo, OHPassPassPassInclude.
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45820Topeka, KSPassPassPassInclude.
45940Trenton, NJPassPassPassInclude.
46060Tucson, AZPassPassPassInclude.
46140Tulsa, OKPassPassPassInclude.
46220Tuscaloosa, ALPassPassPassInclude.
46340Tyler, TXPassPassPassInclude.
46520Urban Honolulu, HIPassPassPassInclude.
46540Utica-Rome, NYPassPassPassInclude.
46660Valdosta, GAPassFailPassExclude.
46700Vallejo-Fairfield, CAPassFailFailExclude.
47020Victoria, TXPassPassPassInclude.
47220Vineland-Bridgeton, NJPassFailPassExclude.
47260Virginia Beach-Norfolk-Newport News, VA-NCPassPassFailExclude.
47300Visalia-Porterville, CAPassPassPassInclude.
47380Waco, TXPassPassPassInclude.
47460Walla Walla, WAFailFailPassExclude.
47580Warner Robins, GAPassPassPassInclude.
47900Washington-Arlington-Alexandria, DC-VA-MD-WVPassPassPassInclude.
47940Waterloo-Cedar Falls, IAPassPassPassInclude.
48060Watertown-Fort Drum, NYFailFailPassExclude.
48140Wausau, WIPassPassPassInclude.
48260Weirton-Steubenville, WV-OHPassPassPassInclude.
48300Wenatchee, WAPassPassPassInclude.
48540Wheeling, WV-OHPassPassPassInclude.
48620Wichita, KSPassPassPassInclude.
48660Wichita Falls, TXPassFailFailExclude.
48700Williamsport, PAPassPassPassInclude.
48900Wilmington, NCPassPassPassInclude.
49020Winchester, VA-WVPassPassPassInclude.
49180Winston-Salem, NCPassPassPassInclude.
49340Worcester, MA-CTPassPassPassInclude.
49420Yakima, WAPassPassPassInclude.
49620York-Hanover, PAPassPassPassInclude.
49660Youngstown-Warren-Boardman, OH-PAPassPassPassInclude.
49700Yuba City, CAPassPassPassInclude.
49740Yuma, AZPassPassPassInclude.

The following is a summary of the comments received and our responses.

Comment: The issue of MSA exclusions was a subject raised by a variety of commenters. Commenters expressed concerns with the possibility of the same MSAs being selected for inclusion in both the cardiac EPMs and in the CJR model. Commenters stated that the introduction of 3 new required models simultaneously in MSAs where CJR is still in the early stages of implementation would divert participants' focus from being able to successfully implement CJR and would pose resource allocation challenges. Commenters stated that hospitals have a limited capacity to successfully take on new models and that hospitals could best achieve success when they are allowed to focus on specific projects. Commenters stated that adding too many required models will result in diluted resources given to each model and increased administrative costs to the hospital. One commenter expressed concern that implementing too many models can compromise both the success of the models and patient care. Commenters requested that CMS add an exclusion rule that removes the CJR MSAs from the possibility of selection as a cardiac EPM area.

Response: We acknowledges the concern of CJR participant hospitals with respect to having the capacity and ability to take on the new cardiac and SHFFT episodes in addition to their current model participation. While recognizing the logistical and resource challenges of implementing multiple models simultaneously, CMS believes that there are commonalities between the models that would result in some efficiencies. For example, experiences in CJR with creating gainsharing approaches, analyzing claims feeds, and understanding reconciliation methodologies will be directly transferable to managing the cardiac episodes.

CMS considered the exclusion of CJR MSAs from the possibility of selection as a cardiac EPM. The effect of removing the CJR MSAs was considered relative to a variety of other considerations including the impact of this removal on the remaining MSAs and whether it would create a biased pool due to the disproportionate removal of areas with high episode payments as well as areas with a larger population.

In determining which areas were eligible for selection for CJR, MSAs were required to have at least 400 LEJRs in the reference year. In contrast, the equivalent exclusion rule for the cardiac EPMs requires at least 75 AMI episodes. These two different rules means that the pool of MSAs eligible for selection as a cardiac EPM contains many smaller MSAs who were not eligible for selection in CJR. Removing the CJR MSA would disproportionately remove larger cities from the selection pool and the pool would be artificially weighted towards MSAs with lower numbers of Start Printed Page 235cases. The resulting random selection in this pool would similarly be over-weighted to select smaller areas with lower numbers of episodes.

MSAs were selected for inclusion in CJR by dividing MSAs into quartiles based on the MSA average LEJR episode spending. The likelihood of being selected as a CJR area differed between the quartiles such that MSAs in the least expensive quartile had a 30% chance of selection and MSAs in the most expensive quartile had a 45% chance of selection. Thus, the removal of the CJR MSAs from the cardiac EPM selection pool would disproportionately leave relatively more efficient MSAs eligible for selection and remove relatively inefficient areas. In order to quantify the extent of this potential bias, the impact of removing the CJR areas was examined relative to the average MSA spending for AMI episodes. CJR MSAs represented just 12% of MSAs in the least expensive quartile (9 of 74) but represented 26% of the MSAs in the most expensive quartile (19 of 74).

In summary, because the CJR MSAs were proportionately underweighted for more efficient MSAs, and over weighted for more expensive MSAs with higher LEJR episode payments, their removal resulted in introducing bias which would result in the selection of more small cities as well as more efficient cities. This bias to disproportionally select relatively more efficient MSAs is counter to the overall orientation that these models are most likely to result in cost savings in inefficient areas. Furthermore, CMS anticipates that an increase in the probability of selection in smaller cities may also be problematic to commenters, many of whom expressed concern with the ability of hospitals with few cases to succeed under the model.

CMS further notes that a variety of models and efforts are currently underway with the goal of controlling health care costs. While this presents an operationally challenging situation, CMS hopes to be able to assess the extent to which these different models interact and complement (or compete with) one another. The evaluation of CJR and the EPMs will include a systematic look at hospital experiences in regard to model uptake given their range of prior experience, capabilities, and circumstances.

Comment: One commenter recommended the exclusion of MSAs with less than 20 CABG episodes per quarter rather than basing the exclusionary criteria only on AMI volume episode volume.

Response: We continue to have a strong interest in being able to observe how well EPMs operate in areas with a lower volume of episodes, and, in particular, the consequences of the model for AMI episodes where CABG is not commonly performed or where standard practice is to refer all CABGs outside of the MSA, and consequently, does not find it appropriate to exclude MSAs on the basis of CABG volume.

Comment: One commenter suggested that MSAs with significant penetration of Medicare Advantage Plans and considerable ACO activity be excluded from the possibility of selection. They stated that the models should be implemented in markets with more limited alternative payment and/or managed care activity. They suggested that the selection of MSAs believed to be fully invested in care design efforts would make it challenging to evaluate whether improvements in efficiency were related to the EPMs or associated with these other efforts. The commenter stated that restricting to MSAs with minimal involvement with other APM would ease both administrative burden and allow for better results and more accurate reconciliation.

Response: While including MSAs with experience in APMs may pose challenges to the evaluation in its effort to assess causation, CMS believes that the exclusion of MSAs who may be relatively more experienced in care redesign and thus more likely to be able to achieve success in the models would be undesirable. It would be considered a positive if participant hospitals are able to leverage the knowledge and experience of experts in their areas in order to successfully reduce episode spending in eligible patients. Experience with care management under managed care or within APMs might be one source of expertise from which participant hospitals may wish to draw. The evaluation of EPMs will include an examination of market characteristics and model activity, so as to explore how the overlapping nature of these two factors impacts performance.

Comment: One commenter expressed the concern that some hospitals act as regional referral centers or may otherwise have a large proportion of the beneficiaries they treat who reside outside of the MSA where the hospital is located. They expressed concern that it would be difficult to manage care for these beneficiaries in the post hospital episode period due to this distance. They requested that MSAs with a significant percent of cases coming from out of the state be excluded from the possibility of selection.

Response: We recognize that many hospitals treat patients from a wide catchment area and that this catchment area may possibly extend beyond the MSA. This situation is particularly relevant to the CABG EPM. The management of the beneficiary's recovery in the post hospital period may be a challenge for some providers. Multiple patient characteristics, including the physical distance between the beneficiary and the hospital, will influence both what type of care redesign approach will be most appropriate and the likelihood that the approach taken will result in improved efficiency and quality. While distance may pose a challenge to improving patient coordination, it is one that many providers have successfully undertaken. Many providers, including regional referral centers, have been able to form and maintain relationships with providers outside their communities.

CMS holds that regional referral centers are a critical component of how CAGB episodes are treated and, as such, are an important part of the cardiac EPM and to gaining an understanding of the ability of such participants to manage patient episodes.

Comment: Commenters expressed concern that low-volume hospitals are included in the models and requested that thresholds be added to remove low-volume providers from the model. Commenters stated that lower volume providers are subject to issues of random variation and that the cost and quality experiences observed in these hospitals may not be due to efficiencies and care coordination. They stated that smaller hospitals will be at a disadvantage due to the inability to achieve stability or predictability due to this variation.

Finally, a commenter noted that they believed that minimum number of applicable cases is necessary for a hospitals to perform internal analyses to determine the appropriate strategies to use to successfully re-engineer care. They stated that having a minimum number of cases is a key factor in whether or not a facility can be ready for undertaking bundled payments. Minimal numbers are necessary for generating adequate levels of involvement in potential partners such as physicians and post-acute care providers. The commenter proposed that the definitions of minimal volume used in the payment methodology be used instead as minimal requirements for hospitals to be required to participate in the cardiac EPMs.

Response: We acknowledge the fact that hospitals, particularly low-volume hospitals, may have limited resources to fully engage in care re-design efforts and, due to the low volume, they are Start Printed Page 236much more susceptible to wider episode cost fluctuations. We refer readers to the following sections of this final rule III.D.4.b.(9). of this final rule for a discussion of how target prices for hospitals with low volume are determined and to III.D.7.c.(1). of this final rule for a discussion of low volume hospital protections under the cardiac EPMs.

The inclusion of low-volume hospitals in the EPMs is consistent with the goal of evaluating the impact of bundled payment and care redesign across a broad spectrum of hospitals with varying levels of infrastructure, care redesign experience, market position, and other considerations, and circumstances. We are interested in evaluating the experience of these hospitals in the models as part of our overall desire to see the impact of an episode payment model in providers who would not otherwise choose to participate in a model. We would be concerned that setting a threshold for low volume could result in hospital gaming in order to be below that threshold and thus be excluded from the models.

Similar to the CJR model, the design of the EPMs and the inclusion of low-volume providers within the models reflects our interest in testing and evaluating the impact of a bundled payment approach for these procedures in a variety of circumstances, especially among those hospitals that may not otherwise participate in such a test. The inclusion of these providers allows CMS to better appreciate and understand how the models operate as a general payment approach and its impact across a wide range of hospitals. The impact of EPMs on low-volume hospitals is of great interest to the evaluation of these models.

We acknowledge that providers with low volumes of AMI, CABG, or CJR cases may not find it advantageous to engage in an active way with the EPMs. We expect that low volume providers may decide that their resources are better targeted to other efforts because they do not find the financial incentive present in the EPMs sufficiently strong to cause them to shift their practice patterns. We believe this choice is similar in nature to that made as hospitals decide their overall business strategies and where to focus their attentions.

Final Decision: After consideration of the public comments received, we are finalizing the proposal, without modification, to exclude MSAs that fail one or more of the following rules:

Exclusion Rule 1: Exclude MSAs with fewer than 75 AMI episodes (determined as discussed in section III.C. of this final rule).

Exclusion Rule 2: Exclude MSAs with fewer than 75 non-BPCI AMI episodes in the MSA in the reference year.

Exclusion Rule 3: Exclude MSAs if the number of non-BPCI AMI episodes calculated under Exclusion Rule 2 is less than 50 percent of the total number of AMI episodes calculated under Exclusion Rule 1.

As discussed in section III.B.2. of this final rule, the Burlington Vermont MSA was found to no longer be eligible for possible selection because of the Vermont All-Payer ACO Model. Thus, 293 MSAs out of 384 total MSAs are eligible for the possibility of selection as a cardiac EPM area.

b. Selection Approach

We proposed the selection of 98 MSAs for the cardiac EPMs through the use of simple random selection from the 294 (now 293) eligible MSAs.

Simple random selection is often considered to be an appropriate default approach to experimental design unless there is a compelling reason to depart from it. One common alternative approach is to perform random selection separately within subgroups. Selection within subgroups can be a useful approach to limiting differences between intervention and control groups to improve statistical power or for facilitating over or under sampling to allow the evaluation to examine effects of the intervention on particular types of MSAs or because those types of MSAs are of particular interest for policy reasons.

In CJR, we used a stratified random assignment approach in which we organized MSAs into strata based on MSA population size and historic LEJR episode payments. Under the CJR model, we believed a stratified approach was appropriate due to wide regional variation in prices, primarily associated with the use of post-acute services. The stratified approach served as a means to oversample in higher-expense MSAs as these areas have both the most need for and the most opportunity under the CJR model.

In assessing whether stratification would be proposed for the EPMs, we assessed a variety of factors described later in this section. Absent stratification, the rate at which a particular type of MSA will appear in the sample will be proportional to how often in appears among eligible MSAs. If a particular type of MSA is relatively common, it is likely to occur often enough that we do not need to deliberately over-sample for it. In the end, our analyses did not provide sufficient evidence that it is necessary to create selection subgroups of MSAs to guide the selection approach. As a result, we are proposing to use simple random selection from the entire pool of eligible MSAs.

(1) Factors Considered but Not Used

We considered a variety of possible MSA characteristics for possible use in classifying sub-groups. Though we did consider many of these variables important, we believe that a simple random selection, where warranted, is preferable.

Some of the factors we considered that we are not proposing to use in the selection methodology include the following:

  • Measures associated with AMI-episode and CABG episode wage-adjusted spending, respectively. In considering how to operationalize such measures, we considered a number of alternatives including average total episode spending payments in an MSA, average episode spending associated with the initial hospital stay(s) and average episode spending occurring in the period after discharge from the initial hospital.
  • Measures associated with variation in practice patterns associated with AMI and CABG episodes. In considering how to operationalize this measure, we considered a number of alternatives including the extent to which both an AMI and a CABG episode are associated with having a transfer hospital stay at the beginning of the episode, and the extent to which CABG hospitalizations occur following a hospital transfer from either within or from outside the same MSA.
  • Measures associated with relative market share of providers with respect to AMI and/or CABG episodes, including the presence or absence of regional referral centers and the number of providers with the capacity to perform CABGs or otherwise treat complex cardiac patients.
  • Health care supply measures of providers in the MSA including acute or post-acute bed counts, and number of relevant physician specialties such as cardiologists and cardiothoracic surgeons.
  • MSA-level demographic measures such as: (1) Average income; (2) distributions of population by age, gender or race; (3) percent dually eligible; and (4) percent with specific health conditions or other demographic composition measures.
  • Measures associated with the degree to which a market might be more capable or ready to implement care-redesign activities. Examples of market-Start Printed Page 237level characteristics that might be associated with anticipated ease of implementation include the MSA-level EHR meaningful-use levels, managed-care penetration, ACO penetration, and experience with other bundling efforts.

Though these measures were not proposed to be part of the selection process, we acknowledge that these and other market-level factors may be important to the proper understanding of the evaluation of the impact of EPMs. We intend to consider these and other measures in determining which MSAs are appropriate comparison markets for the evaluation and for possible subgroup analysis or risk-adjustment purposes. The evaluations will include beneficiary-, provider-, and market-level characteristics in how they will examine the performance of the proposed EPMs.

The following is a summary of the comments received and our responses.

Comment: A few commenters expressed general support for the selection approach. Several commenters identified considerations that they believed would increase the likelihood of success in these models and believed that those factors should influence the likelihood of selection.

One commenter believed that the selection methodology used should instead select MSAs where there is unwanted clinical or fiscal variation in care. They stated that the implementation of the cardiac EPMs in these MSAs would be most likely to target patients who would benefit from novel care delivery initiatives. In contrast, another commenter noted that the implementation of the cardiac EPMs in a variety of markets, including those who are relatively more efficient, could help with improving care management/coordination overall.

One commenter mentioned that CMS did not incorporate any MSA-level demographic measures in its selection process, such as distributions of population by age, gender, or race; percent of population dually eligible for Medicare and Medicaid; percent of population with specific health conditions; and other demographic composition measures. They believed these factors vary not only between MSAs, but also by hospitals within an MSA, and could affect a hospital's chances of success in the proposed EPMs.

Response: We appreciate the suggestions of alternative MSA selection criteria and note that we considered whether to disproportionately select higher cost areas. As discussed above, the range of average episode costs between MSAs was relatively narrow and even relatively efficient MSAs would have opportunity for care redesign and increased efficiency under these models. The examination of the distribution of expenses did not seem to indicate that there are substantial pattern of care differences between MSAs that needed to be recognized in the selection methodology.

We acknowledge that demographic factors may indeed influence the ability of hospitals to succeed under the models. However, in creating the EPMs, we are seeking to understand how the models impact costs and quality under a variety of circumstances. We seek to understand if the models work in both more and less challenging circumstances in order to be able to gain an understanding of successes and failures of the episodic payment approach in all types of initiating participants. We did not choose to incorporate MSA level demographics in our selection methodology but instead we are relying on random selection to include MSAs with a variety of circumstances. We did not believe it was necessary to preemptively over-sample areas with a larger percent of vulnerable patients.

Final Decision: After consideration of the public comments received, we are finalizing the proposal, without modification, to select MSAs for inclusion in the cardiac EPMs by simple random selection.

(2) Sample-Size Calculations and the Number of Selected MSAs

Our analyses of the necessary sample size led us to propose the selection of 98 MSAs, to participate in both the AMI and CABG EPMs. At the time of the proposed rule 294 MSAs were eligible for selection out of a total of 384 MSAs. In this section, we discuss the assumptions and modeling that went into our proposal to test these EPMs in 98 MSAs. The discussion of the method of selection of these 98 MSAs is addressed in the following section. In coming to the decision to target 98 MSAs, we are proposing an approach that limits the size of the intervention to the greatest degree possible, while still ensuring that we have sufficient statistical power to reliably evaluate the effects of the EPMs. Going below this threshold would jeopardize our ability to be confident in our results and to be able to generalize from the EPMs to the larger national context.

In calculating the necessary size of the AMI and CABG EPMs, a key consideration was to have sufficient power to be able to detect the desired size impact. The larger the anticipated size of the impact, the fewer MSAs we would have to sample in order to observe it. However, a model sized to be able to only detect large impacts runs the risk of not being able to draw conclusions if the size of the change is less than anticipated. The measure of interest used in estimating sample size requirements for the both the AMI and the CABG EPMs was wage-adjusted total episode spending. The data used for the wage-adjusted total episode spending is the 3-year data pull previously described that covers AMI and CABG episodes with admission dates from July 1, 2012, through December 31, 2014. For the purposes of the sample-size calculation, we aim to be able to reliably identify between a 2-percent and 3-percent reduction in wage-adjusted episode spending after 1 year of experience. We chose this range because those numbers represent the anticipated amount of the discount proposed to apply under various conditions of the AMI and CABG EPMs' implementation.

The next consideration in calculating the necessary sample size is the degree of certainty we will need for the statistical tests that will be performed. In selecting the right sample size, there are two types of errors that need to be considered: “false positives” and “false negatives.” A false positive occurs if a statistical test concludes that a model was successful (that is, saved money) when it in fact was not. A false negative occurs if a statistical test fails to find statistically-significant evidence that the model was successful, when it in fact was successful. In considering the minimum sample size needs of the AMI and CABG EPMs, a standard guideline in the statistical literature suggests calibrating statistical tests to generate no more than a 5-percent chance of a false positive and selecting the sample size to ensure no more than a 20-percent chance of a false negative. In contrast, the proposed sample size for this project was based on a 10-percent chance of a false positive and no more than a 30-percent chance of a false negative in order to minimize reduce sample size requirements to the greatest degree possible.

A third consideration in the sample-size calculation was the appropriate unit of selection and whether it is necessary to base the calculation on the number of MSAs, the number of hospitals, or the number of episodes. We proposed to base the sample size calculation at the MSA level. The proposed EPMs are an example of what is known as a “nested comparative study.” Under a nested comparative study, assignment to an intervention or comparison arms of the study is based on membership in a pre-existing, identifiable group where the groups are Start Printed Page 238not formed at random, but rather through some physical, social, geographic, or other connection among their members. Because these groups are not formed at random, individual members of each group are likely to share important commonalities. In the context of the proposed EPMs, spending and outcomes for patients cared for within a given MSA are relatively similar to one another due to such factors as the existence of common practice or referral patterns, the underlying health in the population, and the availability of providers in an area.

In statistical terms, these commonalities create a positive correlation (called an intra-class correlation) among hospitals or beneficiaries in the same MSA. Due to that intra-class correlation, the variability of any aggregate statistic—such as the estimated difference in outcomes between the intervention and comparison arms of the study—has two components—(1) variability attributable to variation among hospitals or beneficiaries in a given MSA; and (2) variability attributable to differences between MSAs. An accurate power analysis must account for both components of variability.

In determining the necessary sample size, we take into consideration the degree to which commonalities within MSAs exist and the number of independent beneficiaries and hospitals expected to be included in the EPMs within each MSA. As part of this process, we empirically examined the number of beneficiaries, the number of hospitals, and the number of MSAs, as well as the level of correlation in episode payments between each level. Based on this empirical examination, we determined that the correlation was high enough that the degree of variability would be primarily driven by the number of MSAs in the model, indicating that the MSA is the appropriate unit of analysis for the power calculations.

