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Financial Experts Assess Upcoming Changes to Health Policy

The Healthcare Financial Management Association (HFMA) released an assessment of possible and/or upcoming policy changes under the new administration. We have been waiting for HFMA to speak on ramifications to the non-insurance side of the Affordable Care Act (ACA), so we welcome the report and provide a portion of it here.


The new secretaries of HHS and CMS “have created a picture” of how the transition to value will be affected, how the Medicaid program might change and base rates to industry participants will be affected by other policy priorities.


HFMA notes the following:

  • The transition to value, particularly episodic payments, will continue but at a different pace and altered focus.
  • Medicaid will likely be changed, if not on a national level as a result of legislation, at the state level through Section 1115 waivers.
  • If policy priorities outside of health care are accomplished, they will likely trigger cuts to Medicare and Medicaid payments to reduce the deficit.


Center for Medicare & Medicaid Innovation


Innovative payment models, including bundled payments, have been developed by the Center for Medicare & Medicaid Innovation (CMMI). Republican health policy documents have called for eliminating CMMI, so policy experts have questioned its continued existence. HFMA wrote that, “With the Trump administration’s appointees running HHS and CMS, however, it is likely Republicans will think twice before shuttering CMMI. The latitude to experiment provided by CMMI—or some function within CMS—will be useful in testing and implementing conservative health policy ideas.


“Specific to episodic payments, even if CMMI is eliminated, Section 3023 of the ACA—which was not targeted for repeal in the reconciliation bill passed by Republicans in early 2016 due to a lack of direct budgetary impact—mandates a national pilot program on payment bundling. CMS therefore is legally bound to administer a bundled payment program even if CMMI is disbanded. Although the administration could let a bundled payment program wither from administrative neglect, that’s not likely. In general, voluntary bundles are viewed favorably on both sides of the aisle . . .” (“What to Expect From the New Administration’s Approach to Health Policy,” HFMA Magazine, February 2017)


Mandatory Bundles


HFMA notes that CMMI is likely to remain intact and continue developing episodic payment models. However, its focus relative to bundles will change slightly. Because HHS Secretary Tom Price is an outspoken critic of the mandatory payment models implemented by CMMI, it is expected that additional new models are not likely to be mandatory. “The episodes for coronary artery bypass graft (CABG), acute myocardial infarction (AMI), and surgical hip and femur fracture treatment (SHFFT) included in the Episode Payment Model final rule will likely be the last mandatory models implemented without legislation.” However, new (or at least improved) episodes will be rolled out with the next iteration of the Bundled Payment for Care Improvement program. Assuming the timeline discussed in the final rule implementing the Medicare Access and CHIP Reauthorization Act (MACRA) holds, this rollout is anticipated later this year. (“What to Expect From the New Administration’s Approach to Health Policy,” HFMA Magazine, February 2017)



New voluntary episodic payment models will likely focus on physicians or, at the very least, to provide more flexible options for physicians to participate and share savings and losses with alternative payment model (APM) entities. It appears that Price, with his background as an orthopedic surgeon, wants more models that help physicians—particularly specialists—to qualify for the advanced APM incentive payment under MACRA. (“What to Expect From the New Administration’s Approach to Health Policy,” HFMA Magazine, February 2017)


Forging Ahead


Many hospitals may welcome mandatory participation in episodic payment models, but the authors note, “ . . . it would be a mistake” for hospitals to abandon efforts to prepare for the spread of bundled payments for two reasons:


  • Episodic payment models are likely to be the vehicle that allows many specialists—on whom hospitals rely for patient volume—to qualify for the APM bonus payment. Therefore, the organization that can provide the best platform from which to successfully manage an episode will be rewarded with referrals from these physicians.


  • Employers, commercial payers and state governments will continue to view bundled payments as a vehicle to reduce variation in both the cost and quality of outcomes for high-volume procedures. Therefore, hospitals unable to meet purchaser demands risk losing volume. In response to these demands from both physicians and purchasers, hospitals should continue to focus on developing the analytic capabilities, care coordination staffing and tools, physician relationships and post-acute care networks necessary to succeed in an episode.

(“What to Expect From the New Administration’s Approach to Health Policy,” HFMA Magazine, February 2017)


For more from HFMA’s report, please contact clockee@veralon.com for the link to the remainder of the report covering Medicaid program changes, Medicare and Medicaid payment reductions and adapting strategy.



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