Mandatory Bundled Payments on the Horizon

Requiring APMs Necessary to Test Efficacy and Spur Reform, Azar Says

There are continuing indications that mandatory alternative payment models (APMS), including mandatory bundled payments, are coming. During remarks to the Physician-Focused Payment Model Technical Advisory Committee (PTAC) on September 6, 2018, Alex Azar, secretary for the Department of Health and Human Services (HHS), stated, “We need strategies and models that provide better care at a lower price…in some cases that’s going to mean mandatory models from CMMI and other mandatory reforms.”

Continuing Signals for APMs, Including Mandatory Bundled Payments

In November 2017, prior to Azar’s confirmation as secretary, the Centers for Medicare & Medicaid Services (CMS) canceled two mandatory bundled payment models that were scheduled to begin January 1, 2018, which some interpreted as a pivot towards voluntary models. During Azar’s confirmation hearings in January, however, Azar clearly stated his belief that mandatory APMs may be necessary in order to test the efficacy of those programs. During his recent comments to PTAC, Azar doubled down on the need for mandatory models, saying, “Requiring participation can be necessary to determine whether a model really works, but it may also be necessary to meet what we see as an urgent need for reform.”

CMS Administrator Seema Verma noted that forthcoming models will be focused on high-cost areas such as end-stage renal disease, cancer care, chronic disease and other serious medical conditions.

Two-Sided Risk Part of Overall Strategy

In addition to discussing the need for mandatory models, Azar also touched on the recent proposal by CMS to overhaul the accountable care organization (ACO) Medicare Shared Savings Program (MSSP). The proposed changes would move providers into a risk-bearing model more quickly, regarding which Azar said, “…the best results we’ve seen have been in ACOs that took on two-sided risk—where providers have real accountability for outcomes…that’s why we have now proposed to simplify the ACO system into two tracks, requiring them to take on risk sooner.”

For providers, the message is clear—CMS is committed to advancing value-based care through alternative payment models, and mandatory models with two-sided risk are part of that strategy. Mandatory bundled payments are on the horizon, and providers should start laying the groundwork now in order to succeed under these programs.