Using the previously mentioned assumptions, a power calculation for AMI was run which indicated that at 98 MSAs we would be able to reliably detect a 3-percent reduction in wage-adjusted episode spending after 1 year with a false-positive rate of 10 percent and a false-negative rate of between 20 percent and 40 percent. We are targeting a false-negative rate of 30 percent. The extent to which this rate can be lowered will depend on the ability of evaluation models to substantially reduce variation through risk adjustment and modeling. We believe it is prudent to choose a sample size where the targeted amount is in the middle of this expected band.

We separately assessed the sample-size needs associated with CABG episodes. At 98 MSAs, we anticipate being able to detect a 2.25-percent reduction in wage-adjusted episode expenditures after 1 year with a false-positive rate of 10 percent and a false-negative rate of between 20-40 percent. The effective number of MSAs where the CABG EPM will be tested will be reduced because approximately 6 percent of eligible MSAs had no CABG episodes in the reference year. However, our power calculations do not lead us to believe we need to increase the sample size based on this fact. The number of CABG MSAs can experience this reduction and maintain equivalent levels of power to the AMI episodes.

The following is a summary of the comments received and our responses.

Comment: One commenter expressed the opinion that the models should be tested in 5 to 10 MSAs rather than be done as a large scale test.

Response: As stated in the proposed rule, we believe that the evidence base related to episode payments is sufficient enough to justify a large scale test and we believe that it is appropriate to size the models so as to be able to generate statistically reliable estimates of the impact as well as to be able to understand how well the models operate in a variety of circumstances.

Final Decision: After consideration of the public comments received, we are finalizing the proposal, without modification, to select 98 MSAs to participate in the cardiac EPMs.

(3) Method of Selecting MSAs

As previously discussed, we are sought to choose 98 MSAs from our pool of eligible MSAs through simple random selection. We proposed to make the selection in the proposed rule using SAS Enterprise Guide 7.1 software to run a computer algorithm SAS Enterprise Guide 7.1 and the computer algorithm used to conduct selection represents an industry-standard for generating advanced analytics and provides a rigorous, standardized tool by which to satisfy the requirements of randomized selection. The key SAS commands employed include a “PROC SURVEYSELECT” statement coupled with the “METHOD=SRS” option used to specify simple random sampling as the sample selection method. A random number seed will be generated using the birthdate of the person executing the program.[39]

We sought comment on our proposal to implement the AMI and CABG models in the selected MSAs, some of which may overlap with MSAs where the CJR and SHFFT models also are being implemented.

The following is a summary of the comments received and our responses.

Comment: Comments were received from multiple sources that expressed that the list of selected MSAs be published as soon as possible to allow for better preparation for the start of the models. One commenter requested that the list of hospitals in the selected areas also be published and that hospitals be given 60 days to comment on its accuracy. Commenters expressed a preference that, in future rule making of a similar nature, the list of selected MSAs be displayed in the proposed rule rather than the final rule to allow for comment by the impacted MSAs and additional preparation time.

Response: We appreciate the suggestion that MSAs and affected providers be published at the time of rulemaking, and will take it under advisement in any future rule. One of the reasons for not selecting MSAs at the time of the proposed rule was to encourage all potentially impacted providers to comment. In addition, we wished to be able to maintain flexibility that would allow for the creation of new exclusion rules to be suggested in the comment period without necessitating the need to re-select MSAs between the proposed and final rules. In order to accommodate the later announcement of impacted MSAs, we proposed a July 1, 2017 model start. This represents a similar amount of time between the CJR MSA announcement and the start of that model as for the announcement of the cardiac EPM MSAs and the finalization of the SHFFT MSAs and the start of those models.

The list of MSAs selected for the cardiac EPM is included in TABLE 2. The list of hospitals identified as in the MSAs selected for the cardiac EPMs can be found at https://innovation.cms.gov/​initiatives/​epm/​. Hospitals believing that they have erroneously been identified as being in a selected area should send an email to epm@cms.hhs.gov within 45 days of the publication of the final rule. Hospitals should include identifying information including the hospital CCN. CMS will periodically review and revise the list of hospitals that meet the requirements for participation in the cardiac EPMs and Start Printed Page 239will update this information on https://innovation.cms.gov/​initiatives/​epm/​.

Final Decision: After consideration of the public comments received, we are finalizing the proposal, without modification. We selected the participating MSAs for the CABG and AMI EPMs through simple random selection. SAS for Windows Version 9.4 software was used to run a computer algorithm designed to randomly select MSAs. SAS for Windows Version 9.4 and the computer algorithm used to conduct selection represents an industry standard for generating advanced analytics and provides a rigorous, standardized tool by which to satisfy the requirements of randomized selection. The key SAS commands employed include a “PROC SURVEYSELECT” statement coupled with the “METHOD=SRS” option used to specify simple random sampling as the sample selection method. The random number seed utilized was 19730609.

The MSAs selected for inclusion are shown in TABLE 2.

Table 2—MSAS Selected To Participate in the Cardiac EPMS

CBSA_OMBMSA nameCJR selected MSA?
10180Abilene, TX
10420Akron, OHyes.
10780Alexandria, LA
10900Allentown-Bethlehem-Easton, PA-NJ
11260Anchorage, AK
12100Atlantic City-Hammonton, NJ
12220Auburn-Opelika, AL
12420Austin-Round Rock, TXyes.
13380Bellingham, WA
13460Bend-Redmond, OR
14020Bloomington, IN
14260Boise City, ID
14460Boston-Cambridge-Newton, MA-NH
15940Canton-Massillon, OH
15980Cape Coral-Fort Myers, FL
16020Cape Girardeau, MO-ILyes.
16300Cedar Rapids, IA
16700Charleston-North Charleston, SC
16860Chattanooga, TN-GA
16980Chicago-Naperville-Elgin, IL-IN-WI
17020Chico, CA
17660Coeur d'Alene, ID
17860Columbia, MOyes.
17900Columbia, SC
17980Columbus, GA-AL
18880Crestview-Fort Walton Beach-Destin, FL
19100Dallas-Fort Worth-Arlington, TX
19300Daphne-Fairhope-Foley, AL
19740Denver-Aurora-Lakewood, COyes.
19780Des Moines-West Des Moines, IA
20100Dover, DE
20500Durham-Chapel Hill, NCyes.
21060Elizabethtown-Fort Knox, KY
21500Erie, PA
21660Eugene, OR
22520Florence-Muscle Shoals, AL
22660Fort Collins, CO
23060Fort Wayne, IN
23580Gainesville, GAyes.
24300Grand Junction, CO
24860Greenville-Anderson-Mauldin, SC
25940Hilton Head Island-Bluffton-Beaufort, SC
26580Huntington-Ashland, WV-KY-OH
26820Idaho Falls, ID
26900Indianapolis-Carmel-Anderson, INyes.
26980Iowa City, IA
27620Jefferson City, MO
27860Jonesboro, AR
27900Joplin, MO
28020Kalamazoo-Portage, MI
28140Kansas City, MO-KSyes.
28420Kennewick-Richland, WA
29100La Crosse-Onalaska, WI-MN
29420Lake Havasu City-Kingman, AZ
29460Lakeland-Winter Haven, FL
29620Lansing-East Lansing, MI
30460Lexington-Fayette, KY
30620Lima, OH
30780Little Rock-North Little Rock-Conway, AR
Start Printed Page 240
31540Madison, WIyes.
31700Manchester-Nashua, NH
32780Medford, OR
32820Memphis, TN-MS-ARyes.
33340Milwaukee-Waukesha-West Allis, WIyes.
33540Missoula, MT
34820Myrtle Beach-Conway-North Myrtle Beach, SC-NC
34980Nashville-Davidson-Murfreesboro-Franklin, TNyes.
35100New Bern, NC
35660Niles-Benton Harbor, MI
36420Oklahoma City, OKyes.
36540Omaha-Council Bluffs, NE-IA
39140Prescott, AZ
39380Pueblo, CO
39580Raleigh, NC
39660Rapid City, SD
39740Reading, PAyes.
39900Reno, NV
40060Richmond, VA
40220Roanoke, VA
41100St. George, UT
41140St. Joseph, MO-KS
41420Salem, OR
41500Salinas, CA
42340Savannah, GA
43300Sherman-Denison, TX
44060Spokane-Spokane Valley, WA
44100Springfield, IL
46060Tucson, AZ
46140Tulsa, OK
46220Tuscaloosa, ALyes.
46540Utica-Rome, NY
47940Waterloo-Cedar Falls, IA
48300Wenatchee, WA
48620Wichita, KSyes.
48900Wilmington, NC
49180Winston-Salem, NC
49660Youngstown-Warren-Boardman, OH-PA
49740Yuma, AZ

C. Episode Definition for the EPMs

1. Background

Episode payment models incentivize improvement in the coordination and quality of care experienced by a Medicare beneficiary, as well as episode efficiency, by bundling payment for services furnished to the beneficiary for specific clinical conditions over a defined period of time. A key model design feature is the definition of the episodes included in the model. The definition of episodes has two significant dimensions—(1) a clinical dimension that describes which clinical conditions and associated services are included in the episode; and (2) a time dimension that describes the beginning, middle, and end of the episode.

2. Overview of Three Episode Payment Models

We proposed three new EPMs—AMI, CABG, and SHFFT—that each begin with a hospitalization and extend 90 days after hospital discharge. The proposed AMI model includes beneficiaries discharged under an AMI MS-DRG (280-282), representing admission to an IPPS hospital for AMI that is treated with medical management, or an IPPS admission for a PCI MS-DRG (246-251) with an International Classification of Diseases (ICD)—Clinical Modification (CM) AMI diagnosis code describing an initial AMI diagnosis in the principal or a secondary diagnosis code position.

The proposed CABG model includes beneficiaries discharged under a CABG MS-DRG (231-236), representing an IPPS admission for this coronary revascularization procedure irrespective of AMI diagnosis.

The proposed SHFFT model includes beneficiaries discharged under hip and femur procedures except major joint MS-DRG (480-482), representing an IPPS admission for a hip fixation procedure in the setting of a hip fracture.

One reason these particular episodes were chosen for the proposed EPMs is that the initiation of treatment for each of the three clinical conditions included in an episode occurs almost exclusively during a hospitalization, which we believe would minimize the possibility of shifting beneficiaries in or out of the EPM based on the site-of-service where treatment is initiated. The majority of evaluation and treatment for AMI is performed in the inpatient hospital setting, commonly beginning when beneficiaries present with symptoms to the emergency department of a hospital. Patients experiencing an AMI are almost uniformly admitted to the hospital for further evaluation and management.[40] Although PCIs can be performed and Start Printed Page 241may be paid by Medicare in the hospital outpatient setting in addition to being performed during a hospitalization, the majority of patients experiencing an AMI who are candidates for procedural revascularization receive PCI procedures during the initial hospitalization for AMI where evaluation also occurs.[41] CABG procedures are furnished exclusively in the inpatient hospital setting. We note that all of the Current Procedural Terminology (CPT) codes that physicians report for CABG are listed on the hospital Outpatient Prospective Payment System (OPPS) inpatient-only list in Addendum E of the 2017 OPPS final rule with comment period that is posted on the CMS Web site.[42] The hip fixation procedures performed in the SHFFT model also are predominantly furnished in the inpatient hospital setting, and we further note that almost all of the CPT codes that describe these procedures also are on the OPPS inpatient-only list.

Hospitals' ability to identify EPM beneficiaries during the hospitalization that begins the episode (hereinafter the anchor hospitalization) also is an important consideration in developing episode payment models that, like the CJR model, rely upon MS-DRG assignment for IPPS claims following their submission in order to identify beneficiaries for model inclusion. This is especially important for medical management of conditions for which the predictability of the ultimate MS-DRG for the hospitalization is less certain than for surgical or procedural MS-DRGs. AMI represents a relative exception among medical conditions as it is associated with specific clinical and laboratory features that enable hospitals to identify beneficiaries with AMI during the anchor hospitalization whom would likely be included in an AMI episode through their ultimate discharge under an AMI MS-DRG. We note that ICD-CM coding rules allow AMI diagnosis codes in both the primary and secondary position to map to AMI MS-DRGs.[43] In the case of procedural episodes such as CABG, SHFFT, and AMI episodes for beneficiaries treated with PCI, the MS-DRG for the procedure performed would determine the ultimate MS-DRG assignment for the hospitalization unless additional surgeries higher in the MS-DRG hierarchy also are reported.[44] Therefore, we proposed these three EPMs for clinical conditions where MS-DRG assignment is likely to be certain and known during the anchor hospitalization, even though treatment for AMI may involve only medical management. We believe hospitals participating in the proposed EPMs would be able to identify beneficiaries in EPM episodes through their AMI, CABG, and SHFFT episode MS-DRGs during the anchor hospitalization, allowing active coordination of EPM beneficiary care during and after hospitalization.

3. Clinical Dimensions of AMI, CABG, and SHFFT Episodes

As we stated in the CJR Final Rule, we believe that a straightforward approach for hospitals and other providers to identify Medicare beneficiaries in these episode payment models would be important for the care redesign that is required for EPM success, as well as for operationalization of the proposed payment and other EPM policies (80 FR 73299). Therefore, as in the CJR model, we proposed that an EPM episode would be initiated by an admission to an acute care hospital for an anchor hospitalization paid under EPM-specific MS-DRGs under the IPPS (80 FR 73300).

The following is a summary of the comments received and our responses:

Comment: Many commenters expressed support for CMS' proposal to use many of the BPCI Model 2 and CJR episode parameters to define EPM episodes because of the provider experience to date with these design features and their applicability to the clinical conditions that are the basis of the EPMs. Several commenters specifically recommended that CMS begin EPM episodes with emergency department care because including beneficiaries with emergency department care and observation status would include all beneficiaries with the clinical conditions that were included in the proposed EPMs. While the commenters acknowledged that many beneficiaries with the clinical conditions in the EPMs would be admitted to the hospital, they believe there is a subset of beneficiaries for whom care could solely be furnished through emergency department and observation care. Other commenters requested clarification on how a beneficiary treated in observation status and then transferred to another hospital would be handled under the EPMs because the beneficiary would never be assigned to an MS-DRG at the initial treating hospital. The commenters believe that a hospital could use this strategy to avoid including high-cost beneficiaries in the EPMs. The commenters stated that patient stabilization is critical and the resources needed to care for the beneficiary should not dictate observation status versus inpatient status due to a hospital participation in an EPM. Several commenters encouraged CMS to provide additional guidance on instances when the beneficiary is never admitted at the initial hospital, but rather transferred from the emergency department or observation status to another hospital for AMI or CABG.

One commenter recommended that CMS modify the Episode Grouper for Medicare (EGM) which, to date, has only been considered for resource-use measurement, to implement advanced APMs designed around EPMs to correct problems the commenter believes would be present in the proposed EPMs that would rely on MS-DRGs, including limited severity adjustment, the limits on who can bear risk, and the inadequate incentives against complications. The commenter claimed that an acute care bundle in the hospital setting is important, but so is managing chronic conditions in an outpatient setting (which often lead to acute inpatient episodes). While contracting for condition episodes and procedure episodes separately is feasible and creates a different level of accountability, the commenter stated that it is even more desirable to consider contracting for the whole patient; that is, procedure episodes should be considered downstream events deeply tied to the effective management of condition episodes. The commenter stated that the nested construction logic of the EGM was designed with this in mind.

A commenter contended that the proposed structure for the new EPM episodes would continue to reward providers for complications. Payments would be based on the beneficiary's assigned MS-DRG, so a complication of care could move a low risk patient from a lower paying MS-DRG to a higher paying MS-DRG that could result in a Start Printed Page 242significant increase in revenue. The commenter believes the problem is further compounded because it penalizes providers who invest in quality improvement. Providers that invest time and resources into care redesign that successfully reduces complications that influence MS-DRG assignment do not share in the savings that they generate through their efforts. The commenter stated that the MS-DRG payment categorization creates a substantial financial incentive to avoid quality improvement in favor of focusing on improving the management of adverse events after they occur. The commenters stated that the benefit of using MS-DRG assignment in the EPMs could be preserved without the perverse incentive if the payment group for the episode were assigned based on an MS-DRG assignment that depended only on diagnosis codes that were present on admission.

Another commenter claimed that MS-DRGs do not map well to care delivered in post-acute care settings, especially for chronically ill beneficiaries. MS-DRGs, in identifying diagnoses and procedures delivered in the acute care hospital setting, often do not relate to the skilled nursing needs, functional limitations, or therapy/rehabilitation focused on in post-acute care settings after hospital discharge. Additionally, the commenter pointed out that MS-DRGs do not take into account a patient's functional status, which is an important indicator for determining a patient's post-acute care needs. The commenter recommended CMS to develop a more robust risk adjustment methodology under the EPMs, because MS-DRGs alone are not sufficient for medically complex patients. For those providers caring for the sickest beneficiaries, the commenter recommended that CMS create separate bundled payments for seriously ill beneficiaries, as defined by something other than MS-DRG.

Response: We appreciate the support that many commenters expressed for our proposal to identify Medicare beneficiaries included in the proposed EPMs by their admission to an acute care hospital for a hospitalization paid under EPM-specific MS-DRGs under the IPPS. We and many stakeholders have gained substantial experience with bundled payment models of a similar design under BPCI Model 2 and the CJR model. We agree with the many commenters who stressed the importance of EPM participants being able to identify EPM beneficiaries on a timely basis as early as possible during the episodes in order to maximize the opportunities for care redesign to improve EPM episode quality and reduce costs. As we discussed in the proposed rule (81 FR 50813), we believe that a straightforward approach to EPM model design that would allow hospitals and other providers to identify Medicare beneficiaries in these episode payment models would be important for the care redesign that is required for EPM success, as well as for operationalization of the proposed payment and other EPM policies, and agree with many commenters that our proposed design of the EPMs meets these objectives.

While we acknowledge the perspective of some commenters that a small number of beneficiaries with clinical conditions that are the focus of the EPMs, especially AMI, may be appropriately treated in the emergency department with observation status without hospital admission, we believe it is infeasible to include these beneficiaries in the EPMs due to complex operational challenges for CMS and EPM participants and model design parameters, such as appropriate pricing in the context of varied hospital cardiac care capabilities. We refer to section III.C.4.a.(1) of this final rule for further discussion of comments on outpatient treatment scenarios and our responses. We refer to section III.C.4.a.(5) of this final rule for discussion of outpatient-to-inpatient (o-i) transfer scenarios for beneficiaries with AMI, including when AMI episodes would begin and to which hospital the episode would be attributed. We agree with the commenters that patient stabilization of serious conditions such as AMI in the emergency department of a hospital is critical and the resources needed to care for the beneficiary should not dictate observation status versus inpatient status due to a hospital participation in an EPM. We believe our final EPM policies, including our AMI model transfer policies, reflect our commitment to ensuring that the initial care of beneficiaries with urgent conditions such as those targeted by the EPMs is not influenced by hospital participation in an EPM. We also refer to sections III.G.4. through 6. of this final rule for discussion of our monitoring plans to detect changing patterns of care under the EPMs, including practices that could indicate that medically complex beneficiaries who otherwise would be expected to be in high-cost EPM episodes do not initiate EPM episodes.

While we have an interest in future condition-specific episode payment models and sought public comment on this topic in the proposed rule (81 FR 50810 through 50811), we have not identified long-term management of beneficiaries with chronic disease as the focus of these EPMs, which are proposed to extend 90 days post-hospital discharge from an anchor hospitalization for beneficiaries who have cardiac or orthopedic surgery or a cardiac event.

As one commenter pointed out, MS-DRGs currently provide higher payments for beneficiaries who experience complications during the inpatient hospitalization and we appreciate the interest of the commenter in EPMs that encourage improvement in quality of care during the anchor hospitalization for which hospitals would be rewarded. However, given the operational challenges that EPMs that require participation present for EPM participants and CMS, it would be infeasible in models like the EPMs to regroup beneficiaries to different MS-DRGs for setting EPM episode prices based only on their diagnoses that were present on admission to address underlying payment incentives under the IPPS. Instead, the EPMs focus EPM participants on care redesign to improve the quality of care for EPM beneficiaries that may achieve internal hospital cost savings for the anchor hospitalization and/or savings to Medicare in the post-hospital discharge period. We expect that some of those care redesign strategies that improve care coordination for EPM beneficiaries may have spill-over effects that result in reduced in-hospital complications as well.

Finally, we refer to section III.D.4.b.(2) of this final rule for a discussion of risk adjustment under the EPMs. Because all EPM participants care for some seriously ill beneficiaries, some hospitals may disproportionately care for such beneficiaries due to their service area, referral patterns, and/or specialized hospital capacity. We believe appropriate risk adjustment of EPM episode prices, particularly by performance year 3 when the pricing blend shifts to reflect predominantly regional pricing, addresses the commenter's concern that led them to recommend that CMS create separate bundled payments for seriously ill beneficiaries as defined by something other than MS-DRG for those providers caring for the sickest patients. While we agree with the commenter that MS-DRGs only reflect the resources for the anchor hospitalization and, therefore, do not necessarily reflect the post-acute care resources required by a beneficiary, we note that the IPPS payment for the anchor hospitalization is included in the EPM episode and constitutes, on average, a significant percentage of the EPM episode spending, specifically 33 Start Printed Page 243percent of AMI episode spending for episodes anchored by AMI MS-DRGs; 58 percent of AMI episode spending for episodes anchored by PCI MS-DRGs; 63 percent of CABG episode spending; and 27 percent of SHFFT episode spending.[45] Thus, we do not believe it is necessary or appropriate to create separate bundled payments for seriously ill beneficiaries defined by a grouping other than MS-DRG, because the specific MS-DRG of the anchor hospitalization determines a significant percentage of spending for the episode for EPM beneficiaries, including seriously ill beneficiaries.

