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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 perfo