CMS Proposes Changes to Some Cardiac and Orthopaedic Payment Models

9-5-17 Legal Intelligencer article by Lamb McErlane PC partner Vasilios J. Kalogredis

On August 15, 2017, the Centers for Medicare and Medicaid Services (“CMS”) proposed changes to the Comprehensive Care for Joint Replacement Model (“CJR”), cancellation of a mandatory Episode Payment Models (“EPMs”) and Cardiac Rehabilitation (“CR”) incentive payment model.  These were previously authorized tests to change reimbursements as to certain cardiac and joint replacement services. sent out a press release relative thereto on August 15, 2017.  This Proposed Rule is intended to offer a greater flexibility and choice for hospitals and their physicians in providing these particular types of services for Medicare beneficiaries.  Since this is Proposed Rule, comments are sought and will be accepted for a sixty (60) day period starting from the date of publication in the Federal Register.  Go to for more information.

The Proposed Rule proposes to cancel the EPMs and CR incentive payment model and to rescind the regulations governing those models.

It also proposes to revise certain aspects of the CJR model.  This includes giving certain hospitals selected for participation in the CJR model a one-time option to choose whether to continue participation in the model or not; technical refinements and clarifications for certain payment, reconciliation and quality provisions; and a change to increase the pool of eligible clinicians that qualify as an affiliated practitioners under the Advanced Alternative Payment Model (“AAPM”) track.

The EPM and CR incentive programs were scheduled to begin on January 1, 2018.  CMS itself states that eliminating these models would give CMS greater flexibility to design and test innovations that will improve quality and care coordination across the in-patient and post-acute-care spectrum.  CMS announced that it would reduce the number of mandatory geographic areas participating in the Center for Medicare and Medicaid Innovation’s (“Innovation Center”) CJR model from 67 to 34.  CMS proposes to allow CJR participants in the 33 remaining areas to participate on a voluntary basis.

CMS is changing the scope of these models in order to allow testing and evaluation of improvements in care processes that will improve quality, reduce costs, and ease burdens on hospitals.  Stakeholders had asked for more input on the design of these models.  These changes make this possible and give CMS maximum flexibility to test other episode-based models that will bring about innovation and provide better care for Medicare beneficiaries, according to CMS Administrator Seema Verma.  It will allow for some services to be provided on other than an all fee -for-service basis.

Tom Price is the current Secretary of the Department of Health and Human Services (“HHS”).  Dr. Price is an orthopaedic surgeon.  He has practiced in a large orthopaedic group in Georgia, practicing in a private practice setting for about two decades.  He is the first physician to lead the HHS in over twenty years.

Including during his confirmation hearings, he has stated that he is supportive of innovative payment models.  However, he was opposed to CMS’ mandatory bundle payment programs that had been in place.  Dr. Price opposed Medicare providers and their patients being forced into high-risk government dictated changes with unknown impacts.  Therefore, it is not surprising that CMS did what it did on August 15, 2017.

It is also interesting that in December, 2016, under the prior Administration, when the CMS at that time finalized regulations regarding the CR incentive payment model, the American Hospital Association (“AHA”) expressed concerns.  In a December Press Release from Tom Nickels, Executive Vice President of the AHA in government relations and public policy, stated that the AHA was concerned with the pace of change.  It was also concerning to the AHA that this bundled payment model for cardiac care was the second (CJR being the first) mandatory demonstration project that had been finalized by CMS in a fifteen (15) month period.  In AHA’s view, this was too much, too soon.  In addition, the AHA Press Release stated that CMS has finalized plans to expand and further complicate the existing mandatory hip and knee (CJR) bundled payment model less than a year after it began and before fully evaluating its results.  The AHA Press Release closed by stating that hospitals should not be forced to participate in complicated new programs if the government has not already proven that they will benefit the patients served.  AHA’s position was that any new bundled payment programs be of a voluntary nature, at least until they have proven to be effective in accomplishing the hoped for results.

In the August 15, 2017 Proposed Rule, CMS stated that if it decided to test these or similar models on a voluntary basis, it would not expect to implement them through rule making.  It would expect to use methods of soliciting applications and securing participants’ agreement to participate, consistent with how other voluntary models have been implemented in the past.

Therefore, it is not surprising that in its August 15, 2017 announcement, CMS stated that it expects to increase opportunities for providers to participate in voluntary initiatives rather than in large mandatory episode payment model efforts.

This is all part of the process as the government attempts to do what it can to reduce Medicare costs and improve quality in an ever changing healthcare world.  The theory is that programs such as those mentioned above can provide more cost certainty for payers (the federal government here) by getting more away from fee-for-service payments and more towards approaches incentivizing more coordinated and prudent uses of resources.  For example, the CR Model was intended to incentivize increased coordination of care among hospitals, physicians and post-acute care providers (such as Rehab).


Vasilios (“Bill”) J. Kalogredis is Chairman of Lamb McErlane’s Health Law Department. Bill has been practicing health law for over 40 years, representing exclusively physicians, dentists, group practices, other health care professionals and health care-related entities.