Comment: Several commenters expressed concern about EPM participants' ability to identify EPM beneficiaries on a timely basis. The commenters explained that the final MS-DRGs assigned to the beneficiary's hospitalization is not generated until several days post-discharge, thus impacting the EPM participant's ability to predict whether a beneficiary is in or out of an EPM episode at the time the beneficiary is in the hospital. One commenter added that because the MS-DRG is assigned to a patient's case upon discharge, it may not be predictable during a patient's treatment prior to discharge, making it difficult for providers to implement care redesign targeted to a patient population identified by MS-DRGs. This commenter believes that the MS-DRGs assigned to a patient's stay are often inaccurate or otherwise inappropriate for the patient's diagnosis, making the classification an inappropriate basis for episode triggers, budgets, quality measurement and adjusting for underlying patient illnesses. Another commenter reported on their BPCI Model 2 experience where 70 percent of model beneficiaries were elective admissions, and 30 percent presented to the hospital through the emergency department. Given that the proposed EPMs would be more similar to the commenter's experience with emergency department admissions, the commenter expressed concern that the EPMs would limit an EPM participant's ability to intervene with the beneficiary prior to admission and skepticism that the participant could even identify the beneficiary as being eligible for the EPM prior to hospital discharge. The commenter added that with very sick patients, hospitals often must wait for the appropriate coding to confirm which MS-DRG the patient ultimately is assigned to prior to billing.

Several commenters further stated that precedence rules among different models and programs can touch the same beneficiary, and stated that hospital case managers, nurses, and administrators cannot know at admission or even before discharge which model the beneficiary may already be enrolled in or attributed to based on prior utilization.

Response: We appreciate the interest of the commenters in the timely identification of EPM beneficiaries that would allow EPM participants the most significant opportunity to influence the care of these beneficiaries to improve the quality and reduce the cost of EPM episodes. While we appreciate that many EPM beneficiaries would be admitted to the hospital on an emergency basis for treatment of hip fracture, AMI, or CABG surgery under circumstances that would not allow EPM participants to engage these beneficiaries prior to hospital admission, we believe that our proposals for the clinical conditions in the EPMs make identification of most EPM beneficiaries unambiguous while they are still in the hospital, without a need for hospitals to wait for coding following discharge to confirm which MS-DRG the patient ultimately is assigned to for the hospitalization.

As we stated in the proposed rule (81 FR 50829), we agree with the commenters that hospitals' ability to identify EPM beneficiaries during the anchor hospitalization is an important consideration in developing episode payment models that rely upon MS-DRG assignment for IPPS claims following their submission in order to identify beneficiaries for model inclusion. We believe the identification of SHFFT and CABG model beneficiaries should be straightforward for EPM participants because the relevant MS-DRG assignments directly result from the surgical procedure performed during the hospitalization and would, therefore, be accurate. However, identification of beneficiaries for a model focused on medical management of conditions may be more challenging because the predictability of the ultimate MS-DRG for the hospitalization is less certain than for surgical or procedural MS-DRGs. We believe that AMI represents a relative exception among medical conditions as it is associated with specific clinical and laboratory features that should enable hospitals to identify beneficiaries with AMI during the anchor hospitalization who are treated medically or with PCI and who would likely be included in an AMI episode through their ultimate discharge under an AMI MS-DRG. Therefore, we proposed these three EPMs for clinical conditions where MS-DRG assignment is likely to be certain and known during the anchor hospitalization, even though treatment for AMI may involve only medical management. We believe hospitals participating in the proposed EPMs would generally be able to identify beneficiaries in EPM episodes through their AMI, CABG, and SHFFT episode MS-DRGs during the anchor hospitalization, allowing active coordination of EPM beneficiary care during and after hospitalization.

We refer to section III.D.6.c. of this final rule for discussion of issues related to beneficiaries whose care could be included in the EPMs as well as other CMS models and programs.

Comment: One commenter expressed appreciation for CMS' intent to not have overlap between the same care for a beneficiary in episodes under more than one EPM. The commenter sought clarification about how CMS would attribute episodes that originate with one EPM and then cross over into another EPM. The commenter provided an example of a beneficiary with a surgical hip fracture who has an AMI during the hospitalization that is coded in a secondary position, yet the precipitating event for the hip fracture was through syncope and a fall.

Response: When an IPPS claim is submitted to Medicare for payment of a beneficiary's hospitalization, the claim is grouped to an MS-DRG using the MS-DRG grouper, a software that uses ICD-10-CM diagnosis and procedures codes submitted on the hospital claim to assign an acute hospital stay to a particular MS-DRG. Claims are assigned to an MS-DRG using the grouper effective for the discharge date of the claim. Under the EPMs, regardless of the chronology and causality of events that led to the diagnoses and treatment during the hospitalization, we would rely upon the MS-DRG (and the presence of an ICD-10-CM AMI diagnosis code on the claim in the case of a PCI MS-DRG) assigned to the claim following hospital discharge to initiate an EPM episode and define the EPM to which the beneficiary's care would be attributed. In the commenter's example in which a patient is admitted to a hospital for surgical hip fracture fixation and has an AMI during the hospitalization, the MS-DRG grouper would assign a SHFFT MS-DRG to that hospitalization. Therefore, the beneficiary would initiate a SHFFT episode if the hospital is a SHFFT model participant. Regardless of Start Printed Page 244whether or not the hospital is an AMI model participant, no AMI episode would be initiated.

Final Decision: After consideration of the public comments received, we are finalizing the proposal to initiate EPM episodes by an admission to an acute care hospital for an anchor hospitalization paid under EPM-specific MS-DRGs under the IPPS, without modification. We refer to section III.D.4.a.(5) of this final rule for a discussion of outpatient-to-inpatient and inpatient-to-inpatient transfers between hospitals under the AMI model. We refer to section III.D.6.c of this final rule for further discussion of issues related to overlap of beneficiaries in other Innovation Center models and CMS programs.

a. Definition of the Clinical Conditions Included in AMI, CABG, and SHFFT Episodes

(1) AMI (Medical Management and PCI) Model

We proposed the AMI model to incentivize improvements in the coordination and quality of care, as well as episode efficiency, for beneficiaries treated for AMI with either medical management or coronary artery revascularization with PCI. We proposed to define beneficiary inclusion in the AMI model by discharge under an AMI MS-DRG (280-282), representing those individuals admitted with AMI who receive medical therapy but no revascularization, and discharge under a PCI MS-DRG (246-251) with an ICD-10-CM diagnosis code of AMI on the IPPS claim for the anchor hospitalization in the principal or secondary diagnosis code position. We note that we would use AMI International Classification of Diseases, 9th revision clinical modification (ICD-9-CM) diagnosis codes to identify historical episodes for setting AMI model-episode benchmark prices in the early performance years of the AMI model. The Uniform Hospital Discharge Data Set (UHDDS) defines the principal diagnosis for hospitalization as “that condition established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care” and other (secondary) diagnoses as “all conditions that coexist at the time of admission, that develop subsequently, or that affect the treatment received and/or the length of stay. Diagnoses that relate to an earlier episode which have no bearing on the current hospital stay are to be excluded.” [46] We proposed to include those beneficiaries discharged under PCI MS-DRGs with an AMI ICD-10-CM diagnosis code in the principal or secondary diagnosis code position to ensure that beneficiaries with an AMI that is not chiefly responsible for occasioning the hospitalization are included in the AMI model because the AMI itself is likely to substantially influence the hospitalization and post-discharge recovery (and be responsible for leading to the PCI) even if an AMI ICD-10-CM diagnosis code is reported in a secondary diagnosis code position. For example, a beneficiary receiving a PCI with an ICD-10-CM diagnosis code of pneumonia in the principal position and an AMI ICD-10-CM diagnosis code in a secondary position would be included in the AMI model, which would be appropriate because the course of the beneficiary's recovery and management during the AMI episode would be primarily associated with the AMI and PCI. While pneumonia is typically an acute illness that may sometimes result in hospitalization, underlying chronic conditions may increase the likelihood that a beneficiary would be hospitalized for pneumonia, a condition that is more commonly treated on an outpatient basis. AMI in association with a hospitalization for pneumonia would represent a sentinel event for the beneficiary resulting from underlying CAD that signals a need for a heightened focus on medical management of CAD and other beneficiary risk factors for future cardiac events that may themselves have increased the beneficiary's risk for pneumonia. Thus, care coordination and management in the 90 days post-hospital discharge for these beneficiaries would be focused on managing CAD and the beneficiary's cardiac function after the AMI.

In the proposed rule (81 FR 50830), we acknowledged that this proposal to identify beneficiaries included in the AMI model through a combination of MS-DRGs and AMI ICD-CM diagnosis codes represented a modification of the CJR episode definition methodology. The CJR model defined episodes based on MS-DRGs alone, specifically MS-DRG 469 (Major joint replacement or reattachment of lower extremity with Major Complications or Comorbidities (MCC)) and MS-DRG 470 (Major joint replacement or reattachment of lower extremity without MCC), because the anchor hospitalization for the CJR model was defined by admission for a surgical procedure alone (80 FR 73280). However, the proposed AMI episodes would be defined by admission for a medical condition that includes a range of treatment options, including medical treatment and PCI. Therefore, to identify beneficiaries admitted for AMI and treated with PCI requires ICD-CM diagnosis codes paired with MS-DRGs to identify the subset of PCI MS-DRG cases associated with AMI that would otherwise be excluded from an AMI model based solely on AMI MS-DRGs.

For the purposes of defining historical AMI episodes, we proposed to exclude beneficiaries discharged under PCI MS-DRGs with an AMI ICD-9-CM diagnosis code in the principal or secondary position if there was an intracardiac ICD-9-CM procedure code in any procedure code field. Intracardiac procedure codes do not represent PCI procedures indicated for the treatment of the coronary artery obstruction that results in AMI, but instead represent a group of procedures indicated for treating congenital cardiac malformations, cardiac valve disease, and cardiac arrhythmias. These intracardiac procedures are performed within the heart chambers rather than PCI procedures for AMI that are performed within the coronary blood vessels. To reflect this clinical distinction, the FY 2016 IPPS update removed intracardiac procedures from MS-DRGs 246-251 and assigned them to new MS-DRGs 273 and 274 (80 FR 49367). Therefore, to be consistent with our proposed definition of AMI episodes that initiate with PCI MS-DRGs 246-251 (not with MS-DRGs 273 and 274) and an AMI ICD-9-CM diagnosis code in the principal or secondary position, we proposed to define historical AMI episodes for beneficiaries discharged under PCI MS-DRGS 246-251 as those that do not include the ICD-9-CM procedure codes in Table 3. These codes were also posted on the CMS Web site at https://innovation.cms.gov/​initiatives/​epm.Start Printed Page 245

Table 3—Proposed ICD-9-CM Procedure Codes in any Position on the IPPS Claim for PCI MS-DRGS (246-251) That Do Not Define Historical AMI Episodes

ICD-9-CM procedure codeICD-9-CM procedure code description
35.52Repair of atrial septal defect with prosthesis, closed technique.
35.96Percutaneous balloon valvuloplasty.
35.97Percutaneous mitral valve repair with implant.
37.26Catheter based invasive electrophysiologic testing.
37.27Cardiac mapping.
37.34Excision or destruction of other lesion or tissue of heart, endovascular approach.
37.36Excision, destruction, or exclusion of left atrial appendage.
37.90Insertion of left atrial appendage device.

In FY 2014, there were approximately 395,000 beneficiaries discharged from a short-term acute care hospitalization (excluding Maryland) with an AMI ICD-9-CM diagnosis code in the principal or secondary position on the IPPS claim. Of these beneficiaries, 58 percent were discharged under MS-DRGs that would initiate an AMI episode, specifically an AMI MS-DRG (33 percent) and PCI MS-DRG (25 percent). Five percent of beneficiaries were discharged from CABG MS-DRGs and 3 percent were discharged from AMI MS-DRGs representing death during the hospitalization. The remaining 34 percent of beneficiaries with an AMI ICD-CM diagnosis code in the principal or secondary position were distributed across over approximately 300 other MS-DRGs, with the septicemia MS-DRGs accounting for 8 percent and the remainder accounting for 3 percent or less of beneficiaries with an AMI ICD-CM diagnosis code on the IPPS claim.[47] We note that the AMI ICD-9-CM diagnosis code was most commonly in a secondary position for discharges from these other MS-DRGs, likely representing beneficiaries hospitalized for another condition who experienced an AMI during that hospitalization. We further note that CMS' AMI quality measures used in the Hospital Inpatient Quality Reporting (HIQR) Program are based on all beneficiaries discharged under any MS-DRG who have an AMI ICD-CM diagnosis code only in the principal position, reflecting the measures' focus on the most homogeneous beneficiary population with AMI as the condition responsible for occasioning the hospital admission. This is in contrast with our proposed use of an AMI ICD-10-CM diagnosis code in the principal or a secondary position for the AMI model in order to identify those beneficiaries receiving a PCI whose hospitalization and post-discharge recovery and management would primarily be associated with the PCI and AMI.

The proposed specifications for AMI episodes, including ICD-9-CM AMI diagnosis codes for historical episodes used to set the initial AMI model-episode benchmark prices and ICD-10-CM AMI diagnosis codes for the performance years of the model, are displayed in Table 5. The proposed ICD-9-CM intracardiac procedure codes used to exclude inpatient claims with PCI MS-DRGs 246-251 from anchoring AMI model historical episodes used to set initial AMI model-episode benchmark prices are displayed in Table 3.

Based on Medicare claims data for historical AMI episodes ending in CYs 2012-2014, the annual number of potentially eligible beneficiary discharges for the AMI model nationally was approximately 168,000.[48] This number was less than the approximately 229,000 discharges for beneficiaries with AMI discharged from AMI MS-DRGs 280-282 and PCI MS-DRGs 246-251 that could be expected to be included in the AMI model for several reasons. Discharges did not result in historical episodes when a beneficiary did not meet the beneficiary care inclusion criteria discussed in section III.C.4.a.(1) of the proposed rule (81 FR 50834); was not discharged alive from PCI MS-DRGs 246-251; was discharged from a transfer hospital during a chained anchor hospitalization; or was discharged from a readmission during an AMI episode that did not initiate new model episodes.

The list of ICD-9-CM and ICD-10-CM AMI diagnosis codes used to identify beneficiaries discharged under a PCI MS-DRG (MS-DRGs 246-251) in historical episodes and during the performance years of the model that would be included in the AMI episodes were discussed in section III.C.4.a.(2) of the proposed rule (81 FR 50834 through 50835). To make changes to this list as necessary based on annual ICD-10-CM coding changes or to address issues raised by the public throughout the EPM performance years, we proposed implementing the following sub-regulatory process, which mirrors the sub-regulatory process as described in the CJR Final Rule for updating hip fracture ICD-9-CM and ICD-10-CM diagnosis codes (80 FR 73340) and for updating the exclusion list (80 FR 73305 and 73315). We proposed to use this process on an annual, or more frequent, basis to update the AMI ICD-10-CM diagnosis code list and to address issues raised by the public. As part of this process, we proposed the following standard when revising the list of ICD-10-CM diagnosis codes representing AMI: The ICD-10-CM diagnosis code is sufficiently specific that it represents an AMI. We proposed to then post a list of potential AMI ICD-10-CM diagnosis codes to the CMS Web site at https://innovation.cms.gov/​initiatives/​epm to allow for public input on our planned application of these standards, and then adopt the AMI ICD-10-CM diagnosis code list with posting to the CMS Web site of the final AMI ICD-CM diagnosis code list after our consideration of the public input. We would provide sufficient time for public input based on the complexity of potential revisions under consideration, typically at least 30 days, and, while we would not respond to individual comments as would be required in a regulatory process, we could discuss the reasons for our decisions about changes in response to public input with interested stakeholders.

The proposals for identifying the beneficiaries included in the AMI model and the sub-regulatory process for updating the AMI ICD-10-CM diagnosis code list were included in proposed § 512.100(c)(1) and (d), respectively. We sought comment on our proposals to identify beneficiaries included in the AMI model and the sub-regulatory process for updating the AMI ICD-10-Start Printed Page 246CM diagnosis code list. The proposal to exclude inpatient claims with PCI MS-DRGS 246-251 from anchoring AMI model historical episodes used to set initial AMI model-episode benchmark prices when there was an ICD-9-CM intracardiac procedure code on the claim was included in proposed § 512.100(d)(4). We sought comment on our proposal to exclude inpatient claims with PCI MS-DRGS 246-251 from anchoring AMI model historical episodes used to set initial AMI model-episode benchmark prices when there was an ICD-9-CM intracardiac procedure code on the claim.

We received no comments on the proposed sub-regulatory process for updating the AMI ICD-10-CM diagnosis code list. The following is a summary of the comments received on the other AMI model proposals to define the included clinical conditions and our responses.

Comment: Several commenters expressed concern that the AMI model would be so heavily reliant upon coding that creates an artificial clinical population which is so heterogeneous as to make clinical care redesign efforts nonspecific and likely ineffective. They contended that while EPMs based on surgical MS-DRGs streamline patient identification and inclusion, the AMI model would depend on multiple levels of coding, both ICD-10-CM and MS-DRGs. One commenter explained that an important distinction between medical diagnosis and procedural-based episode-of-care models is that medical diagnosis models tend to involve a patient population of greater complexity, often with life-threating conditions. The commenter believes that, where appropriate, this awareness should be reflected in the design of the EPMs. The commenters were concerned that the proposed AMI model would put a greater emphasis on coding methodologies and increase the chance of disparities between cases identified by each responsible hospital for inclusion in the AMI model versus cases identified by CMS from historical claims data upon which quality-adjusted target prices would be based. The commenters stressed the need for CMS to establish clinical homogeneity in the AMI model, limiting ambiguity as much as possible.

Several commenters recommended CMS to use ICD-10-CM coding strategies to limit inclusion of AMI model beneficiaries to the most clinically similar subset of beneficiaries in order to allow for meaningful comparisons and ultimately provide CMS the opportunity to clearly evaluate the impact of the AMI model on patient care and outcomes. The commenters stated that with the move from ICD-9-CM to ICD-10-CM, the coding stages associated with AMI have changed, warranting additional considerations. Specifically, a number of commenters recommended that CMS limit the AMI model to beneficiaries with ST-elevation myocardial infarction (STEMI) discharged under AMI MS-DRGs and PCI MS-DRGs with an AMI ICD-10-CM code only in the principal diagnosis code position on the inpatient claim. The commenters claimed that while STEMIs occur due to an acute coronary artery occlusion, many non-ST elevation (NSTEMI) beneficiaries with AMI experience open coronary arteries but there is an imbalance between the oxygen demands of the heart and the coronary arteries' ability to meet them. The commenters added that due to these substantial differences in the underlying pathophysiology of STEMI and NSTEMI AMI patients that lead to more variation in clinical presentation in NSTEMI patients, in addition to the different approaches to their evaluation and management, the AMI model should only include STEMI beneficiaries which, when risk adjustment is applied, represent a more homogenous population compared to NSTEMI patients.

These commenters presented the most current consensus driven definition of AMI, the third universal definition, as: “Evidence of myocardial necrosis consistent with acute myocardial ischemia. Under these conditions, any one of the following criteria meets the diagnosis for MI:

  • Detection of a rise and/or fall of cardiac biomarker values, preferably cardiac troponin with at least one value above the 99th percentile upper reference limit; and at least one of the following:
  • Symptoms of new ischemia;
  • New or presumed new significant ST-segment-T wave (ST-T) changes or new left bundled branch block (LBBB);
  • Development of pathological Q waves in the ECG;
  • Imaging evidence of new loss of viable myocardium or new regional wall motion abnormality; and
  • Identification of an intracoronary thrombus by angiography or autopsy.” [49]

The commenters recommended CMS to clearly define AMI for the EPM because they claimed that currently what is coded as AMI often only meets this definition in part and may be limited to abnormal biomarkers that can be detected without an acute occlusion of a coronary artery. Aligning coding with clinical reality is necessary for establishing clinical homogeneity in the AMI model. The commenters believe that including in the AMI model beneficiaries not only with a principal but a secondary diagnosis of AMI would make it difficult to establish a clearly defined clinically homogeneous population for the following reasons:

  • Critically ill patients often receive a secondary diagnosis of AMI for what is more correctly characterized as supply-demand ischemia due to the routine and inaccurate coding of any troponin leak or elevation as an AMI, despite the absence of a clinical event suggestive of infarction. The commenters provided examples such as a beneficiary with metastatic breast cancer and internal bleeding who exhibits a slight cardiac troponin leak or a beneficiary with multi-organ failure, stating that the root cause of small elevation of troponin in these cases would be the underlying condition, not CAD. They also claimed that elderly patients with heart failure or rapid atrial fibrillation may have a secondary AMI ICD-CM diagnosis, yet the heart failure or atrial fibrillation would drive decisions about care, not the AMI.
  • Outcomes and cost-of-care for critically ill patients with a secondary AMI diagnosis are likely driven more by the primary condition than by AMI resulting from possible CAD.
  • Patterns of care are very different for patients with a secondary, as compared to a principal, diagnosis of AMI; and
  • Including patients with a secondary diagnosis of AMI increases the variability within the AMI model, limiting opportunity to draw clear conclusions when testing the model.

