Cancellation of Mandatory Bundles Paves the Way for Voluntary Success

This week, the Centers for Medicare & Medicaid Services (CMS) announced it will cancel its mandatory cardiac and orthopedic Episode Payment Models (EPM), in addition to scaling back the Comprehensive Care for Joint Replacement (CJR) model. While the news has left some questioning the future of value-based care, the cancellation of these mandatory bundled payment programs is a favorable indication of the future of voluntary reimbursement programs.   The recent cancellation of mandatory bundles has been brewing for some time. Prior to the cancellations, Tom Price, Secretary of the U.S. Department of Health and Human Services delayed the effective start date of EPM, and openly criticized the mandated programs. And while it may seem that bundled payments have been through the fire in just a few short days, two voluntary models that have seen much success among providers have emerged unscathed: Bundled Payments for Care Improvement (BPCI) initiative and Oncology Care Model (OCM).

Even when mandated programs were in place, hospitals and other stakeholders were pressing for voluntary initiatives. Results from the voluntary programs have shown greater engagement and increased savings among providers who are eager to improve quality and reduce costs in a pressured healthcare environment. As success of the voluntary models continues, we expect the adoption of these programs will only continue to grow.

At Archway, we have a rather unique opinion on the recent news and the mandatory versus voluntary debate. As a bundled payment company, one would likely assume we are in favor of mandatory bundled payment participation. In fact, we believe the best approach for bundled payment programs is to allow voluntary participation.

While we were initially excited about the CJR and EPM programs that included mandatory participation for certain areas and hospitals, we have concluded over the past two years that voluntary programs will have a bigger and more rapid impact on the shift from volume to value.

Even better news in the announcement this week is the clear indication that CMS is moving full speed ahead with a new voluntary bundled payment program that will allow hospitals, specialists and post-acute providers to serve as Episode Initiators. We view this as a very positive development for providers who missed the last voluntary open enrollment period in early 2014.  This program will also enable CMS to offer an opportunity for specialists to participate in a MACRA qualifying Advanced Alternative Payment Model (APM) in 2018.

As CMS prepares to launch the next generation of BPCI in the coming weeks, we’ve actively advocated for the program to be voluntary. There are three main reasons why we believe voluntary bundled payment programs will be more successful in this transition:

The first is the willingness of providers to commit to payment reform. Because they have signed up, provider organizations participating in the voluntary programs are more engaged and motivated to change processes, improve care, and reduce costs. As a result, the improvements are more significant and the adoption occurs more rapidly.

The second is that voluntary programs don’t have to appeal to all providers. In order to make mandatory programs palatable to reluctant participants, the rules tend to be watered down compared to the rules within the voluntary programs. As a result, there is less urgency to change behavior, and the improvements in care and cost are not as substantial.

Finally, we have seen many specialty groups, hospitals and post-acute providers achieve significant success in these voluntary initiatives.  In the programs we have helped manage, we have seen outcomes improve, patients return home faster, and significant savings earned by both CMS and the Episode Initiating providers.

Even in losing these mandatory bundled payment programs, CMS continues to push the industry toward value. By having voluntary participants show the benefits and significant improvements from bundle payment programs, more providers will eventually want to participate, and we are confident we will see a more impactful shift in payment reform.