Important Next Step towards a Better, Smarter, Healthier Medicare: New Payment Models and Rewards for Better Care at Lower Cost

Important Next Step towards a Better, Smarter, Healthier Medicare: New Payment Models and Rewards for Better Care at Lower Cost


Today, the Department of Health & Human Services proposed new models that continue the Administration’s progress to shift Medicare payments from quantity to quality by creating strong incentives for hospitals to deliver better care to patients at a lower cost. These models would reward hospitals that work together with physicians and other providers to avoid complications, prevent hospital readmissions, and speed recovery.

Today’s proposal contains three new significant policies:

  • New bundled payment models for cardiac care and an extension of the existing bundled payment model for hip replacements to other hip surgeries;
  • A new model to increase cardiac rehabilitation utilization; and
  • A proposed pathway for physicians with significant participation in bundled payment models to qualify for payment incentives under the proposed Quality Payment Program.

The proposed bundled payment models for cardiac care includes medical as well as surgical services, which will offer new information on how these models affect quality and costs. Together, this cardiac care model, the cardiac rehabilitation proposal, and the Million Heart awards announced last week – to support risk assessment and prevention of cardiovascular disease – offer the opportunity to improve prevention and treatment of one of the top causes of death and disability in this nation. Heart attacks and strokes cause one in three deaths and result in in over $300 billion of health care costs each year.

Stakeholder input is vital for the success of these proposals, and HHS welcomes feedback on today’s proposed rule.

The Future of Care Coordination: Bundling Payments for Cardiac Care and Hip Fractures

By structuring payment around a patient’s total experience of care, in and out of the hospital, bundled payments support better care coordination and ultimately better outcomes for patients. Today, HHS is proposing new bundled payment models to improve the quality of care and reduce costs for beneficiaries who have a heart attack or undergo bypass surgery. HHS is also proposing to extend its innovative hip and knee bundled payment model to include other surgical treatments for hip and femur fractures beyond hip replacement. These new models support the Administration’s goal to have 50 percent of traditional Medicare payments flowing through alternative payment models by 2018 (already, 30 percent of Medicare payments go through alternative models).

“Having a heart attack or undergoing heart surgery is scary and stressful for patients and their families,” said Health and Human Services Secretary Sylvia M. Burwell. “Today’s proposal is an important step to improving the quality of care Americans receive and driving down costs. By focusing on episodes of care and rewarding successful recoveries, bundled payments encourage hospitals to coordinate care to achieve the best outcomes possible for patients.”

In 2014, more than 200,000 Medicare beneficiaries were hospitalized for heart attack treatment or underwent bypass surgery, costing Medicare over $6 billion. But the cost of treating patients for bypass surgery, hospitalization, and recovery varied by 50 percent across hospitals, and the share of heart attack patients readmitted to the hospital within 30 days varied by more than 50 percent. And, while harder to quantify, patient experience also varies. In some cases, hospitals, doctors, and rehabilitation facilities work together to support a patient from heart attack or surgery all the way through recovery. But in other cases, coordination breaks down, especially when a patient leaves the hospital.

That’s partly because today, in most situations, no clinician or hospital is fully accountable for the holistic outcomes of a patient undergoing treatment. To encourage better care coordination and outcomes, hospitals in these models earn more when their care teams work together and collaborate with other providers to speed recovery and avoid preventable costs.

“Patients want the peace of mind of knowing they will receive high-quality, coordinated care from the minute they’re admitted to the hospital through their recovery,” said Patrick Conway, M.D., CMS principal deputy administrator, and chief medical officer. “The variation in cost and quality for the same surgery at different hospitals shows there are major opportunities for hospitals included in today’s models to reduce costs, improve care, and receive additional payments by improving patient outcomes.”

Under the new models in today’s rules, the hospital in which a Medicare patient is admitted for care for a heart attack or bypass surgery would be accountable for the cost and quality of care provided to Medicare fee-for-service beneficiaries during the inpatient stay and for 90 days after discharge. The proposed cardiac care policies would be phased in over a period of five years, but would begin July 1, 2017 for hospitals located in the 98 metro areas participating in the model (about one-quarter of all metro areas in the nation). More information about the structure of these models is available in the fact sheet.

Doctors, patient advocates, and health care experts across the country support these models because they have seen firsthand their potential for delivering better and more cost-effective care. Public and private-sector bundled payment models have already shown promise in improving patient outcomes while lowering costs, including for cardiac and orthopedic care. In Medicare, thousands of providers are participating in bundles through the Bundled Payment for Care Improvement Initiative. Early results are encouraging: cardiac and orthopedic bundles, in particular, have shown promising results on cost and quality in the first two years of the initiative. The models announced today will test the impact of bundled payments on a larger scale.

Boosting Recovery and Reducing Readmissions through Cardiac Rehabilitation

Alongside the new bundled payment models, today’s rule also announces a test of incentive payments designed to increase the use of cardiac rehabilitation. These payments will encourage hospitals to ensure that patients recovering from a cardiac event work with a team of health care professionals, such as cardiologists, nurses, dietitians, and physical therapists, to improve cardiovascular fitness. Currently, only 15 percent of heart attack patients receive cardiac rehabilitation, even though clinical studies have found that completing a rehabilitation program can lower the risk of a second heart attack or death.

New Rewards for Physicians: Participants in Bundled Payment Models May be Eligible for the Incentive Payments from Advanced Alternative Payment Models

Today’s rule also describes new pathways for physicians who participate in bundled payment models to qualify for financial rewards through the proposed Quality Payment Program, which implements the bipartisan Medicare Access and CHIP Reauthorization Act (MACRA). The bundled payment models proposed in today’s rule – as well as the Comprehensive Care for Joint Replacement model, which began this year – could qualify as Advanced Alternative Payment Models beginning in 2018 for physicians who collaborate with hospitals participating in the models. 

“Today’s rule adds to the options for specialists who want to participate in Advanced Alternative Payment Models to a significant level,” said Andy Slavitt, Acting Administrator of CMS. “Expanding these options will help MACRA succeed in its goal of transforming the health care delivery system.”

The proposed rule can be viewed at and is anticipated to display at on July 26, 2016. Comments on the proposed rule are due 60 days after it publishes in the Federal Register.

For more information on the Cardiac Bundled Payment Models:

For more information on the Cardiac Rehabilitation Incentive Payment Model, visit:

For more information on the Comprehensive Care for Joint Replacement Model, visit:

Via: Important Next Step towards a Better, Smarter, Healthier Medicare: New Payment Models and Rewards for Better Care at Lower Cost

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