One commenter requested that CMS account for beneficiaries with AMI who do not have a traditional AMI but coding results in discharge under an AMI MS-DRG by specifying a concrete list of ICD-10-CM codes that, if included on a claim for a beneficiary discharged under an AMI MS-DRG from an AMI model participant, would exclude the beneficiary from the AMI model.

Response: We appreciate the suggestions of the commenters that we include a more homogeneous group of beneficiaries in the AMI model by limiting the model to those beneficiaries with a STEMI ICD-CM diagnosis code in the principal position on the claim for the anchor hospitalization. Under our proposal to include all beneficiaries Start Printed Page 247in the AMI model discharged from AMI MS-DRGs and beneficiaries discharged from PCI MS-DRGs with an AMI ICD-CM diagnosis code listed in Table 3 (the codes we are finalizing are listed in Table 4) in the principal or a secondary position on the inpatient claim for the anchor hospitalization, all of the diagnosis codes except 410.71 (Subendocardial infarction, initial episode of care) in ICD-9-CM and 121.4 (Non-ST elevation (NSTEMI) myocardial infarction) and 122.2 (Subsequent non-ST elevation (NSTEMI) myocardial infarction) are for STEMI diagnoses. We analyzed historical AMI episodes from 2012-2014 and found that about 78 percent of episodes were for NSTEMI, while 22 percent were for STEMI.[50] There are well-established clinical guidelines for the management of beneficiaries with both NSTEMI and STEMI, and the clinical care pathways generally differ for these beneficiaries.[51 52] However, to limit the AMI model to beneficiaries with STEMI only, the minority of beneficiaries with AMI whose care is less varied, and exclude beneficiaries with NSTEMI, the majority of beneficiaries with AMI whose care is more varied and highly dependent on the beneficiary's risk factors for adverse outcomes, would miss a substantial opportunity to test an EPM for a large proportion of Medicare beneficiaries with AMI. We believe there are substantial opportunities for care redesign under the AMI model to improve the quality and efficiency of episode care for both NSTEMI and STEMI patients so we will not limit the model to one subgroup of beneficiaries hospitalized for treatment of AMI. In response to the commenters who were concerned that including beneficiaries with NSTEMI and STEMI in the AMI model could interfere with CMS' ability to evaluate the impact of the AMI model on patient care and outcomes, we note that as discussed in section IV. of this final rule, we will examine the impact of the AMI model on subgroups of beneficiaries to better understand variations in payments and outcomes within and between hospitals. The identification of subgroups to be examined will include a variety of key clinical and demographic factors.

We also analyzed the distribution of AMI ICD-9-CM diagnosis codes for FY 2014 discharges from AMI and PCI MS-DRGs (ICD-10-CM was not in use in that year) in the principal versus secondary position for beneficiaries who would be included in the AMI model under our proposal because of their assignment to an AMI MS-DRG or to a PCI MS-DRG.[53] We found that 94 percent of historical episodes assigned to PCI MS-DRGs had an AMI ICD-9-CM diagnosis code in the principal position. Of those episodes with an AMI ICD-9-CM diagnosis code in the secondary position, the most common principal diagnoses were 996.72 (Other complications due to other cardiac device, implant, and graft) and 414.01 (Coronary atherosclerosis of native coronary artery), which constituted 53 percent of cases with an AMI ICD-9-CM diagnosis code only in a secondary position, while the remaining episodes had one of over 200 different ICD-9-CM diagnoses codes in the principal position. In addition, we found that 86 percent of episodes assigned to AMI MS-DRGs had an AMI ICD-9-CM diagnosis code in the principal position. Of those cases with an AMI ICD-9-CM diagnosis code in the secondary position, the most common principal diagnoses in descending order of frequency were 428.23 (Acute on chronic systolic heart failure); 427.31 (Atrial fibrillation); 428.33 (Acute on chronic diastolic heart failure); 428.43 (Acute on chronic combined systolic and diastolic heart failure); 428.0 (Congestive heart failure, unspecified); and 428.21 (Acute systolic heart failure). These diagnoses constituted 62 percent of cases with an AMI ICD-9-CM code only in a secondary position, while the remaining episodes had one of over 200 different, but primarily cardiac, ICD-9-CM diagnoses codes in the principal position. We note that the diagnosis code patterns we observed did not confirm the views of some commenters that beneficiaries with underlying non-cardiac disease and a troponin leak, such as a metastatic breast cancer with internal bleeding, would be included in the AMI model based on our proposal. However, the AMI model would include some beneficiaries discharged from AMI MS-DRGs with significant underlying cardiac conditions such as heart failure and atrial fibrillation in the principal diagnosis code position, another example provided by some commenters.

ICD-CM diagnosis coding does not rely on clinical definitions; it is the physician who is responsible for documenting the patient's diagnosis. In other words, coders cannot determine if a patient suffered an AMI based on cardiac biomarkers. If the physician documents an AMI, then the coder is required to report the ICD-10-CM code describing the type of AMI. The coder does not interpret the troponin levels of a beneficiary.

Based on our analysis of historical claims and the established rules for medical coding, we believe that it is appropriate to include the small percentage of beneficiaries with an ICD-CM AMI diagnosis code only in the secondary position upon discharge from AMI and PCI MS-DRGs in the AMI model because the principal diagnoses on these claims generally represent beneficiaries with coronary obstruction. The secondary AMI diagnosis on the claim would have resulted from a physician diagnosis of AMI which, as the commenters stated, should be represented by changes in cardiac biomarker values and at least one other characteristic of a specified list. In addition to representing a reasonably homogeneous population, we believe this approach provides an unambiguous definition for AMI model participants to use to identify beneficiaries discharged from PCI MS-DRGs who would be in the AMI model. Because the model is focused on a condition, AMI, rather than a procedure, and some beneficiaries admitted for PCI will not have an AMI, it is necessary for PCI MS-DRGs to pair ICD-CM diagnosis codes with the MS-DRG to identify AMI model beneficiaries.

While we observed that 14 percent of beneficiaries assigned to AMI MS-DRGs only had an AMI ICD-9-CM diagnosis code in the secondary position and most commonly another cardiac diagnosis in the principal position, this group is a small minority of beneficiaries discharged from AMI MS-DRGs. We do not believe that it is necessary to exclude these beneficiaries from the AMI model for purposes of clinical homogeneity because the beneficiaries should have had an AMI documented by a physician for an AMI diagnosis Start Printed Page 248code to be included in a secondary position on the hospital claim. We further observed from our analysis of FY 2014 claims for discharges from AMI MS-DRGs that those beneficiaries with an AMI ICD-9-CM code in the principal position commonly had similar cardiac diagnoses (for example, atrial fibrillation and heart failure) as those beneficiaries where the order of diagnosis coding was reversed.[54] Care coordination and management of other cardiac conditions which would be included in the AMI episode definition as discussed in section III.C.3.b. of this final rule would be common for beneficiaries discharged from AMI MS-DRGs, regardless of whether AMI is the principal or a secondary diagnosis on the hospital claim that led to the beneficiary's discharge from an AMI MS-DRG. Therefore, limiting the AMI model beneficiaries only to those assigned to AMI MS-DRGs based on a principal diagnosis code of AMI would not significantly increase clinical homogeneity of those AMI model beneficiaries discharged after medical treatment for AMI. Moreover, to exclude beneficiaries discharged from AMI MS-DRGs with an AMI ICD-9-CM diagnosis code only in a secondary position on the hospital claim from the model could substantially complicate timely EPM participant identification of the beneficiaries in the model by including only a subset of beneficiaries assigned to AMI MS-DRGs upon discharge. Thus, we do not believe it is necessary for AMI MS-DRGs to pair AMI ICD-CM diagnosis codes with the MS-DRG to identify AMI model beneficiaries.

Comment: In addition to the commenters who recommended that CMS apply specific coding strategies to increase clinical homogeneity of beneficiaries in AMI episodes, other commenters recommended that CMS exclude a variety of beneficiaries who would otherwise meet the proposed AMI model criteria for inclusion. Some commenters further recommended CMS to make a pricing adjustment for AMI episodes for these beneficiaries if CMS does not exclude them from the model altogether. Suggestions included excluding beneficiaries who are in the following clinical scenarios:

  • Cardiogenic shock or, at a minimum, the subset of beneficiaries with cardiogenic shock who are transferred from an AMI model participant or who are transferred to an AMI model participant, as the impact of the AMI model on transfer decisions could delay access to life-saving therapies at specialized centers.
  • Sepsis who do not have clinically traditional AMI and would not be expected to follow a typical clinical pathway for AMI.
  • Experiencing a second or greater AMI, who are more likely to have complex cardiac needs beyond immediate management of the AMI.
  • Undergoing organ transplantation or ventricular assist device (VAD) implantation during the episode, because regional pricing could limit access to life-saving therapies only available at those few centers capable of caring for advanced heart failure patients and organ transplant candidates.
  • Receiving outpatient inotropes for advanced heart failure during AMI episodes, because these therapies allow beneficiaries to avoid a surgical bridge to transplant with VAD implantation but are used in a group of beneficiaries who might otherwise receive a VAD. The commenters believes this would be consistent with excluding beneficiaries who receive VAD during AMI episodes from the AMI model.
  • Undergoing CABG or other cardiac surgery within 90 days following discharge from the hospitalization for AMI because they must be medically optimized prior to surgery to ensure safe outcomes. This percentage of beneficiaries is higher for certain hospitals with complex patient populations, and the proposed payment methodology would not adequately account for these high-cost cases.

Response: We appreciate the recommendations of the commenters regarding the exclusion of certain complex, potentially high-cost beneficiaries from the AMI model. We do not believe it would be appropriate to exclude beneficiaries experiencing cardiogenic shock or a second or subsequent AMI from the AMI model because there are significant opportunities for improving the quality and efficiency of care for these beneficiaries during episodes, despite their greater complexity and medical needs, and we believe it is important to include these beneficiaries in the test of the AMI model. In response to the commenters who recommended that we exclude beneficiaries with sepsis and atypical AMI from the AMI model, based on our proposed definition of the beneficiaries to be included in the AMI model and the ICD-CM diagnosis code analysis discussed in the response to the previous comment, we do not believe that beneficiaries with sepsis and clinically atypical AMI would generally be included in the AMI model because they would not be assigned to AMI or PCI MS-DRGs.

While readmission for cardiac transplantation or VAD implantation would be excluded from AMI episodes based on our proposed AMI model exclusion list, these beneficiaries would otherwise initiate and remain in AMI episodes throughout the 90-day post-discharge period both before and following cardiac transplantation or VAD implantation that occurs during the 90-day period. Other readmissions and Part B services furnished to these beneficiaries would be included in the episodes based on the proposed exclusion list. We believe it is important to include in the AMI model these beneficiaries with complex care needs following hospitalization for AMI, including those receiving outpatient inotropes during AMI episodes, because there are opportunities to improve the quality and efficiency of their care, despite their experiencing severe sequelae following AMI.

Finally, we note that we also do not believe it would be appropriate to exclude from the AMI model those beneficiaries receiving CABG or other cardiac surgery during AMI episodes after a period of medical optimization following discharge from the anchor hospitalization. As discussed in section III.D.4.b.(2)(c) of this final rule, we are providing a pricing adjustment for AMI episodes with a CABG readmission for beneficiaries who follow this medically appropriate clinical pathway. We refer to section III.D.4.b.(2) of this final rule for further discussion of risk adjustment in the context of the AMI model's implementation of downside risk and progression to regional pricing for AMI episodes.

Comment: Several commenters supported excluding intracardiac valvular and ablation procedures from historical AMI episodes for clinical consistency between historical AMI episodes and those during the AMI model performance years. They explained that intracardiac valvular and ablation procedures are typically unrelated to management of an AMI but would historically have substantially impacted the total spending in historical AMI episodes for beneficiaries discharged from MS-DRGs 246 through 251 in centers that performed those procedures.

Response: We appreciate the support from the commenters. We continue to believe it is appropriate to define historical AMI episodes for beneficiaries discharged under PCI MS-DRGS 246-251 as those that do not include the ICD-9-CM procedure codes in Table 4.Start Printed Page 249

Final Decision: After consideration of the public comments received, we are finalizing the proposals in § 512.100(c)(1) to include the care of beneficiaries in the AMI model who meet the general beneficiary care inclusion criteria as discussed in section III.C.4.a.(1) of this final rule and who are discharged under an AMI MS-DRG (280-282), representing those individuals admitted with AMI who receive medical therapy but no revascularization, or discharged under a PCI MS-DRG (246-251) with an ICD-10-CM diagnosis code of AMI as displayed in Table 6 on the IPPS claim for the anchor hospitalization in the principal or secondary diagnosis code position, without modification.

We are also finalizing the proposals in § 512.100(d)(4) to define historical AMI episodes for beneficiaries discharged under PCI MS-DRGS 246-251 as those that do not include the ICD-9-CM procedure codes in Table 4, without modification.

Table 4—Final ICD-9-CM Procedure Codes in any Position on the IPPS Claim for PCI MS-DRGS (246-251) That Do Not Define Historical AMI Episodes

ICD-9-CM procedure codeICD-9-CM procedure code description
35.52Repair of atrial septal defect with prosthesis, closed technique.
35.96Percutaneous balloon valvuloplasty.
35.97Percutaneous mitral valve repair with implant.
37.26Catheter based invasive electrophysiologic testing.
37.27Cardiac mapping.
37.34Excision or destruction of other lesion or tissue of heart, endovascular approach.
37.36Excision, destruction, or exclusion of left atrial appendage.
37.90Insertion of left atrial appendage device.

Finally, we are finalizing the proposals in § 512.100(d)(1)-(3) for the sub-regulatory process to be used on an annual, or more frequent, basis to update the AMI ICD-10-CM diagnosis code list and to address issues related to AMI diagnosis codes raised by the public, without modification. As part of this process, we will use the following standard when revising the list of ICD-10-CM diagnosis codes representing AMI: The ICD-10-CM diagnosis code is sufficiently specific that it represents an AMI. We will post a list of potential AMI ICD-10-CM diagnosis codes to the CMS Web site at https://innovation.cms.gov/​initiatives/​epm to allow for public input on our planned application of the standard, and then adopt the AMI ICD-10-CM diagnosis code list with posting to the CMS Web site of the final AMI ICD-CM diagnosis code list after our consideration of the public input. We will provide sufficient time for public input based on the complexity of potential revisions under consideration, typically at least 30 days, and, while we will not respond to individual comments as would be required in a regulatory process, we can discuss the reasons for our decisions about changes in response to public input with interested stakeholders.

We note that we reviewed the FY 2017 ICD-10-CM diagnosis code changes that became available after publication of the EPM proposed rule in the Federal Register on August 2, 2016. There are no changes or additions to the ICD-10-CM diagnosis codes reporting AMI for FY 2017 so we are not suggesting modifications for FY 2017 to the final list displayed in Table 6 of ICD-10-CM AMI diagnosis codes in the principal or secondary position on the IPPS claim for PCI MS-DRGs (246-251) that initiate AMI episodes. Thus, we are not initiating a sub-regulatory update process for FY 2017 AMI ICD-10-CM diagnosis code updates at this time.

(2) CABG Model

We proposed the CABG model to incentivize improvements in the coordination and quality of care, as well as episode efficiency, for beneficiaries treated with CABG irrespective of AMI during the CABG hospitalization, thereby including beneficiaries undergoing elective CABG in the CABG model as well as beneficiaries with AMI who have a CABG during their initial AMI treatment. The CABG model would be similar to the CJR model in that the anchor hospitalization would be defined by admission for a surgical procedure, which would be defined by the MS-DRGs for that procedure alone (80 FR 73280). All CABG procedures are performed in the inpatient hospital setting. Thus, we proposed to include beneficiaries admitted and discharged from an anchor hospitalization paid under CABG MS-DRGs (231-236) under the IPPS in the CABG model. Based on Medicare claims data for historical CABG episodes beginning in CYs 2012-2014, the annual number of potentially eligible beneficiary discharges for the CABG model nationally was approximately 48,000.[55]

The proposal for identifying beneficiaries included in the CABG model was included in proposed § 512.100(c)(2). We sought comment on our proposal to identify beneficiaries included in the CABG model.

The following is a summary of the comments received and our responses.

Comment: Similar to the suggestions of commenters recommending that CMS exclude certain beneficiaries discharged from AMI MS-DRGs or PCI MS-DRGs with an AMI ICD-10-CM diagnosis code from the AMI model, several commenters recommended that CMS exclude a variety of beneficiaries from the CABG model who would otherwise meet the proposed CABG model criteria for inclusion. Recommendations include excluding beneficiaries who are in the following clinical scenarios:

  • Cardiogenic shock or, at a minimum, the subset of beneficiaries with cardiogenic shock who are transferred from a model participant or who are transferred to a model participant, as the impact of the CABG model on transfer decisions could delay access to life-saving therapies at specialized centers;
  • Undergoing organ transplantation or VAD implantation during the CABG episode, as regional pricing could limit access to life-saving therapies only available at those few centers capable of caring for advanced heart failure patients and organ transplant candidates.
  • Receiving outpatient inotropes for advanced heart failure during CABG episodes, because these therapies allow beneficiaries to avoid a surgical bridge to transplant with ventricular assist device (VAD) implantation but are used in a group of beneficiaries who might otherwise receive a VAD. The Start Printed Page 250commenters state that this would be consistent with excluding beneficiaries who receive VAD during CABG episodes from the CABG model.
  • Undergoing a second or greater CABG, given the increase in complexity and comorbidities associated with this population.
  • Undergoing a salvage CABG due to a failed or aborted PCI, either during a single admission or a readmission, due to the clinically frail beneficiaries that result in high-cost episodes.

Response: We appreciate the recommendations of the commenters regarding the exclusion of certain complex, potentially high-cost beneficiaries from the CABG model, and note that in some cases recommendations for exclusion were the same as for the AMI model. We do not believe it would be appropriate to exclude beneficiaries experiencing cardiogenic shock, undergoing a second or subsequent CABG, or undergoing salvage CABG from the CABG model because there are significant opportunities for improving the quality and efficiency of care for these beneficiaries during episodes, despite their greater complexity and medical needs, and we believe it is important to include these beneficiaries in the test of the CABG model.

While readmission for cardiac transplantation or VAD implantation would be excluded from CABG episodes based on our proposed CABG model exclusion list, these beneficiaries would otherwise initiate and remain in CABG episodes throughout the 90-day post-discharge period both before and following cardiac transplantation or VAD implantation that occurs during the 90-day period. Other readmissions and Part B services furnished to these beneficiaries would be included in the episodes based on the proposed exclusion list. We believe it is important to include in the CABG model these beneficiaries with complex care needs following CABG surgery, including those receiving outpatient inotropes during CABG episodes, because there are opportunities to improve the quality and efficiency of their care, despite their experiencing severe sequelae following CABG. We refer to section III.D.4.b.(2) of this final rule for further discussion of risk adjustment in the context of the CABG model's implementation of downside risk and progression to regional pricing for CABG episodes.

Final Decision: After consideration of the public comments received, we are finalizing the proposals in § 512.100(c)(2) to include the care of beneficiaries in the CABG model who meet the general beneficiary care inclusion criteria as discussed in section III.C.4.a.(1) of this final rule and are discharged under a CABG MS-DRG (231-236) paid under the IPPS, without modification.

(3) SHFFT (Excludes Lower Extremity Joint Replacement) Model

We proposed the SHFFT model to incentivize improvements in the coordination and quality of care, as well as episode efficiency, for beneficiaries treated surgically for hip and femur fractures, other than hip arthroplasty. Together, the CJR and SHFFT models would cover all surgical treatment options (that is, hip arthroplasty and fixation) for Medicare beneficiaries with hip fracture.

The SHFFT model would be similar to the CJR model in that the anchor hospitalization would be defined by admission for a surgical procedure, which would be defined by the MS-DRGs for that procedure alone (80 FR 73280). Additionally, most SHFFT procedures are furnished in the inpatient hospital setting, consisting primarily of hip fixation procedures, with or without reduction of the fracture, as well as open and closed surgical approaches. Thus, we proposed to include beneficiaries admitted and discharged from an anchor hospitalization paid under SHFFT MS-DRGs (480-482) under the IPPS in the SHFFT model. Based on Medicare claims data for historical SHFFT episodes beginning in CYs 2012-2014, the annual number of potentially eligible beneficiary discharges for the SHFFT model nationally was approximately 109,000.[56]

The proposal for identifying beneficiaries included in the SHFFT model was included in proposed § 512.100(c)(3). We sought comment on our proposal to identify beneficiaries included in the SHFFT model.

The following is a summary of the comments received and our responses.

Comment: A number of commenters expressed support for the proposal to define the clinical conditions included in the SHFFT model as beneficiaries who are admitted and discharged under SHFFT MS-DRGs. Other commenters recommended that CMS apply additional episode-specific criteria to exclude beneficiaries from the SHFFT model who would be discharged from the SHFFT MS-DRGs. Recommendations of beneficiaries from some commenters to be excluded include:

  • Beneficiaries with fracture due to falls or trauma in association with acute myocardial infarction; cardiac arrhythmia; syncope; cerebrovascular accident; seizure; head injury; or polytrauma to reduce the large risk of increases in patient transfers from EPM participants seeking to reduce their financial responsibility for high-cost beneficiaries;
  • Beneficiaries with dementia or Alzheimer's disease due to ethical issues around withholding surgery that could arise in the case of EPM participants attempting to reduce their financial risk;
  • Beneficiaries already residing in a SNF at the time of fracture, who would necessitate an unavoidable SNF stay after discharge from the anchor hospitalization that would increase the episode cost attributable to the EPM participant;
  • Beneficiaries with fractures related to cancer, who would be expected to be high-cost cases;
  • Beneficiaries with a history of previous hip fracture; previous surgery in the region; retained hardware; open fracture; periprosthetic fractures; and congenital deformities who would be expected to have atypical and potentially costly hip fracture care pathways; and
  • Beneficiaries who smoke or have diabetes, which are risk factors for fracture nonunion and infection, respectively, because these behaviorally mediated risk factors for costly care cannot be managed prior to hip surgery, unless the SHFFT model adjusts prices for the higher financial risk attributable to these beneficiaries.

