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CMS Expands Payment Reform to Outpatient Care in New RFI

Written by: Andrew J. Shin

Citing the need to complement a portfolio of pilot projects that focus mostly on primary care and the inpatient setting, CMS released a Request for Information (RFI) on February 11th, seeking input on potential payment and care delivery models that focus on outpatient specialty care and complex/chronic disease management care.  As compared to the initiatives currently underway through the Center for Medicare and Medicaid Innovation (CMMI), this latest RFI has the potential to impact a broader group of health care stakeholders, such as drug manufacturers, diagnostic companies, laboratories, and a variety of physician specialty providers ranging from anesthesiology to radiology.

The new pilots embedded in the latest RFI will address outpatient procedures and chronic disease management.

For the outpatient model, the RFI specifically identifies colonoscopy and cardiac catheterization as procedures that could be good candidates for new episode-based payments and identifies services such as anesthesia, pathology, radiology, Medicare Part B and D drugs, diagnostics, and facility payments as potential components to be in included in the episode-based payment.  Further, the RFI seeks input on commercial sector examples where models may already be in use, as well as suggestions on how to engage other payers in a Medicare-Commercial, multi-payer approach.

The chronic disease management concept builds on the existing Bundled Payments for Care Improvement initiative but focuses on chronic disease for a time period well beyond the 30 or 90 day window traditionally used for more acute care-focused episodes.  This initiative is in line with several proposals from various health care policy experts such as Dr. Zeke Emanuel, a former top Obama Administration official who has advocated for longer, more comprehensive, episode-based payments focused on chronic disease.    

The RFI also aligns with recent Congressional activity focused on alternative bundled payment approaches and the increase in chronic disease coordination legislation.   New Senate Finance Committee Chair, Senator Ron Wyden (D-OR), introduced a bill that would use global capitated payment to help providers better manage Medicare beneficiaries with chronic disease and Representatives Diane Black (R-TN) and Richard Neal (D-MA) also introduced a new bundled payment model.

With the exception of oncology, which CMS has already spent the better part of a year developing, the RFI proposes a broad array of potential services and conditions that could be candidates for episode-based payment.   The considerations for procedures and services that could be targeted are identified as:

  1. Historical variation in utilization and payment;
  2. Extent to which this variation is under the practitioner’s control; and
  3. Ease with which the practitioner responsible for the episode can be identified.

During the past year, policymakers have focused the public’s attention on services and procedures with high variation and no clinical support for the disconnect in utilization rates amongst various providers and regions.  For example, through the newly created Office of Information Products and Data Analytics, CMS created a public database that contains the past 4 years of claims data for all Medicare beneficiaries in the fee-for-service program to allow researchers to study various trends in spending, utilization, and disease prevalence.  In essence, the agency has provided the data necessary to make its case to reign in the approximately 30% of Medicare spending believed to be unnecessary.

Stakeholders have been expecting CMS to develop a number of new pilots in 2014, especially in the outpatient setting, based on the need to “round out the portfolio” of CMMI initiatives that have focused heavily on primary care settings and acute care hospitals.  With almost half of their $10 billion in funding left to develop and implement a variety of new models that include a new Pioneer ACO model, oncology care redesign, and rural provider innovation, focusing on utilization and payment with high/unexplained variation is the logical next step for the Obama Administration as it ramps up its focus on reducing Medicare costs.

Finally, what is evident amidst a host of new and developing proposals is that health care stakeholders who may have been on the sidelines for the various CMS pilots and other initiatives may not have that luxury in the near future as CMS expands their delivery and payment reform portfolio over the coming year.  Comments to the RFI are due March 13, 2014.

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