Medicare Okays New Payment Models

December 21, 2016

Medicare Okays New Payment Models


Several new Medicare payment models that create strong financial incentives for providers to deliver better care at lower cost have been finalized, according to the Centers for Medicare & Medicaid Services (CMS).  They include bundled payments for cardiac care and hip surgery and a new payment track for Accountable Care Organizations (ACOs) that is designed to encourage more physician practices to take on performance-based financial risk.


Physicians participating in any of the initiatives will also qualify for the 5 percent annual incentive payment allowed under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).


Bundled Payments


Hospitals in selected geographic areas will be reimbursed via bundled payments for care related to heart attack, coronary bypass graft, and hip fracture surgery (other than hip replacement).  The payment covers all treatment and recovery services, beginning with hospitalization and extending for 90 days following hospital discharge.  Depending upon how well a provider performs on quality and cost, it may receive an additional payment from Medicare if its actual spending falls below Medicare’s target payment level.   Starting in the third year of the program, however, a provider may have to repay Medicare if it spends above the target.


CMS said it is also waiving several existing payment requirements, thereby allowing payment for certain telehealth services in a beneficiary’s home, certain types of physician-directed home visits, and admission to a nursing home without a preceding three-day inpatient stay. The payment model will begin in July, 2017, and run through 2021.


ACO Payment Track 1+


The new Medicare ACO Track 1+ payment model allows ACOs to take on a more-limited performance-based financial risk—sharing in 30 percent of financial losses—than ACOs in Tracks 2 and 3 of the Shared Savings program, which share losses up to 60–75 percent.  CMS says that the lower level of risk-sharing is intended to encourage more practices, especially small practices, to agree to take on potential downside financial risk based on performance.  CMS Track 1+ ACOs will also be considered as Advanced Alternative Payment Models under MACRA, thus allowing clinicians in such ACOs to qualify for 5 percent annual incentive payments from 2019 – 2024.

The regular ACO Track 1, which allows shared savings, but does not require downside financial risk, will continue.