Response: We appreciate the recommendations of the commenters to exclude certain beneficiaries receiving SHFFT from the SHFFT model due their personal circumstances, other clinical conditions, or circumstances that led to the hip fracture. We agree with the commenters that beneficiaries in this group may be more likely to require complex care during the anchor hospitalization and significant, intensive health services during the 90 day post-hospital discharge period, which could result in high-cost SHFFT episodes. However, we do not believe it would be appropriate to exclude beneficiaries with complex social or clinical circumstances from the SHFFT model because there are significant opportunities for improving the quality and efficiency of care for these beneficiaries during episodes, despite their greater complexity and medical needs, and we believe it is important to Start Printed Page 251include these beneficiaries in the test of the SHFFT model. As discussed in section III.G.4. of this final rule, we will be monitoring for issues related to access to care. We expect that all Medicare beneficiaries with hip fracture are offered clinically appropriate treatments for their fracture and that all transfers of beneficiaries with hip fracture to other hospitals are medically necessary and not determined by the SHFFT model participant's assessment of the beneficiary's risk of a high-cost SHFFT episode. We also refer to section III.D.4.b.(2) of this final rule for further discussion of risk adjustment in the context of the SHFFT model's implementation of downside risk and progression to regional pricing for SHFFT episodes.

Comment: Some commenters stated that there is a sizeable minority of beneficiaries with hip fracture who should not and do not get hospitalized or if hospitalized are not treated with surgery for fracture so would not be included in the SHFFT or CJR models. These commenters observed that these beneficiaries were not discussed in the proposed rule and, therefore, no discussion was included about the decisions related to the appropriate treatment of hip fracture in the case of serious disability, frailty, and concurrent illness. The commenters contended that EPM participants that have historically served a substantial frail population could be seriously disadvantaged under the SHFFT model due to the significant care needs for these beneficiaries following hip fracture surgery and might seek to reduce their traditional commitment to this population in various ways, which were contrary to the interests of this highly vulnerable population. Some commenters further speculated that beneficiaries with hip fracture could be shifted to no surgery or to joint replacement if SHFFT model participants seek to reduce high-cost cases that present the most financial risk under the SHFFT model. The commenters further stated that the SHFFT model may drive SHFFT model participants to provide more expensive hip replacement to beneficiaries due to their desire to avoid SNF admission because of the longer need for protected weight-bearing post-internal fixation after SHFFT in comparison with total joint replacement where immediate weight-bearing may be possible.

Response: While we agree with the commenters that surgical fracture repair may not be appropriate for some beneficiaries with hip fracture, the proposed SHFFT model was designed to include only those beneficiaries with surgical fracture repair other than joint replacement and not those for which surgical fracture repair was not performed. We believe the decision about fracture treatment should remain that of the beneficiary in consultation with any caregivers and his or her treating physicians. We did not propose to define the SHFFT model by hip fracture alone because we believe the primary opportunities for care redesign under an EPM that seeks to improve episode quality and efficiency are in the surgical treatment of hip fracture, rather than in the primary non-surgical management of hip fracture for beneficiaries who may or may not be hospitalized.

We do not believe that EPM participants would direct Medicare beneficiaries to other treatments that would result in their not being included in the SHFFT model simply on the basis of the beneficiary's potential for being a high-cost hip fracture surgical episode. We refer to section III.D.4.b.(2) for discussion of risk adjustment for complex beneficiaries under the SHFFT model. In addition, we note that beneficiaries with hip fracture who are treated with joint replacement, a care pattern that some commenters believe could result from SHFFT model participants' efforts to avoid of high-cost cases under the SHFFT model, would be included in the CJR model for most SHFFT model participants who are also CJR participant hospitals as discussed in section III.B.3. of this final rule. Thus, it is unlikely that a shift from a SHFFT procedure to joint replacement would financially benefit the SHFFT model participant. As discussed in sections III.G.4. through 6. of this final rule, we will be closely monitoring for access to care, quality of care, and delayed care under the SHFFT model.

Final Decision: After consideration of the public comments received, we are finalizing the proposals in § 512.100(c)(3) to include the care of beneficiaries in the SHFFT model who meet the general beneficiary care inclusion criteria as discussed in section III.C.4.a.(1) of this final rule and are discharged under a SHFFT MS-DRG (480-482) under the IPPS, without modification.

b. Definition of the Related Services Included in EPM Episodes

The general principles for the definition of related services are the same for the AMI, CABG, and SHFFT models, so we address them in a single discussion in this section. Like the CJR model, we are interested in testing inclusive AMI, CABG, and SHFFT episodes to incentivize comprehensive, coordinated, patient-centered care for the beneficiary throughout the episode (80 FR 73303). Therefore, we proposed to exclude Medicare items and services furnished during the EPM episodes only when unrelated to the EPM episode diagnosis and procedures based on clinical rationale that would result in standard exclusions from all of the episodes in a single EPM. Thus, we proposed to include all items and services paid under Medicare Part A and Part B unless they fall under an exclusion because they are unrelated to the EPM episodes.

Also like the CJR model, we proposed that the items and services ultimately included in the EPM episodes after the exclusions are applied are called related items and services, and that Medicare spending for related items and services be included in the historical data used to set EPM-episode benchmark prices and in the calculation of actual EPM episode payments that would be compared against the quality-adjusted target price to assess the performance of EPM participants (80 FR 73303 and 73315). Additionally, we proposed that Medicare spending for unrelated items and services (excluded from the EPMs' episode definitions) would not be included in the historical data used to set EPM-episode benchmark prices or in the calculation of actual EPM episode payments. We proposed that related items and services for EPM episodes would include the following items and services paid under Medicare Part A and Part B, after the EPM-specific exclusions are applied:

  • Physicians' services.
  • Inpatient hospital services.
  • Inpatient psychiatric facility (IPF) services.
  • Long-Term Care Hospital (LTCH) services.
  • Inpatient Rehabilitation Facility (IRF) services.
  • Skilled Nursing Facility (SNF) services.
  • Home Health Agency (HHA) services.
  • Hospital outpatient services.
  • Independent outpatient therapy services.
  • Clinical laboratory services.
  • Durable medical equipment.
  • Part B drugs.
  • Hospice.

We note that inpatient hospital services would include services paid through IPPS operating and capital payments. The AMI, CABG, and SHFFT episodes also could include certain per-member-per-month model payments as discussed in section III.D.6.d. of the proposed rule (81 FR 50871 through 50872). These items and services for the Start Printed Page 252EPMs are the same items and services included in CJR episodes (80 FR 73303 and 73315).

Similar to the CJR model and for the reasons explained in the CJR Final Rule, we proposed to exclude drugs that are paid outside of the MS-DRGs included in the EPM episode definitions, specifically hemophilia clotting factors, identified by CPT code, diagnosis code, and revenue center on IPPS claims, from the EPM episodes (80 FR 73303 and 73315). Hemophilia clotting factors, in contrast to other drugs that are administered during a hospitalization and paid through the MS-DRG, are paid separately by Medicare in recognition that clotting factors are costly and essential to appropriate care of certain beneficiaries. Therefore, we believe there are no EPM episode efficiencies to be gained in the variable use of these high cost drugs.

We also proposed to exclude IPPS new technology add-on payments for drugs, technologies, and services from these EPM episodes, excluding them from both the actual historical episode data used to set EPM-episode benchmark prices and from actual EPM episode payments that are reconciled to the quality-adjusted target prices like the CJR model (80 FR 73303-73304 and 73315). This would apply to both the anchor hospitalization and any related readmissions during the EPM episodes. New technology add-on payments are made separately and in addition to the MS-DRG payment under the IPPS for specific new drugs, technologies, and services that substantially improve the diagnosis or treatment of Medicare beneficiaries and would be inadequately paid under the MS-DRG system. We believe it would not be appropriate for the EPM to potentially diminish beneficiaries' access to new technologies or to burden hospitals who choose to use these new drugs, technologies, or services with concern about these payments counting toward EPM participants' actual EPM episode payment. Additionally, new drugs, technologies, or services approved for the add-on payments vary unpredictably over time in their application to specific clinical conditions.

Finally, we proposed to exclude OPPS transitional pass-through payments for medical devices as defined in § 419.66 from the EPM episodes because, through the established OPPS review process, we have determined that these technologies have a substantial cost but also lead to substantial clinical improvement for Medicare beneficiaries. This proposal also is consistent with the CJR model final exclusions policy (80 FR 73308 and 73315).

We proposed to follow the same general principles in determining other proposed excluded Part A and Part B services from the EPM episodes that we use in the CJR model in order to promote coordinated, high-quality, patient-centered care (80 FR 73304). These include identifying excluded (unrelated) services rather than included (related) services based on clinical review. We would operationalize these principles for the new EPMs, as we do for the CJR model, by excluding unrelated inpatient hospital admissions during the EPM episode by identifying MS-DRGs for exclusion on an EPM-specific basis (80 FR 73304 through 73312 and 73315). We would further exclude unrelated Part B services during the EPM episode based on the diagnosis code on the claim by identifying categories of ICD-CM codes for exclusion (identified by code ranges) on an EPM-specific basis. ICD-9-CM diagnosis code exclusions would apply to historical episodes used to construct EPM-episode benchmark prices, while ICD-10-CM diagnosis code exclusions would apply to EPM episodes during the EPMs' performance years. We proposed to identify unrelated Part B services and readmissions based on the BPCI Model 2 Part B exclusion lists that apply to the anchor MS-DRG that initiates the EPM episode, or to the price MS-DRG if it is different than the anchor MS-DRG as described further in section III.D.4.b.(2)(a) of this final rule. This proposal is consistent with our use of the BPCI Model 2 LEJR ICD-9-CM, ICD-10-CM, and MS-DRG exclusion lists in the CJR model (80 FR 73304 and 73315).

The BPCI episode-specific exclusion lists were initially developed more than 3 years ago for the BPCI initiative through a collaborative effort of CMS staff, including physicians from medical and surgical specialties, coding experts, claims processing experts, and health services researchers. The lists have been shared with thousands of entities and individuals participating in episodes in one or more phases of the BPCI initiative, and have undergone refinement in response to stakeholder input about specific diagnoses for exclusion, resulting in only minimal changes over the last 3 years. Thus, the BPCI exclusion lists have been vetted broadly in the health care community; refined based on input from a wide variety of providers, researchers and other stakeholders; and successfully operationalized in the BPCI models. We proposed their use in the AMI, CABG, and SHFFT models based on our confidence related to our several years of experience that these definitions are reasonable and workable for AMI, CABG, and SHFFT episodes, for both providers and CMS, and based on our rulemaking for the CJR model. We note that the BPCI Model 2 exclusion lists for the 48 clinical conditions being tested in the BPCI models include lists that apply to every MS-DRG that could be an anchor MS-DRG (or price MS-DRG, if applicable) for the AMI, CABG, and SHFFT episodes.

Similar to the CJR model, we proposed to include in EPM episodes all Part A services furnished post-hospital discharge during the EPM episode, as these services are typically intended to be comprehensive in nature (80 FR 73304 and 73315). We specifically proposed to exclude unrelated hospital readmissions for MS-DRGs that group to the following categories of diagnoses: Oncology, trauma medical admissions, surgery for chronic conditions unrelated to a condition likely to have been affected by care furnished during the EPM episode, and surgery for acute conditions unrelated to a condition resulting from or likely to have been affected by care during the EPM episode. The rationale for these exclusions is the same as the rationale for their exclusion in the CJR model (80 FR 73304).

Specifically with respect to Part B services, similar to the CJR model, we proposed to exclude acute disease diagnoses unrelated to a condition resulting from or likely to have been affected by care during the EPM episode, and certain chronic disease diagnoses, as specified by CMS on a diagnosis-by-diagnosis basis, depending on whether the condition was likely to have been affected by care during the EPM episode or whether substantial services were likely to be provided for the chronic condition during the EPM episode (80 FR 73305 and 73315). Thus, we would include all Part B services with principal diagnosis codes on the associated Part B claims that are directly related (clinically and per coding conventions) to EPM episodes, claims for diagnoses that are related to the quality and safety of care furnished during EPM episodes, and claims for services for diagnoses that are related to preexisting chronic conditions such as diabetes, which may be affected by care furnished during EPM episodes.

In general, the anchor MS-DRG that initiates the AMI, CABG, or SHFFT episode would determine the exclusion list that applies to the EPM episode. For example, AMI episodes may have different exclusion lists applied based on whether the AMI episode is initiated by admission to the participant hospital Start Printed Page 253that results in discharge from an AMI anchor MS-DRG or a PCI anchor MS-DRG with AMI ICD-10-CM diagnosis code. If a price MS-DRG applies to the AMI episode that includes a chained anchor hospitalization as described in section III.D.4.b.(2)(a) of this final rule, the exclusion list that applies to the price MS-DRG would apply to the AMI episode. Complete lists of excluded MS-DRGs for readmissions and excluded ICD-CM codes for Part B services furnished during EPM episodes after EPM beneficiary discharge from an anchor or chained anchor hospitalization in the AMI, CABG, and SHFFT models are posted on the CMS Web site at https://innovation.cms.gov/​initiatives/​epm.

Like the CJR model policy, we proposed that these exclusion lists would be updated by sub-regulatory guidance on an annual basis, at a minimum, to reflect annual changes to ICD-10-CM coding and annual changes to the MS-DRGs under the IPPS, as well as to address any other issues that are brought to our attention throughout the course of the EPMs' performance period (80 FR 73304 through 73305 and 73315). The standards for this updating process reflect the previously discussed general principles for determining excluded services. That is, we proposed to not exclude any items or services that are directly related to the EPM episode diagnosis or procedure (for example, a subsequent admission for heart failure or repeat revascularization) or the quality or safety of care (for example, sternal wound infection following CABG); or to chronic conditions that may be affected by the EPM diagnosis or procedure and the post-discharge care (for example, diabetes). We proposed to exclude items and services for chronic conditions that are generally not affected by the EPM diagnosis or procedure and the post-discharge care (for example, prostate removal for cancer), and for acute clinical conditions not arising from existing EPM episode-related chronic clinical conditions or complications from the EPM episode (for example, appendectomy).

Similar to the CJR model, we proposed that the potential revised exclusions, which could include additions to or deletions from the exclusion lists, would be posted to the CMS Web site to allow for public input (80 FR 73305 and 73315). Through the process for public input on potential revised exclusions and then posting of the final revised exclusions, we proposed to provide information to the public about when the revisions would take effect and to which episodes they would apply.

The proposal for included services for an EPM was included in proposed § 512.210(a). The proposal for excluded services from the EPM episode was included in proposed § 512.210(b). The proposal for updating the lists of excluded services for EPMs was included in proposed § 512.210(c). We sought comment on our proposals for included and excluded services for the AMI, CABG, and SHFFT models and updating the lists of excluded services.

The following is a summary of the comments received and our responses.

Comment: Most commenters expressed general support for CMS' proposed episode definition strategy that would include Part A and Part B items and services and exclude certain unrelated readmissions based on a list of MS-DRGs, as well as certain unrelated Part B services based on the principal diagnosis on the claim, consistent with the episode definition approach for LEJR under the CJR model and the approach used in the BPCI initiative for several years for BPCI, SHFFT, AMI, PCI, and CABG episodes. The commenters acknowledged that most items and services would be included in the episode definition under the proposal, thus creating broadly defined SHFFT, AMI, and CABG episodes. In some cases, while commenters agreed with the proposed general strategy for identifying EPM episode exclusions, they made specific recommendations for additional exclusions based on a different exclusions standard, and these commenters are summarized later in this section, where responses are also provided. In other cases, commenters who agreed with the strategy for identifying EPM episode exclusions stated that if CMS finalizes broad EPM episode definitions, risk adjustment would be necessary in order to ensure fair payment to EPM participants.

Several commenters recommended CMS to provide greater clarity about the services included in and excluded from EPM episodes. One commenter stated that it is hard to differentiate included versus excluded services, and further added that people are “irreducible bundles” and someone needs to be responsible for all of the issues for people when they are very sick. The commenter recommended that the longer-term value of patient-centered medical homes, comprehensive ACOs, and primary care geriatricians should be considered for beneficiaries completing EPM episodes and recommended that moving people with complex illness into such arrangements should be a feature of all CMS innovations as part of moving fee-for-service payment toward quality and value. A few commenters recommended that CMS provide a clear definition and methodology for the term “related services” which would be applied consistently throughout various payment models so providers could verify how their services would be identified and paid. Finally, several commenters requested that CMS utilize an inclusions list rather than an exclusion list to avoid including inappropriate services by default. One commenter presented analysis that showed AMI model readmission for seizures and other for organic disturbance and mental retardation would be included in AMI episodes, and the commenter believes that neurological and mental health conditions are not related to cardiac care for AMI.

Response: We appreciate the support of many commenters for our proposed general approach to identifying excluded items and services for the EPMs. As we stated in the proposed rule (81 FR 50832), we are interested in testing inclusive AMI, CABG, and SHFFT episodes to incentivize comprehensive, coordinated, patient-centered care for the beneficiary throughout the episode. We agree with the commenter that it can be hard to distinguish included versus excluded services because sick people have many complex and interrelated clinical conditions and corresponding health care needs. The proposed EPM episode definitions are broad in part for this reason. Additionally, while we also agree with the commenter that the ongoing and acute health care needs of medically complex beneficiaries may be addressed through a patient-centered medical home or ACO, many of these vulnerable beneficiaries currently are not included in such models or programs. In the case of other beneficiaries who are included in medical home or ACO models or programs, they may have specific, new care management needs arising from an acute cardiac event, CABG, or hip fracture surgery that may be best managed by the EPM participant that has substantial expertise in coordinating and managing care throughout AMI, CABG, or SHFFT episodes because of its participation in the EPM, while the ACO or patient-centered medical home may have less specific expertise in managing beneficiaries recovering from major orthopedic or cardiac surgery or an AMI. We expect that EPM participants, accountable for EPM episode quality and cost performance Start Printed Page 254under the EPMs, will work closely with all providers and other organizations with which a model beneficiary has established relationships, toward the mutual goal of high quality, well-coordinated care that maximizes the rate of a beneficiary's return of function and improvements in health following surgery or AMI. We further expect that the medical management and care coordination during EPM episodes will continue to be provided as beneficiaries' transition out of EPM episodes, potentially into a primary care medical home or other model or program with accountability for population health, such as an ACO.

Because our proposed inclusive approach to EPM episode definitions results in many more items and services that are included in EPM episodes than excluded, we believe it is most efficient to identify excluded items and services as we proposed. With regard to the commenters who were concerned that an exclusion list could include inappropriate services by default, we note that we posted to the CMS Web site the proposed exclusion lists for the AMI, CABG, and SHFFT models for comment in association with the proposed rule and are finalizing the initial exclusion lists through this rulemaking where we have considered and responded to all the comments we received on our proposed exclusions. Thus, no items and services would be included in EPM episodes by default because the exclusion lists have been established through notice and comment rulemaking. In addition, as discussed later in this section, we proposed a sub-regulatory process for updating the exclusion lists to reflect ICD-10-CM coding and annual changes to the MS-DRGs under the IPPS, as well as to address any other issues that are brought to our attention throughout the course of the EPMs' performance periods. The standards for the process reflect the proposed general principles for excluded services and the process itself allows opportunity for public input. Thus, we believe that all items and services included in EPM episodes are intentionally included, after consideration of public input, rather than included by default.

We note that in the example raised by the commenter of “default inclusion,” we disagree with the commenter that readmissions for neurological and mental health conditions are unrelated to cardiac care for AMI. For example, an AHRQ Evidence Report on post-myocardial infarction found that the evidence is consistent that in patients with AMI, depression is common at the time of the hospitalization and persists for at least several months after hospital discharge without treatment.[57] Further, the report found that depression is associated with a significantly increased risk of subsequent death, and of cardiac readmission and poor quality of life during the first year. Thus, we would not exclude readmission for treatment of depression from AMI episodes because we believe that depression would generally be a chronic condition that was likely to have been affected care during the AMI model episode. Under our proposal, readmissions for neurological and mental health conditions would not be excluded from AMI episodes because they are not MS-DRGs that we proposed to exclude from the AMI episodes, specifically oncology; trauma medical; chronic disease surgical unrelated to a condition likely to have been affected by care during the EPM episode; or acute disease surgical unrelated to a condition resulting from or likely to have been affected by care during the AMI episode. Thus, we consider those readmissions related to AMI episodes as they are medical MS-DRGs for conditions that are likely to have resulted from or been affected by care during the AMI anchor hospitalization or during the 90 days post-hospital discharge.

By posting to the CMS Web site the lists of excluded services for the EPMS, we believe we are providing the clarity and detail needed for any provider to understand whether his or her services furnished to a beneficiary in an EPM episode are included in the EPM episode definition because they are related to the episode or excluded from the EPM episode because they are unrelated. To date, we have applied the same general approach to identifying exclusions in the BPCI initiative, the CJR model, and the proposed EPMs, which should facilitate provider understanding about exclusions under these different episode payment models. We note, however, that the exclusion list differs based on the clinical condition that is the focus of the episode so a provider that is paid under Part B or a hospital would not be able to have a uniform determination of whether services furnished were included or excluded from an episode without knowledge of the beneficiary's specific episode in an episode payment model as well as the clinical condition for which the provider furnished services. All of the Innovation Center episode payment models except Model 4 of BPCI use retrospective payment, so all providers would be paid according to the usual fee-for-service systems that apply, regardless of whether the items or services furnished by the provider are included in or excluded from a beneficiary's episode.

Comment: While some commenters expressed full support for CMS' proposed definition of related services, other commenters recommended CMS to exclude specific additional groups of services from EPM episodes. The commenters requested that CMS further exclude:

  • Readmissions that were already planned for the beneficiary prior to the anchor hospitalization because their occurrence would be unrelated to episode care;
  • Readmissions that were part of the planned post-discharge care for the beneficiary after the anchor hospitalization, because these provide no opportunity for efficiency yet could lead to high-cost episodes:
  • Medical readmissions for unrelated acute and chronic conditions;
  • Part B services that are not directly related to the episode;
  • Cardiac rehabilitation, intensive cardiac rehabilitation, and chronic care management services where appropriate utilization under the EPMs in the context of historical low utilization would lead to increased episode costs during the EPM performance period;
  • Behavioral and substance abuse services because these are not always integral or of strong relevance to the clinical definitions of the EPMs, and CMS does not provide claims data to model participants for these services so no participants can predict, model, or calculate episode spending; and
  • Outpatient chemotherapy, psychiatric readmissions, and high cost intravenous therapy administered through DME that are unrelated to the episode and could lead to increased episode costs.

Response: We believe that it is not necessary to exclude from EPM episodes planned readmissions and outpatient services, regardless of whether those plans were made prior to the anchor hospitalization or during the anchor hospitalization but prior to discharge, solely because the readmissions or outpatient services are planned in advance. While we understand that certain other CMS programs account differently for planned readmissions by excluding them from readmission calculations, such as the HRRP which reduces payments to hospitals with excess readmissions, we do not believe that planned readmissions should be Start Printed Page 255excluded from EPM episodes, where the goals of the EPMs are to improve the quality and efficiency of episode care and where we do not make a specific assessment about excess readmissions. Just like unplanned readmissions, we believe that planned readmissions should be excluded from EPM episodes only if they are unrelated to the EPM episodes based on the proposed standards for exclusion of inpatient readmissions that group to the following categories of diagnoses: Oncology; trauma medical; chronic disease surgical unrelated to a condition likely to have been affected by care during the EPM episode; and acute disease surgical unrelated to a condition resulting from or likely to have been affected by care during the EPM episode. We continue to believe these standards are appropriate to identify excluded readmissions from EPM episodes given our design of the EPMs to test comprehensive, coordinated patient-centered care for the beneficiary throughout broadly defined EPM episodes. Unless a readmission is excluded from the EPM episode based on these standards, any readmission, whether planned or unplanned, would be related to the EPM episode and be affected by the clinical condition that is the basis for that episode. We appreciate the concerns of the commenters about ensuring appropriate EPM episode prices in the case of planned readmissions. While we are not adopting any specific methodologies for identifying and making episode payment adjustments for such planned, related readmissions now except in the case of a CABG readmission during an AMI episode as discussed in section III.D.4.b.(2)(c), we will study this issue in more detail especially as it relates to the cardiac models. Should we determine a change to our policies regarding planned, related readmission could be appropriate, we will make proposals through future rulemaking.

To the extent that planned readmissions reflect certain clinically appropriate care patterns for beneficiaries in EPM episodes based on plans made during the anchor hospitalization, we expect that such readmissions would be included in the historical EPM episodes used to establish EPM-episode payments and thus hospitals would be appropriately paid, on average, for EPM episode care. To the extent that efficiencies in EPM episode care are possible and medically appropriate, reducing planned readmissions may provide an opportunity for increased EPM episode efficiencies. However, we would not expect EPM participants to reduce EPM-episode spending by shifting the utilization of medically necessary services, such as planned readmissions, until after the EPM episode ends. We refer to section III.D.4.b.(2)(c) of this final rule for discussion of the pricing adjustment for CABG readmissions during AMI episodes due to this costly, clinically-appropriate care pattern of delayed CABG for some beneficiaries with AMI.

Furthermore, while we expect that certain elective admissions considered related under the EPMs may be planned prior to the anchor hospitalization for the EPM episode and could, therefore, occur during the 90-day post-discharge period, we believe that such actual readmissions after CABG, SHFFT or AMI treatment are uncommon during the post-surgical recovery or post-AMI recovery period for EPM beneficiaries that extends 90 days following discharge from the anchor hospitalization. If such readmissions were planned, they would often be canceled due to the intervening surgery or AMI until the beneficiary has fully recovered. We will not exclude them all as unrelated because any readmission not on the EPM exclusion list may be related care furnished during the post-surgical or post-AMI recovery period. Our exclusion methodology does not allow us to identify those readmissions that are truly elective; that is, the condition was present and the readmission was planned prior to the hospitalization that anchored the EPM episode and scheduled during the 90-day post-hospital discharge period.

For readmissions to medical MS-DRGs, the selection of the principal diagnosis code is not clear-cut so we believe they should all be included in the EPM episode definition so providers focus on comprehensive care to beneficiaries in episodes. We believe that readmissions to medical MS-DRGs are generally linked to the hospitalization or event as a complication of the illness that led to the procedure or event, a complication of treatment or interactions with the health care system, or a chronic illness that may have been affected by the course of care. Therefore, we believe it is infeasible under the EPMs to identify medical readmissions for unrelated acute and chronic medical conditions, other than our proposal to exclude readmissions for oncology and trauma medical diagnoses.

Similarly, our proposal identified those Part B services unrelated to the episode as acute disease diagnoses unrelated to a condition resulting from or likely to have been affected by care during the EPM episode and certain chronic disease diagnoses depending on whether the condition was likely to have been affected by care during the EPM episode or whether substantial services were likely to be provided for the chronic condition during the EPM episode. We do not believe that requiring a direct relationship between the diagnosis for the Part B services and the clinical condition that is the basis for the EPM episode is appropriate under the broadly defined episodes of the EPMs. Most medical conditions are likely to be affected by care during the EPM episode, yet they may not have a direct relationship to the clinical condition that is the reason for the anchor hospitalization.

We also do not believe that it would be appropriate to exclude other specific Part B services that are related to the clinical conditions that are the basis for EPM episodes, such as cardiac rehabilitation, intensive cardiac rehabilitation, and chronic care management services, just because they are underrepresented in the baseline period upon which benchmark episode prices are set. As discussed in section III.D.4.b.(3) of this final rule, to the extent that care redesign under the EPMs increases utilization of these services to improve episode quality and efficiency, periodic updates to the 3 years of historical data used to establish EPM-episode benchmark prices would result in greater representation of these services that reflect more recent care patterns.

Additionally, we do not believe that it would be appropriate to exclude behavioral health and substance abuse services, including psychiatric readmissions, from EPM episodes because these services are for conditions that are likely to affect EPM episode care. We note that these services are not common in episodes and, while we acknowledge that the episode claims data provided to EPM participants will not include these data, our proposal to exclude this information but include the costs of the services in EPM episodes is consistent with our usual treatment of these services in other similar CMS programs and models where providers must take on risk in managing the care of their beneficiaries, such as the Shared Savings Program and BPCI initiative. Based on our experience to date with bundled payment models and the Shared Savings Program, this policy has not been a significant impediment to the operations of these efforts. For example, in the most recent episodes in BPCI Models 2 and 3, the claims for behavioral health and substance abuse services included in episodes that we Start Printed Page 256did not share with BPCI participants accounted for less than 0.1 percent of total episode spending. We refer to section III.K. of this final rule for further discussion of issues related to sharing beneficiary-identifiable data for behavioral health and substance abuse services with EPM participants.

With regard to the commenters requesting that we exclude outpatient chemotherapy services from the EPM episode definitions, we agree that these should be excluded from EPM episodes in accordance with our proposal that excludes services based on ICD-9-CM and ICD-10-CM cancer diagnosis codes on the proposed EPM exclusion lists from historical and actual EPM episodes. In the case of high-cost intravenous therapy administered through DME, we would only exclude such treatments if the claims reported ICD-10-CM diagnosis codes that would identify these services as unrelated to the EPM episodes. Otherwise, despite the cost of this therapy, these services would be included in EPM episodes because they are related.

Comment: Several commenters recommended CMS to exclude readmissions for PCI from AMI episodes, stating that current STEMI clinical guidelines for the culprit artery lesion in addition to other multi-vessel stenosis states, “Approximately 50% of patients with STEMI have multivessel disease. PCI options for patients with STEMI and multivessel disease include: (1) Culprit artery-only primary PCI, with PCI of non-culprit arteries only for spontaneous ischemia or intermediate or high-risk findings on pre-discharge noninvasive testing; (2) multi-vessel PCI at the time of primary PCI; or (3) culprit artery-only primary PCI followed by staged PCI of non-culprit arteries.” [58] Another commenter quoted on the topic from the most recent update to the guidelines published in 2016, “Although several observational studies and a network meta-analysis have suggested that multivessel staged PCI may be associated with better outcome than multivessel primary PCI, there are insufficient observational data and no randomized data at this time to inform a recommendation with regard to the optimal timing of nonculprit vessel PCI.”

The commenters recommended CMS to exclude planned readmissions for PCI from the AMI episode definition because the AMI model as proposed would discourage the recommended course of care of a secondary PCI procedure for AMI patients with multivessel disease. The commenters believe that the AMI episode definition could encourage the treatment of secondary lesions during the initial angioplasty and in other cases could provide an incentive to delay treatment of the secondary lesions until after the 90-day post-hospital discharge duration of the AMI episode has concluded. The commenters added that another strategy of EPM participants to deal with limited AMI episode payments might be to inappropriately refer multivessel disease patients into the separate CABG model.

Alternatively if CMS does not excluded planned PCI readmissions, the commenters recommended CMS to exclude STEMI beneficiaries with multivessel disease from the AMI model and/or make accommodations in the pricing methodology for the extra cost of treating such beneficiaries appropriately. As another alternative, the commenters requested that CMS shorten the AMI episode duration to 30 days post-discharge so that secondary PCI could be performed for multivessel disease without the financial constraints of an ongoing AMI episode. Finally, the commenters recommended that if the AMI episodes cannot be revised to avoid these potentially harmful incentives, CMS should monitor and evaluate whether these shifts in pattern of care are occurring and whether they have affected patient outcomes.

Response: While we appreciate the concerns of the commenters, as we stated in the proposed rule (81 FR 50852), fewer than 3 percent of those AMI model beneficiaries who receive inpatient or outpatient PCIs during AMI episodes receive the PCIs between 2 and 90 days post-discharge from an anchor or chained anchor hospitalization. Since a PCI for an AMI typically is provided during the anchor hospitalization and most PCIs later in an episode occur in the context of a beneficiary presenting through the emergency department, we believe that in most cases of PCI following discharge from the anchor hospitalization, the beneficiary likely has experienced a complication of care resulting in a PCI that may potentially be avoided through care management during the AMI episode. This PCI would clearly be related to the AMI episode and should not be excluded from the AMI episode.

It would also be inappropriate to exclude beneficiaries with STEMI and multivessel disease from the AMI model simply because their plan of care could include a secondary PCI procedure as these beneficiaries would represent nearly 50 percent of STEMI patients, who themselves make up a significant percent of beneficiaries in the AMI model. While we expect that few beneficiaries would follow this care pattern based on our analysis of historical AMI episodes, in this scenario the PCI would clearly be related to the AMI and, therefore, be appropriately included in the AMI episode definition. Given that our intention is to offer appropriate incentives for care quality and efficiency by holding AMI model participants accountable for readmissions that could be related to the quality of care provided prior to the readmission, we believe that a pricing adjustment for a PCI readmission or outpatient PCI would not be appropriate.

We note that the recently updated treatment guidelines cited by the commenters state there is insufficient observation data and no randomized data to inform a recommendation regarding the optimal timing of non-culprit vessel PCI. The guidelines contain no specific recommendation for the timing of delayed treatment of secondary lesions, while specifically stating that the “recommendation with regard to multivessel primary PCI in hemodynamically stable patients with STEMI has been upgraded and modified . . . to include consideration of multivessel PCI, either at the time of primary PCI or as a planned, staged procedure.” Given that there is no specific recommendation regarding the routine performance of multivessel PCI for patients with STEMI and multivessel disease, nor a recommendation on the timing for multivessel PCI if it is performed, we do not believe the AMI model definition discourages patterns of care that are recommended for AMI patients with multivessel disease. We also do not see any reason why the care patterns related to performing PCI for multivessel disease following STEMI should lead us to shorten the AMI episode duration from 90 days post-discharge to 30 days or to make a pricing adjustment for AMI episodes that include this pattern of care. We refer to section III.C.4.c.(2) of this final rule for further discussion of the AMI episode duration.

As recommended by the commenters, we will evaluate care patterns under the AMI model for secondary PCI following an initial PCI for treatment of AMI to determine whether shifts in care are Start Printed Page 257occurring and whether changes in beneficiary outcomes are observed. We refer to section IV. of this final rule for further discussion of our plans for evaluation of the AMI model.

Comment: One commenter requested confirmation of their understanding of CMS' proposal to exclude MS-DRGs for inpatient hospital readmissions that group to the “Trauma medical” category of diagnoses. The commenter interpreted this provision as trauma diagnoses unrelated to the initial MS-DRG triggering an episode.

Response: By trauma medical diagnoses, we mean that those MS-DRGs that represent a readmission for medical treatment of trauma during an EPM episode are excluded. For example, we would exclude MS-DRGs 082-087 in the Traumatic Stupor & Coma series and MS-DRGs 088-090 in the Concussion series.

Comment: Several commenters recommended CMS to exclude hospice services from the EPM episode definition as they generally would be unrelated to the EPM episodes. The commenters stated that including hospice services in EPM episodes could result in incentives for underutilization of the hospice benefit. They encouraged CMS to exclude all hospice services in order to ensure timely access to hospice for EPM beneficiaries. One commenter pointed out that exclusion of hospice services from the EPM episode definitions would be consistent with their exclusion from BPCI episodes.

Response: We appreciate the interest of the commenters in ensuring continued beneficiary access to hospice services under the EPMs. We note that although we exclude hospice services from BPCI episodes, we include them in LEJR episodes in the CJR model (80 FR 73307). We understand that EPM beneficiaries could receive hospice services during an episode under several different types of clinical circumstances. For example, the beneficiary could be enrolled in hospice prior to a SHFFT episode, experience a pathologic hip fracture, and require a SHFFT procedure to stabilize his or her hip. Alternatively, the beneficiary could have a CABG and enter into hospice at some point during the episode in the 90 days following discharge from the anchor hospitalization, either after experiencing a surgical complication leading to a terminal prognosis, progressive severe heart failure despite the CABG, or based on a new diagnosis of a terminal stage of an illness.

As we explained in the CJR Final Rule (80 FR 73307), Medicare hospice care is palliative care for individuals with a prognosis of living 6 months or less if the terminal illness runs its normal course. As referenced in § 418.22(b)(1), to be eligible for Medicare hospice services, the patient's attending physician (if any) and the hospice medical director must certify that the individual is “terminally ill,” as defined in section 1861(dd)(3)(A) of the Act and our regulations at § 418.3; that is, the individual's prognosis is for a life expectancy of 6 months or less if the terminal illness runs its normal course. When an individual is terminally ill, many health problems are brought on by underlying condition(s), as bodily systems are interdependent. Section 1861(dd)(1) of the Act establishes the services that are to be rendered by a Medicare certified hospice program and those services include: Nursing care; physical therapy; occupational therapy; speech-language pathology therapy; medical social services; home health aide services (now called hospice aide services); physician services; homemaker services; medical supplies (including drugs and biologics); medical appliances; counseling services (including dietary counseling); short-term inpatient care (including both respite care and care necessary for pain control and acute or chronic symptom management) in a hospital, nursing facility, or hospice inpatient facility; continuous home care during periods of crisis and only as necessary to maintain the terminally ill individual at home; and any other item or service which is specified in the plan of care and for which payment may otherwise be made under Medicare, in accordance with Title XVIII of the Act. The services offered under the Medicare hospice benefit must be available, as needed, to beneficiaries 24 hours a day, 7 days a week (section 1861(dd)(2)(A)(i)of the Act).

The regulations at § 418.54(c) stipulate that the comprehensive hospice assessment must identify the patient's physical, psychosocial, emotional, and spiritual needs related to the terminal illness and related conditions, and address those needs in order to promote the hospice patient's well-being, comfort, and dignity. The comprehensive assessment must take into consideration the following factors: The nature and condition causing admission (including the presence or lack of objective data and subjective complaints); complications and risk factors that affect care planning; functional status; imminence of death; and severity of symptoms (§ 418.54(c)). Additionally, the hospice Conditions of Participation (CoPs) at § 418.56(c) require that the hospice must provide all reasonable and necessary services for the palliation and management of the terminal illness, related conditions and interventions to manage pain and symptoms. Therapy and interventions must be assessed and managed in terms of providing palliation and comfort without undue symptom burden for the hospice patient or family. In the December 16, 1983, Hospice final rule (48 FR 56010 through 56011), regarding what is related versus unrelated to the terminal illness, we stated: “We believe that the unique physical condition of each terminally ill individual makes it necessary for these decisions to be made on a case-by-case basis. It is our general view that hospices are required to provide virtually all the care that is needed by terminally ill patients.”

Thus, we believe that hospice services furnished to EPM beneficiaries should be included in the episode definition for the EPMs, regardless of the specific diagnosis of the beneficiary, because hospices are to provide virtually all care that is needed by terminally ill patients. This is consistent with our conclusion when we considered hospice services in the LEJR episode definition under the CJR model (80 FR 73307). If an EPM beneficiary was receiving hospice services during an episode, either because the beneficiary was enrolled in hospice prior to surgery or a cardiac event and continued in hospice following surgery or the cardiac event or the beneficiary enrolled in hospice following the surgery or cardiac event that initiated the EPM episode, we believe that hospice services would encompass care related to the EPM episode and should, therefore, be included in the episode definition. As previously noted, given the comprehensive nature of the hospice benefit and the fact that body systems are interdependent at end of life, virtually all care needed by the terminally-ill individual would be related to the terminal prognosis and thus the responsibility of the hospice.

As previously noted, hospices are required, per the Hospice CoPs at § 418.56(c), to provide all reasonable and necessary services for the palliation and management of the terminal illness, related conditions, and interventions to manage pain and symptoms. For patients that underwent surgery or cardiac care under the EPMs that have also elected the Medicare hospice benefit, hospice services would need to respond to the care needs of the EPM beneficiary following surgery or hospitalization for cardiac care. As in the case of other medically necessary services that would improve a beneficiary's quality of care and quality Start Printed Page 258of life, we expect that EPM beneficiaries will receive clinically appropriate referrals to hospice in a timely manner. Furthermore, we also believe hospice services could contribute to episode efficiency through improved comprehensive care coordination and management for EPM beneficiaries that have a terminal prognosis. As previously stated, hospices are required to provide comprehensive care coordination and management per the hospice CoPs at 418.56. As discussed in sections III.G.4. through 6. of this final rule, we will be monitoring for access to care, quality of care, and delayed care and will take actions as described if problems are found.

Comment: One commenter recommended that CMS exclude Inpatient Psychiatric Facility (IPF) services from the EPM episode definition as not being related to or resulting from the EPM clinical condition, consistent with their treatment in BPCI episodes.

Response: We are clarifying that under the BPCI models, IPF services furnished following discharge from the episode anchor hospitalizations but during the episode are included in the episode definition, unless they fall into one of the excluded MS-DRGs for the episode. Thus, we include inpatient psychiatric services whether paid under the IPPS or the IPF PPS in all episodes under the BPCI initiative according to the same policy that would exclude readmissions paid under either payment system based on the same exclusion list. As we concluded for the CJR model (80 FR 73306), we see no reason for the EPMs not to apply the standards we proposed to define related and unrelated Part A and Part B services with respect to IPF services furnished during EPM episodes. Therefore, we believe the list of excluded MS-DRGs applicable to the EPM episode identifies those IPF admissions during the episode that would be clinically unrelated to the episode so we exclude them from the EPM episode definition, whereas IPF services any time during an EPM episode that result in discharge from an MS-DRG that is not excluded would be related and included in the EPM episode definition. We disagree with the commenter that all IPF services furnished following discharge from the anchor hospitalization that initiates the EPM episode after surgery are unlikely to be related to or resulting from the EPM clinical condition or its treatment. Thus, we believe the MS-DRG exclusions for the EPM episodes identify those circumstances when IPF services are unrelated to the episode.

Comment: Several commenters recommended that CMS exclude post-acute care services from EPM episodes if the beneficiary chooses a facility not recommended by the EPM participant or treating physician. Other commenters recommended that CMS exclude post-acute care services following excluded readmissions due to how little is known about the causal relationship between an unrelated hospital readmission and subsequent post-acute care services.

Response: As discussed in section III.G.2. of this final rule, the proposed EPMs would not limit an EPM beneficiary's ability to choose among Medicare providers or the range of services that would be available to them. Beneficiaries would continue to choose any Medicare participating provider, or any provider that has opted out of Medicare, with the same costs, copayments, and responsibilities as they have with other Medicare services. Therefore, it would not be appropriate to exclude post-acute care services from the EPM episode definition if the beneficiary chooses a post-acute care facility that is not recommended by the EPM participant or the beneficiary's treating physician.

With regard to requests that we exclude post-acute services from EPM episodes following excluded readmissions, as Part A services are generally intended to be comprehensive in nature and because the beneficiary in an EPM episode would still be in the recovery period for the 90 days following surgery or an AMI, we believe any post-acute care services provided during the EPM episode would be related to the SHFFT, CABG, or AMI. Regardless of the reason for the hospitalization immediately preceding the initiation of post-acute care services during an EPM episode, the post-acute care provider would need to address the beneficiary's post-surgical or post-AMI recovery, even if the post-acute care services followed an unrelated admission to the hospital.

Comment: Several commenters identified additional MS-DRGs or conditions resulting in hospitalization that they recommended be excluded from the cardiac episodes. The commenters requested that clinical conditions that group to the following MS-DRGs be excluded from the AMI and CABG model episode definitions, generally on the basis that these readmissions are not integral to the management of beneficiaries in the 90 days following discharge from the AMI or CABG anchor hospitalization:

  • 222 (Cardiac Defibrillator Implant with Cardiac Catheterization with AMI/HF/Shock with MCC).
  • 223 (Cardiac Defibrillator Implant with Cardiac Catheterization with AMI/HF/Shock without MCC).
  • 224 (Cardiac Defibrillator Implant with Cardiac Catheterization without AMI/HF/Shock with MCC).
  • 225 (Cardiac Defibrillator Implant with Cardiac Catheterization without AMI/HF/Shock without MCC).
  • 226 (Cardiac Defibrillator Implant without Cardiac Catheterization with MCC).
  • 227 (Cardiac Defibrillator Implant without Cardiac Catheterization without MCC).
  • 266 (Endovascular Cardiac Replacement with MCC).
  • 267 (Endovascular Cardiac Replacement without MCC).
  • 273 (Percutaneous Intracardiac Procedures with MCC).
  • 274 (Percutaneous Intracardiac Procedures without MCC).

Another commenter claimed that CMS' proposal to include nearly all surgical MS-DRGs within Major Diagnostic Category (MDC) 5 (Diseases and Disorders of the Circulatory System) in the AMI and CABG episode definition, rather than also requiring an acute care ICD-CM diagnosis code on the claim for the MS-DRG in MDC 5 to be included in the episode, especially within the 31 to 90 days following discharge from the anchor hospitalization, could penalize hospitals for providing necessary care within the timeframe for AMI and CABG episodes. Examples provided by the commenter included abdominal aortic aneurysm; peripheral bypass surgical and endovascular procedures; surgical valve repair or replacement; planned inpatient or outpatient electrophysiology admissions to replace cardiac defibrillators or pacemakers; and staged outpatient revascularization procedures several months after an initial intervention for AMI.

One commenter recommended that readmissions for extracorporeal membrane circulation (ECMO) that would group to MS-DRG 003 (ECMO or Tracheostomy with MV > 96 hours or PDX Except Face, Mouth and Neck with Major O.R. Procedure) be excluded from the CABG episode definition. Another commenter recommended the addition of 241 MS-DRGs to CMS' the readmissions exclusion list for CABG episodes, in addition to the 370 MS-DRGs proposed by CMS on the list, on the basis that these MS-DRGs did not have any clinical relevance to CABG. These additional MS-DRGs would result in the exclusion of 611 MS-DRGs out of a total of approximately 760 MS-DRGs from CABG episodes.Start Printed Page 259

Finally, the commenter who favored CMS' adopting a more robust methodology for differentiating planned from unplanned use of inpatient and outpatient services within the 90-day post-discharge period, similar to the methodology used in the HRRP for AMI and CABG, requested that should CMS continue with the MS-DRG exclusion list that CMS revisit the proposed exclusion lists for AMI and CABG episodes. The commenter claimed there were some inconsistencies in the treatment of AMI MS-DRG-anchored AMI episodes and CABG episodes compared with PCI MS-DRG-anchored AMI episodes. The commenter identified MS-DRGs 326 (Stomach, Esophageal, and Duodenal Procedures with MCC); 327 (Stomach, Esophageal, and Duodenal Procedures with CC); 328 (Stomach, Esophageal, and Duodenal Procedures without CC/MCC); 266 (Endovascular Cardiac Valve Replacement with MCC); and 267 (Endovascular Cardiac Valve Replacement without MCC) as on the PCI MS-DRG-anchored AMI exclusion list but not on the AMI MS-DRG-anchored AMI and CABG MS-DRG exclusion list, and was unclear about the rationale for these differences.

Response: We appreciate the requests by the commenters to add certain MS-DRGs to the exclusion list for one or both of the cardiac care models. CMS clinicians and coding staff reviewed the three different proposed exclusion lists for AMI MS-DRG-anchored AMI episodes, PCI MS-DRG-anchored AMI episodes, and CABG episodes for the inconsistencies identified by one of the commenters against the proposed standards for excluding readmissions during EPM episodes. We proposed to exclude MS-DRGs 326-328 from PCI-anchored AMI episodes and CABG episodes but not from AMI MS-DRG-anchored episodes. Based on clinical review, we determined that admissions to these MS-DRGs would be for acute disease surgical diagnoses unrelated to a condition resulting from or likely to have been affected by care during the AMI or CABG episode so these MS-DRGs meet the proposed standards for exclusion from AMI MS-DRG-anchored AMI episodes. Therefore, we are adding MS-DRGs 326-328 to the AMI MS-DRG-anchored AMI exclusion list. MS-DRGs 266-267 are on the exclusion list for PCI MS-DRG-anchored AMI episodes, but not on the exclusion list for AMI MS-DRG-anchored AMI episodes or CABG episodes. Based on clinical review, we determined that admissions to these MS-DRGs would be for chronic disease surgical diagnoses unrelated to a condition likely to have been affected by care during the AMI or CABG episode so these MS-DRGs meet the proposed standards for exclusion from both AMI MS-DRG-anchored AMI episodes and CABG episodes. Therefore, we are adding MS-DRGs 266-267 to the AMI MS-DRG-anchored AMI exclusion list and the CABG exclusion list.

We note that MS-DRGs 222-227 and 273-274 requested for exclusion from AMI and CABG episodes by several commenters are surgical MS-DRGs in MDC 5. As another commenter pointed out, some of these may represent planned readmissions following discharge from the anchor hospitalization during the 90-day post-discharge period. However, based on our proposed readmission exclusion methodology that identifies excluded MS-DRGs without examining the diagnosis coding on hospital claims to determine the reason for the readmission, as discussed in our response to comments earlier in this section, we will not exclude planned readmissions from the AMI and CABG episode definitions. Thus, we proposed that MS-DRGs 222 through 227 and 273 through 274 not be excluded from AMI (regardless of PCI or AMI MS-DRG-anchor) and CABG episodes, and we are continuing to include these MS-DRGs in those episodes, as well as the other surgical MS-DRGs in MDC 5 that we did not propose to exclude from all AMI and CABG episodes. Based on clinical review, we determined that these readmissions for circulatory system procedures are related services in AMI and CABG episodes, based on our proposed standards for excluding surgical MS-DRGs from the EPMs: Chronic disease surgical diagnoses unrelated to a condition likely to have been affected by care during the EPM episode; and acute disease surgical diagnoses unrelated to a condition resulting from or likely to have been affected by care during the EPM episode. While some commenters stated that these readmissions were not integral to AMI and CABG episodes, that is not the standard we used for determining related readmissions because we are adopting broad episode definitions for the EPMs. While we are not adopting any specific methodologies for identifying and making episode payment adjustments for such planned, related readmissions now except in the case of a CABG readmission during an AMI episode as discussed in section III.D.4.b.(2).(c). of this final rule, we will study this issue in more detail especially as it relates to the cardiac models. Should we determine a change to our policies regarding planned, related readmission could be appropriate, we will make proposals through future rulemaking.

Finally, we carried out a clinical review of the 241 MS-DRGs recommended by a commenter for addition to the CABG exclusion list, as well as MS-DRG 003 that was recommended for exclusion by another commenter. About three-quarters of the MS-DRGs recommended for exclusion were medical MS-DRGs that did not meet our proposed standards for excluding readmissions based on medical diagnoses, specifically oncology or trauma medical diagnoses. As we first discussed in the CJR Final Rule (80 FR 73304) and in the EPM proposed rule (81 FR 50833), we believe all other readmissions for medical MS-DRGs should be included in EPM episodes because these are generally linked to the condition that was the focus of the anchor hospitalization as a complication of that illness, a complication of treatment or interactions with the health care system, or a chronic illness that may have been affected by the course of episode care. The inclusion of most MS-DRGs in EPM episodes should encourage providers to focus on comprehensive care for beneficiaries during episodes. More than half of the surgical MS-DRGs recommended for CABG episode exclusion were in MDC 5 and, with the exception of MS-DRGs 266-267 discussed previously, we will not exclude them from CABG episodes based on the reasons discussed earlier in this response. Of the remaining surgical MS-DRGs spread across 7 MDCs representing different body systems, we will also not exclude any of these MS-DRGs because they do not meet our standards for excluding MS-DRGs from CABG episodes, namely that the readmissions are for chronic disease surgical diagnoses unrelated to a condition likely to have been affected by care during the CABG episode or acute disease surgical diagnoses unrelated to a condition resulting from or likely to have been affected by care during the CABG episode. We believe that our determinations may be different than the commenters' recommendations because our standard for exclusion in broadly defined CABG episodes is much more stringent than the commenters' review of MS-DRGs based on their clinical relevance to CABG.

Comment: Several commenters requested that CMS add MS-DRGs 469 and 470 for major joint replacement of the lower extremity to the exclusion list for SHFFT episodes, unless the joint replacement was for the joint that Start Printed Page 260underwent a SHFFT procedure that initiated the SHFFT episode. The application of the exclusion in this way would exclude elective LEJR readmissions from SHFFT episodes. The commenters claimed this approach would avoid outliers and penalizing the orthopedic surgeon for identification and treatment of unmet medical needs while treating a beneficiary following a hip fracture. One commenter stated that these circumstances would be highly variable, particularly in hospitals with small patient volume. They recommended excluding MS-DRGs 469 and 470 from SHFFT episodes so as not to penalize low-volume hospitals who performed costly elective LEJR during SHFFT episodes on an occasional basis.

Response: Based on our proposed methodology to identify excluded readmissions by a list of MS-DRGs, we would have to substantially increase the complexity of our exclusions methodology to identify only a subset of MS-DRG 469 and 470 readmissions for exclusion because they were not related to the joint surgery that initiated the SHFFT episode. We do not believe this additional complexity is necessary because we expect that LEJR replacement of another joint, whether elective or for fracture, would be rare during SHFFT episodes. Most LEJR is elective, rather than for fracture, and given the prolonged partial weight-bearing commonly required for recovery from SHFFT procedures and the general complexity and frailty of many beneficiaries who would be included in SHFFT episodes, we believe that elective LEJR of a joint other than that involved in the initial SHFFT surgery during the 90 days post-discharge from the SHFFT model anchor hospitalization would be exceedingly rare. We would expect that most LEJR procedures during SHFFT episodes would be related because they would involve the joint that had an initial SHFFT procedure.

Comment: One commenter recommended that CMS exclude Part B services from CABG episodes based on individual ICD-9-CM and ICD-10-CM diagnosis codes, rather than categories as CMS proposed. The commenter claimed that CMS' proposed process would result in over 22,000 ICD-10-CM diagnosis codes that would be classified as included in the CABG episode, thereby resulting in those services being considered as related items and services. The commenter believes that this methodology would result in many of the included services having no clinical relevance to a CABG. The commenter recommended CMS to specify Part B episode exclusions at the ICD-CM code level to ensure that only services that are clinically related to a CABG are included in the episode. The commenter recommended 4,960 specific ICD-9-CM and 18,859 specific ICD-10-CM diagnosis codes be added to the CABG exclusion list.

Another commenter recommended that CMS exclude the following ICD-10-CM diagnosis code categories from AMI episodes as they are not integral to AMI treatment: I47 (Paroxysmal tachycardia); I48 (Atrial fibrillation and flutter); and I49 (Other cardiac arrhythmias). The same commenter recommended that CMS exclude ICD-9-CM diagnosis code category 427 (Cardiac dysrhythmias) from AMI episodes.

Response: We appreciate the recommendations from the commenter about additional ICD-9-CM and ICD-10-CM diagnosis code categories to be excluded from AMI episodes. However, with respect to their requested additions to the AMI Part B exclusion list, we believe the four categories of ICD-CM codes recommended for exclusion do not meet our proposed Part B exclusions standards, specifically those services that are for acute disease diagnoses unrelated to a condition resulting from or likely to have been affected by care during the EPM episode or for certain chronic disease diagnoses, depending on whether the condition was likely to have been affected by care during the EPM episode or whether substantial services were likely to be provided for the chronic condition during the EPM episode. The ICD-CM diagnosis code categories describe different types of cardiac arrhythmias, which can result from an AMI, where the arrhythmia would be an acute condition related to the AMI episode, or can be a chronic condition where the management of the arrhythmia would be affected by the AMI treatment. Thus, we do not agree with the commenter that these ICD-CM diagnosis code categories should be excluded from AMI episodes.

With respect to CABG episodes, another commenter recommended almost 19,000 ICD-10-CM diagnosis codes be added to the CABG exclusion list. The commenter submitted individual codes in 750 ICD-10-CM categories for exclusion, of which there were 563 categories (75%) in which they requested excluding all codes. We note that there are about 71,000 billable ICD-10-CM codes in 1,910 categories, compared to about 15,000 ICD-9-CM codes in 1,042 categories. Due to the large number of diagnosis codes, we believe it would be operationally infeasible and unnecessarily complex to determine excluded Part B services at the individual diagnosis code level. We further believe that the ICD-CM diagnosis code categories are sufficiently narrow and descriptive that they can be appropriately used to determine Part B exclusions without substantial risk of misidentifying services that are unrelated to CABG episodes according to our proposed Part B exclusions standards. We have several years of experience with 48 different BPCI clinical episodes in Model 2, including CABG, which has a similar design to the proposed CABG model. We have encountered no significant concerns from BPCI Awardees or other stakeholders about our BPCI methodology which excludes Part B services based on ICD-CM diagnosis code categories, just as we use in the CJR model and proposed for the CABG model. Therefore, we are continuing to consider changes to the Part B exclusion list for the EPMs based on ICD-CM categories.

We did not perform another clinical review of the 187 categories where the commenter only requested that we exclude some of the individual ICD-10-CM diagnosis codes in the category, because we will continue to exclude ICD-10-CM codes at the category level. CMS clinicians and coding staff reviewed all of the 563 ICD-10-CM diagnosis code categories where the commenter recommended that we exclude all the diagnosis codes in order to make a determination about additional exclusions at the category level. While the commenters claimed that diagnosis codes in these categories had no clinical relevance to CABG, we do not agree that the additional categories where the commenter recommended 100 percent of the ICD-10-CM diagnosis codes for exclusion meet our proposed standards for exclusion. For example, the commenter requested that we exclude the categories K20 (Esophagitis) and I12 (Hypertensive chronic kidney disease) for Part B services from the CABG model episode definition. However, these two ICD-10-CM diagnosis code categories do not meet our proposed standards for the exclusion of Part B services because they include acute disease diagnoses for a condition arising from or likely to have been affected by care during the CABG episode in the case of Esophagitis and chronic disease diagnoses likely to have been affected by care during the CABG episode in the case of Hypertensive chronic kidney disease. The commenter's recommendations were prepared based on a standard of “clinical relevance” to CABG which we believe is too narrow to define related Start Printed Page 261Part B services for the proposed CABG model which was designed to test comprehensive, coordinated patient-centered care for the beneficiary throughout broadly defined EPM episodes. In our clinical review based on the proposed standards for Part B exclusions, we determined that the 563 ICD-10-CM diagnosis code categories where the commenter recommended that we exclude 100 percent of the diagnosis codes do not meet the standards for exclusion from CABG episodes. Therefore, we are making no changes to the CABG episode ICD-10-CM Part B exclusion list.

The same commenter who made recommendations about additional ICD-10-CM diagnosis code exclusions also recommended ICD-9-CM diagnosis codes in 436 ICD-9-CM categories for exclusion, and of those, the commenter recommended that all codes be excluded in 336 (77 percent) of the categories. We did not perform an additional clinical review of the categories where the commenter only requested that we exclude some of the individual ICD-9-CM diagnosis codes in the category, as we will continue to exclude ICD-9-CM codes at the category level. CMS clinicians and coding staff reviewed all of the 100 ICD-9-CM diagnosis categories where the commenter recommended that we exclude all the diagnosis codes in order to make a determination about additional exclusions at the category level. Similar to our findings from our review of the ICD-10-CM diagnosis code categories where all codes were recommended for exclusion, the ICD-9-CM categories with all codes recommended by the commenter for CABG episode exclusion do not meet our proposed exclusion standards for Part B services. For example, the commenter recommended that we exclude all codes in ICD-9-CM diagnosis code category 584 (Acute kidney failure) and 250 (Diabetes mellitus) from CABG episodes. However, these two ICD-9-CM diagnosis code categories do not meet our proposed standards for the exclusion of Part B services because they include acute disease diagnoses for a condition arising from or likely to have been affected by care during the CABG episode in the case of Acute kidney failure and chronic disease diagnoses likely to have been affected by care during the CABG episode in the case of Diabetes mellitus. In our clinical review, we found that none of the 100 ICD-9-CM categories where the commenter recommended that we exclude 100 percent of the diagnosis codes meet our proposed standards for excluding Part B services from CABG episodes, so we are making no changes to the CABG episode ICD-9-CM Part B exclusion list.

Comment: One commenter stated that their understanding was that emergency transportation of beneficiaries with AMI would be included in AMI episodes. The commenter pointed out that this cost could vary substantially based on the transport mileage and the mode of transport, with air transport being substantially more costly than ground transport. The commenter claimed that the EPM participant where the episode would be initiated has little or no input on the transport method used but would be held accountable for the transportation cost in the AMI episode. The commenter requested that transport of the beneficiary to the AMI model participant where the AMI episode is initiated be excluded because the AMI model participant would have little or no control of that cost.

Response: We proposed to include all Part A and Part B items and services in AMI episodes beginning with the admission of the beneficiary for the anchor hospitalization and extending through anchor hospitalization discharge, whereupon the AMI model exclusion list would be applied to Part A and Part B items and services during the 90 days post-discharge to make a determination about their inclusion in the AMI episode definition. With respect to the inclusion of Part B ambulance claims for air or ground transport in the AMI episode definition, we would exclude those services that occurred prior to the hospital admission. If the ambulance transport occurs on the day of initial admission for the anchor hospitalization and has place-of-service code for ambulance on the claim, the claim would not be included in the AMI episode definition, an approach which would be consistent with the specific request of the commenter.

However, if ambulance transport occurs any other time during the anchor hospitalization, the transportation would be included in the AMI episode definition as we include all Part B services without regard to the Part B exclusion list, except DME to which we apply the Part B exclusion list during the anchor hospitalization as well. Following discharge from the anchor hospitalization, the inclusion or exclusion of ambulance transport in the AMI episode during the 90 day post-discharge would be determined by our proposed methodology for determining exclusion of any Part B items and services based on the principal diagnosis code on the claim and whether that diagnosis code is on the AMI model exclusion list.

We note that medically appropriate air ambulance transportation is a Medicare-covered service regardless of the state or region in which it is rendered. However, contractors approve claims only if the beneficiary's medical condition is such that transportation by either basic or advanced life support ground ambulance is not appropriate. Medical reasonableness is only established when the beneficiary's condition is such that the time needed to transport a beneficiary by ground, or the instability of transportation by ground, poses a threat to the beneficiary's survival or seriously endangers the beneficiary's health.[59] Thus, the circumstances of covered air transport are limited and, once the AMI episode is initiated, the AMI model participant would have an ongoing role in beneficiary care that would result in the participant's input into the mode of transport should transport be required.

Comment: One commenter recommended that CMS include the costs of pre-operative home visits in EPM episodes, including services to discuss goals of care and advance care planning services. Another commenter requested that CMS account for preventive services in the EPMs, although they acknowledged the associated challenges in benchmarking target prices based on historical claims data. One commenter suggested that CMS include the proposed HCPCS G-codes for the Collaborative Care model such that screening and follow-up would be included in the payment structure for each EPM, while another commenter recommended CMS to make resources for care coordination strategies available to support advancing care coordination through appropriate pre-discharge planning and post-discharge follow up. The commenter observed that the majority of opportunities to advance care coordination and improve patient outcomes are in decreasing hospital length of stay to only what is necessary for appropriate treatment, preventing unnecessary readmissions, and controlling post-acute care costs. The commenter stated that opportunities to improve care coordination include strong pre-discharge planning activities; prevention of unnecessary patient visits to the emergency department through early recognition of decompensation; increasing appropriate referral to cardiac rehabilitation services; and Start Printed Page 262effective patient and family education. The commenter claimed that ensuring the social and environmental components are in place prior to discharge is critical and that communication of the most appropriate post-acute care facilities to not only the patients, but to their families and caregivers, can be essential to a patient's recovery.

Response: The only items and services that are included in EPM episode definitions are those that are separately paid by Medicare under Part A or Part B. We established EPM episode definitions in order to add Medicare payments for items and services included in the EPM episode definitions into EPM-episode benchmark prices based on historical EPM episodes and into the calculation of actual EPM-episode spending. In addition, we proposed that EPM episodes begin with the anchor hospitalization. Therefore, for the same reasons as discussed in the CJR Final Rule (81 FR 73316 through 73317) regarding LEJR episodes, we would not include any pre-operative home visits that could be separately paid by Medicare in the EPM episode definitions because they would precede the initiation of the episode which begins with admission to the hospital and discharge from an MS-DRG that is included in the EPM.

In terms of including preventive services and potential new HCPCS G-codes for Part B services in the Collaborative Care model in the EPM episode definitions, we note that according to our standard methodology for identifying excluded Part B services under the EPMs, specific Part B services would be included in both historical EPM episodes and actual EPM episodes to the extent that the ICD-9-CM or ICD-10-CM diagnosis code on the claim for the preventive service or HCPCS G-code for Part B services in the Collaborative Care model is related to the EPM episode and, therefore, not on the EPM episode exclusion list. With regard to CMS making specific financial resources available to EPM participants for pre-discharge planning, post-discharge follow-up, or other care coordination activities, EPM participants would need to develop their own strategies and use their own resources for these activities, as well as engage with EPM collaborators, to redesign care to achieve good quality and cost performance under the EPMs. CMS will not provide additional payments under the EPMs specifically for these types of planning and follow-up activities. However, EPM participants who achieve acceptable episode quality or better and reduce actual EPM-episode spending below the quality-adjusted price are eligible for payment of the difference through a reconciliation payment, which can support the resources used by EPM participants and collaborators in redesigning care to achieve model success.

Comment: Several commenters commended CMS for proposing to exclude IPPS new technology add-on payments for drugs, technologies, and services from EPM episodes, as well as OPPS transitional pass-through payments for medical devices. They believe that these proposals would ensure EPM beneficiaries/access to valuable new drugs, technologies, services, and devices. The commenters recommended CMS to go further and exclude additional innovative technologies from EPM episodes by establishing a review process to determine whether their costs should be excluded from EPM-episode benchmark prices and actual EPM-episode spending. The commenters reasoned that this new review process would allow manufacturers to identify high-cost breakthrough technologies and treatments that offer clinical improvements for all or certain types of patients or offer significant therapeutic advances for new populations or conditions. The commenters recommended that CMS utilize the same processes as those used to determine eligibility for IPPS new technology add-on payments but without regard to the statutory or regulatory policies that apply only to new technology approvals. They further suggested that CMS also allow individual EPM participants to request an EPM payment adjustment if they adopt breakthrough treatment in advance of other hospitals, as well as manufacturers and developers to request the adjustment.

One commenter recommended CMS to consider other innovative capital investments for an EPM episode payment adjustment and to provide payment for new technologies at 100 percent of their cost, not 50 percent as under current CMS programs for payment of new technologies. Finally, another commenter suggested that CMS should provide a financial incentive to EPM participants to use technologies that are shown to improve patient outcomes and reduce cost within 12 to 24 months.

Response: We appreciate the support of the commenters for our proposals regarding the exclusion of new technology payments from EPM episodes and agree that EPM beneficiaries should have access to beneficial new technologies while they are in EPM episodes. We do not believe it would be appropriate for the EPMs to potentially hamper beneficiaries' access to new technologies that are receiving IPPS new technology add-on payments or OPPS transitional pass-through payments or to burden EPM participants who choose to use these new drugs, technologies, services, or devices with concerns about these payments counting toward actual EPM-episode spending.

However, for the same reasons that were discussed previously in the CJR Final Rule (80 FR 73308) regarding LEJR episodes, we will not establish a new process to review innovative technologies or different technologies that would be ineligible for a payment adjustment under the Medicare program and make individual determinations regarding their exclusion from the EPM episode definitions, as recommended by some commenters. Because the EPMs are retrospective reconciliation models that pay all providers and suppliers under the regular Medicare program throughout the episode of care, we believe it is more appropriate to rely on the existing processes under the Medicare program to make determinations about separate payment for new technology items and services. If those existing processes identify new technologies that would qualify for add-on payments under the IPPS or transitional pass-through payments under the OPPS, we will exclude them from the EPM episode definitions as we proposed, to ensure that beneficiaries' access to new technology items and services is not influenced by their care being included in the EPMs. Similarly, under these retrospective EPMs, we will not provide additional payments for new technologies beyond those that are paid under the Medicare program.

Finally, we do not believe it would be appropriate under the EPMs to provide financial incentives to EPM participants to use specific technologies that improve beneficiary outcomes and reduce cost over any specific period of time. We understand that because the EPMs would extend 90 days post-discharge from the anchor hospitalization, the EPMs specifically incentivize the use of technologies and provision of services that improve quality and reduce cost within the limited episode timeframe for which the EPM participant is responsible for episode quality and cost performance. However, we believe that EPM participants, treating physicians, and other EPM collaborators are best positioned to select technologies and furnish services that improve the quality of care and reduce cost for EPM beneficiaries and expect that their Start Printed Page 263decisions factor in the long-term interests of beneficiaries as well.

Comment: One commenter stated that there was significant evidence demonstrating that the use of more expensive drug-eluting stents (DES) results in better long-term outcomes in many patients and fewer repeat procedures for in-stent restenosis. The commenter added that long-term benefit for patients (avoiding the risk, inconvenience and cost of secondary procedures) and to Medicare (via fewer repeat procedures in the long term) would not be fully captured in an episode extending 90 days post hospital discharge, but the full additional costs of DESs would be. The commenter recommended CMS take steps to ensure that the financial models used for the EPMs do not discourage the appropriate use of DES. The commenter claimed that if the AMI model results in fewer beneficiaries receiving DES, long-term outcomes may deteriorate and overall costs may grow.

Response: As discussed in section III.C.4.a.(2) of this final rule, we would initiate AMI episodes from PCI MS-DRGs (246-251) with an AMI ICD-CM diagnosis code in the principal or a secondary position on the claim for the anchor hospitalization. Medicare payment for coronary stents, whether bare metal or DES, used during a PCI performed during a hospitalization are included in the IPPS payment for the inpatient hospitalization. While they are not paid separately by Medicare, payment for the required resources would be included in AMI episodes because the IPPS services for the anchor hospitalization are included in the episodes. We proposed to risk-stratify EPM-episode prices based on MS-DRG as discussed in section III.D.4.b.(1) of this final rule and there are separate MS-DRGs for PCIs that use DES (246 and 247) and non-DES (248 and 249) for which there would be separate AMI episode prices. Therefore, we do not believe that the financial incentives under the AMI model encourage the use of any specific coronary stent because the episode prices take into consideration the IPPS payment for the specific MS-DRG that applies to the AMI model beneficiary. We do not expect the AMI model to discourage the appropriate use of DES.

Comment: Several commenters pointed out that Arkansas and Tennessee have bundled payment programs that include CABG episodes, and their efforts to implement bundled payments include state Medicaid and commercial health plans. The commenters stated that in Arkansas, the episode definition is consistent, specifically naming the duration, responsible entity, and the included services and conditions, across all participating payers. If MSAs from Arkansas or Tennessee are selected for the AMI and CABG models, the commenters recommended that CMS should align the CABG episode definition with that of the state Medicaid plan. The commenters stated that this approach to episode definition would decrease the complexity and cost to providers in those states and reduce overlapping, independent efforts at care redesign that both hospitals and cardiac surgery groups would be simultaneously undertaking, potentially independently. The commenters added that this would also allow CMS to experiment with different episode definitions than those under the BPCI initiative and CJR model and proposed for the EPMs.

Response: We appreciate the commenters drawing our attention to the states that are currently engaged in testing bundled payment models. We are encouraged that several states have identified clinical conditions that overlap with those proposed in the EPMs for testing bundled payment models, specifically CABG and PCI in the context of acute AMI (acute PCI). The choice of these states to test bundled payment models for some of the same clinical conditions that are included the EPMs provides additional support for the opportunities under our proposal of these models for Medicare beneficiaries. Specifically, Arkansas and Tennessee are testing CABG bundled payment models which are similar to the CMS CABG model, while Ohio and Tennessee are testing acute PCI bundled payment models that are similar to the subset of beneficiaries in the CMS AMI model discharged from PCI MS-DRGs with an AMI ICD-CM diagnosis code on the hospital claim. As displayed in section III.B.5 of this final rule, MSAs in Arkansas, Tennessee, and Ohio have been selected for participation in the CMS AMI and CABG models.

The state and CMS models for acute PCI and CABG episodes have similar design features. First, the responsible entity for CABG episodes is the hospital in Tennessee (the physician in Arkansas) like the CMS model and for acute PCI episodes in both states it is the facility where the PCI is performed, which would most commonly be the hospital for an acute procedure as in the CMS model where the hospital is responsible. Second, both the state and CMS models begin with the inpatient hospitalization (or with performance of the procedure), although the state model episodes extend 30 days following discharge, whereas the CMS model episodes extend 90 days. We note that for CMS CABG episodes, 92 percent of episode spending occurs during the anchor hospitalization and the 30 days post-discharge, while 84 percent of acute PCI episode spending occurs during that same period of time.[60] Thus, despite the differences in episode duration between the state and CMS models, the large majority of episode spending occurs in the first 30 days post-discharge so the state and CMS models contain most of the same episode spending. Third, the state and CMS models include most services furnished in the episode post-discharge from the anchor hospitalization, although the state models are not quite as inclusive. Fourth, episode payments are tied to quality measures in both the state and CMS models. Finally, both the state and CMS models included two-sided risk and risk adjustment (or risk stratification) based on payer-specific factors.

Both the state and CMS CABG and acute PCI models support the implementation and testing of bundled payment models for these costly episodes that significantly impact the health of individuals with cardiac disease. While it is operationally infeasible for CMS to apply the different definitions used by state Medicaid agencies in different states testing episode payment in an EPM of the scope of the CMS CABG and AMI models, the state and CMS models that included CABG and acute PCI are sufficiently similar and clinical pathways around CABG and acute PCI care reasonably well-established such that we believe coordination among the various providers, including hospitals and physicians, caring for all beneficiaries in CABG and acute PCI episodes, regardless of payer, should not pose a significant burden on the providers involved. Although the CMS CABG model places the responsibility for the episode upon the hospital, like the Tennessee CABG model, the financial arrangements that are permissible for individuals and entities that collaborate with the hospital toward the goal of improved quality and efficiency of CABG episode care as discussed in section III.I. of this final rule provide participant hospitals with substantial opportunity to share upside and downside risk with their collaborators, including physicians that might be leading CABG bundled payment efforts Start Printed Page 264in Arkansas. The financial arrangement policies under the CMS CABG model should help to minimize the occurrence of independent, potentially overlapping efforts of hospitals and physician groups to redesign care for CABG patients covered by different insurers. We believe that the state and CMS bundled payment models for overlapping clinical conditions are complementary efforts that will provide substantial new information about the effects of bundled payments on the quality and cost of care for CABG and acute PCI. While we understand that implementation of the EPMs will result in testing CABG and acute PCI episodes with minor differences in design for beneficiaries of Medicare versus Medicaid and other commercial payers in MSAs selected for the AMI and CABG models in Arkansas, Tennessee, and Ohio, these differences are unlikely to affect the episode care redesign strategies of the responsible hospitals under the CMS and state models.

Comment: While a number of commenters supported the proposal to update the EPM excluded services through the proposed sub-regulatory process to provide for flexibility and timeliness in adding exclusions to EPM episodes, several commenters opposed CMS' proposal to make changes to EPM episode exclusions through an annual, at a minimum, update outside of rulemaking. The commenters encouraged CMS to use notice and comment rulemaking to evaluate and exclude additional services from EPM episodes. The commenters stated that because participation in the EPMs is required in selected geographic areas and, therefore, the EPMs affect a large number of hospitals and providers, it is important that CMS implement the process to update services to be excluded from these episodes through notice and comment rulemaking, so that provider feedback throughout the course of EPM implementation is reflected in CMS' decisions. They added that hospitals of different sizes, geographic locations, organizational capabilities, and socio-economic factors all have unique preferences, and their ideas and opinions should be accounted for when CMS makes changes to the list of conditions and services to be included and/or excluded from the episodes.

Many commenters recommended CMS to continue to evaluate the list of services to be excluded from EPM episodes. They encouraged CMS to consider excluding a variety of additional services, including hospital readmissions planned for the beneficiary prior to the anchor hospitalization for consistency with other CMS policies such as the treatment of planned readmissions under the HRRP; ongoing care for beneficiaries' chronic conditions for which management is outside the scope of the EPMs and their exclusion could confound the EPM test of optimizing quality and costs for certain episodes; and post-acute care following excluded readmissions where little is known about the causal relationship between the hospital readmission and subsequent post-acute care services.

Response: We appreciate the interest of the commenters in ensuring that future changes to the EPM episode definitions involve a transparent process with opportunity for broad stakeholder input. We have some experience with a similar sub-regulatory update process for the CJR model for both the list of excluded services and the fracture ICD-10-CM diagnosis codes that are used to identify episodes for fracture risk-stratification. We used this process after publication of the CJR Final Rule and again more recently to update the CJR model exclusion list for changes to the FY 2017 IPPS MS-DRGs and ICD-10-CM diagnosis codes. We have received significant public input through those processes, which has allowed us to consider and incorporate, as appropriate based on the regulatory review standards for the processes, stakeholder input and in turn communicate timely final updates to the exclusions and fracture lists to CJR participant hospitals. We have not heard any concerns about the sub-regulatory update processes as we have applied them during CJR model implementation.

As we concluded for the CJR model, we continue to believe that updating the exclusions annually, at a minimum, is most appropriate for the 5-year EPMs, and allowing more frequent updates than through rulemaking as necessary to accommodate timely ICD-10-CM annual coding changes and annual IPPS MS-DRG changes, as well as to address significant issues raised by EPM participants and other stakeholders or by CMS as we continue to evaluate the list of excluded services for the EPM episodes. We will explore the additional areas recommended by the commenters and others that may arise during EPM implementation, and we will utilize the exclusion list update process to suggest any future changes based on our additional analyses.

The commenters who supported an exclusion list update process outside of rulemaking did not suggest specific revisions to the proposed standards for updating the EPM episode exclusions, namely:

  • We would not exclude the following items or services that are:

++ Directly related to the EPM episode or the quality or safety of the EPM episode care.

++ For chronic conditions that may be affected by the EPM episode care.

  • We would exclude the following items and services that are:

++ For chronic conditions not generally affected by the EPM episode care.

++ For acute clinical conditions, not arising from existing EPM episode-related chronic clinical conditions or complications of EPM episode care.

Thus, we continue to believe these standards provide the appropriate clinical review framework for updates to the EPM exclusion list. Finally, we believe that our proposed process to post the potential revised exclusions, which could include additions to or deletions from the exclusion list, to the CMS Web site to allow for public input on our planned application of these standards, and then adopt changes to the exclusion list with posting to the CMS Web site of the final revised exclusion list after our consideration of the public input is consistent with the recommendation of commenters that we use a transparent process reflective of broad opportunity for public input, including implementation experience with the EPMs. Conducting this update process outside of rulemaking based on the standards set forth in this final rule allows us the greatest flexibility to update the exclusions as changes to the MS-DRGs and ICD-10-CM diagnosis codes, upon which our exclusions rely, are released. This process also allows us to respond quickly to any episode definition issues that arise during implementation of the EPMs across the broad array of EPM participants in the selected MSAs, as well as consider any new analysis conducted by CMS or stakeholders about the relationship among items and services to the EPM episodes that might result in a different assessment of the inclusion or exclusion of existing MS-DRGs or ICD-10-CM diagnosis codes in the definition of EPM episodes. We would widely publicize the opportunity for review and public input through the CMS Web site and listservs. We also note that any changes to our overall approach to identifying excluded items and services or to our standards for evaluating items and services for exclusion would be address through future rulemaking. Therefore, we are finalizing our proposal to update the exclusion list annually, at a minimum, using the standards and process as described.Start Printed Page 265

Final Decision: After consideration of the public comments received, we are finalizing the proposals in § 512.210(a), without modification, to identify related items and services for EPM episodes as the following items and services paid under Medicare Part A and Part B, after the EPM-specific exclusions are applied:

  • Physicians' services.
  • Inpatient hospital services.
  • IPF services.
  • LTCH services.
  • IRF services.
  • SNF services.
  • HHA services.
  • Hospital outpatient services.
  • Independent outpatient therapy services.
  • Clinical laboratory services.
  • Durable medical equipment.
  • Part B drugs.
  • Hospice.

We are also finalizing the proposals, without modification, to use the following standards to exclude items and services from EPM episodes:

  • Hospital readmissions for MS-DRGs that group to the following categories of diagnoses: Oncology; trauma medical admissions; surgery for chronic conditions unrelated to a condition likely to have been affected by care furnished during the EPM episode; and surgery for acute conditions unrelated to a condition resulting from or likely to have been affected by care during the EPM episode.
  • Part B items and services for acute disease diagnoses unrelated to a condition resulting from or likely to have been affected by care during the EPM episode, and certain chronic disease diagnoses, as specified by CMS on a diagnosis-by-diagnosis basis, depending on whether the condition was likely to have been affected by care during the EPM episode or whether substantial services were likely to be provided for the chronic condition during the EPM episode.
  • Drugs that are paid outside of the MS-DRGs included in the EPM episode definitions, specifically hemophilia clotting factors.
  • IPPS new technology add-on payments for drugs, technologies, and services.
  • OPPS transitional pass-through payments for medical devices.

We are finalizing the proposals in § 512.210(b) to exclude from EPM episodes specific readmissions, Part B-covered items and services with specific ICD-9-CM or ICD-10-CM diagnosis codes in the principal position on claims for items and services during the 90 days post-discharge from the anchor hospitalization, and additionally Part-B covered DME with specific ICD-9-CM or ICD-10-CM diagnosis codes in the principal position on claims during the anchor hospitalization, with modification to place MS-DRGs 326-328 on the AMI MS-DRG-anchored AMI exclusion list and MS-DRGs 266-267 on the AMI MS-DRG-anchored AMI exclusion list and the CABG exclusion list. As discussed in section III.C.4.a.(5) of this final rule, we are not finalizing our proposed AMI model inpatient-to-inpatient transfer episode initiation and attribution policy so we will not use the terms chained anchor hospitalization and price MS-DRG in the final AMI episode definition and pricing policies. Therefore, the applicable EPM exclusion list is applied to the EPM episode on the basis of the MS-DRG that anchors the EPM episode. The final EPM exclusion lists based on ICD-9-CM and ICD-10-CM diagnosis codes and MS-DRGs as of FY 2016 are posted on the CMS Web site at https://innovation.cms.gov/​initiatives/​epm.

Lastly, we are finalizing our proposals in § 512.210(c) to update the exclusion lists by sub-regulatory guidance on an annual basis, at a minimum, to reflect annual changes to ICD-10-CM coding and annual changes to the MS-DRGs under the IPPS, as well as to address any other issues that are brought to our attention throughout the course of the EPMs, without modification. The standards for this updating process are:

  • Include any items or services that are directly related to the EPM episode diagnosis or procedure (for example, a subsequent admission for heart failure or repeat revascularization) or the quality or safety of care (for example, sternal wound infection following CABG);
  • Include items or services for chronic conditions that may be affected by the EPM diagnosis or procedure and the post-discharge care (for example, diabetes);
  • Exclude items and services for chronic conditions that are generally not affected by the EPM diagnosis or procedure and the post-discharge care (for example, prostate removal for cancer); and
  • Exclude items and services for acute clinical conditions not arising from existing EPM episode-related chronic clinical conditions or complications from the EPM episode (for example, appendectomy).

The potential revised exclusions, which could include additions to or deletions from the exclusion lists, will be posted to the CMS Web site to allow for public input. After receiving and reviewing public input on potential revised exclusions, we will post the final revised exclusion lists, including providing information to the public about when the revisions would take effect and to which episodes they would apply.

With the publication of this final rule, we are initiating the sub-regulatory update process to incorporate changes to the MS-DRGs and ICD-10-CM diagnosis codes for 2017 into the EPMs by posting potential changes to the exclusion lists for the EPMs. We did not consider the 2017 changes in the EPM proposed rule, because the final MS-DRGs and ICD-10-CM codes were not yet available when the proposed rule was published in the Federal Register on August 2, 2016. There are no MS-DRG changes for FY 2017 that resulted in our suggesting potential changes to the exclusion lists for the EPMs. We are suggesting potential modifications to the principal ICD-10-CM diagnosis code categories for excluded Part B services in the AMI, CABG, and SHFFT models as of July 1, 2017, based on new ICD-10-CM diagnosis code categories for FY 2017 and clinical review of existing ICD-10-CM diagnosis code categories to which new ICD-10-CM diagnosis codes have been added for FY 2017. The potential modifications to the exclusion list for each EPM are posted on the CMS Web site at https://innovation.cms.gov/​initiatives/​epm. We request that public input on the potential modifications be sent to epm@cms.hhs.gov by 11:59 p.m. on Friday, January 27, 2017. After receiving and reviewing public input on potential revised exclusions, we will post the final revised exclusions by February 24, 2017, including providing information to the public about when the revisions will take effect and to which episodes they would apply.

4. EPM Episodes

a. Beneficiary Care Inclusion Criteria and Beginning of EPM Episodes

(1) General Beneficiary Care Inclusion Criteria

Because of the clinical variability leading up to these EPM episodes and the challenge of identifying unrelated services given the multiple chronic conditions experienced by many EPM beneficiaries, we proposed to follow the CJR model precedent and not begin an EPM episode prior to the anchor hospitalization (80 FR 73315 and 73318). We proposed that all services that were already included in the IPPS payment based on established Medicare policies (for example, 3-day payment window payment policies) would be included in these EPM episodes, and that the defined population of Medicare beneficiaries whose care would be included in the EPMs would meet all of Start Printed Page 266the follow