Medicare Program; Advancing Care Coordination Through Episode Payment Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and Changes to the Comprehensive Care for Joint Replacement Model (CJR)

Federal RegisterAug 2, 2016

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 510 and 512

[CMS-5519-P]

RIN 0938-AS90

Medicare Program; Advancing Care Coordination Through Episode Payment Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and Changes to the Comprehensive Care for Joint Replacement Model (CJR)

AGENCY:

Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule proposes to implement three new Medicare Parts A and B episode payment models under section 1115A of the Social Security Act. Acute care hospitals in certain selected geographic areas will participate in retrospective episode payment models targeting care for Medicare fee-for-service beneficiaries receiving services during acute myocardial infarction, coronary artery bypass graft, and surgical hip/femur fracture treatment episodes. All related care within 90 days of hospital discharge will be included in the episode of care. We believe this model will further our goals of improving the efficiency and quality of care for Medicare beneficiaries receiving care for these common clinical conditions and procedures. This proposed rule also includes several proposed modifications to the Comprehensive Care for Joint Replacement model.

DATES:

Comment period:

To be assured consideration, comments on this proposed rule must be received at one of the addresses provided in the

ADDRESSES

section no later than 5 p.m. EDT on October 3, 2016.

ADDRESSES:

In commenting, please refer to file code CMS-5519-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

You may submit comments in one of four ways (please choose only one of the ways listed):

Electronically.

You may submit electronic comments on this regulation to

http://www.regulations.gov

. Follow the “Submit a comment” instructions.

By regular mail.

You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-5519-P, P.O. Box 8013, Baltimore, MD 21244-1850.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

By express or overnight mail.

You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-5519-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

By hand or courier.

Alternatively, you may deliver (by hand or courier) your written comments ONLY to the following addresses prior to the close of the comment period:

a. For delivery in Washington, DC— Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201

(Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

b. For delivery in Baltimore, MD— Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address, call telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members.

Comments erroneously mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.

For information on viewing public comments, see the beginning of the

SUPPLEMENTARY INFORMATION

section.

FOR FURTHER INFORMATION CONTACT:

For questions related to the proposed EPMs:

NEPMRULE@cms.hhs.gov

For questions related to the CJR model:

CJR@cms.hhs.gov

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments:

All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received:

http://www.regulations.gov

. Follow the search instructions on that Web site to view public comments.

Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951.

Electronic Access

This

Federal Register

document is also available from the

Federal Register

online database through Federal Digital System (FDsys), a service of the U.S. Government Printing Office. This database can be accessed via the internet at

http://www.gpo.gov/fdsys/

Alphabetical List of Acronyms

Because of the many terms to which we refer by acronym, abbreviation, or short form in this proposed rule, we are listing the acronyms, abbreviations and short forms used and their corresponding terms in alphabetical order.

ACE Acute-care episode

ACO Accountable Care Organization

ALOS Average length of stay

AMA American Medical Association

AMI Acute Myocardial Infarction

APM Alternative Payment Model

ASC QRP Ambulatory Surgical Center Quality Reporting Program

ASC Ambulatory Surgical Center

ASPE Assistant Secretary for Planning and Evaluation

BPCI Bundled Payments for Care Improvement

CABG Coronary Artery Bypass Graft

CAD Coronary artery disease

CAH Critical access hospital

CBSA Core-Based Statistical Area

CC Complication or comorbidity

CCDA Consolidated clinical document architecture

CCDE Core clinical data elements

CCN CMS Certification Number

CEC Comprehensive ESRD Care Initiative

CEHRT Certified Electronic Health Record Technology

CFR Code of Federal Regulations

CJR Comprehensive Care for Joint Replacement

CMHC Community Mental Health Center

CMI Case Mix Index

CMMI Center for Medicare and Medicaid Innovation

CMP Civil monetary penalty

CMS Centers for Medicare & Medicaid Services

CoP Condition of Participation

CPC Comprehensive Primary Care Initiative

CPT Current Procedural Terminology

CR Cardiac rehabilitation

CSA Combined Statistical Area

CVICU Cardiovascular intensive care units

CY Calendar year

DME Durable medical equipment

DMEPOS Durable medical equipment, prosthetics, orthotics, and supplies

DSH Disproportionate Share Hospital

ECQM Electronic Clinical Quality Measures

EFT Electronic funds transfer

EHR Electronic health record

E/M Evaluation and management

EPM Episode payment model

ESCO ESRD Seamless Care Organization

ESRD End-Stage Renal Disease

FFS Fee-for-service

GAAP Generally-Accepted Accounting Principles

GEM General Equivalence Mapping

GPCI Geographic Practice Cost Index

HAC Hospital-Acquired Condition

HACRP Hospital-Acquired Condition Reduction Program

HCAHPS Hospital Consumer Assessment of Healthcare Providers and Systems

HCC Hierarchical Condition Category

HCPCS Healthcare Common Procedure Coding System

HHA Home health agency

HHPPS Home Health Prospective Payment System

HHRG Home Health Resource Group

HHS U.S. Department of Health and Human Services

HH QRP Home Health Quality Reporting Program

HICN Health Insurance Claim Number

HIPPA Health Insurance Portability and Accountability Act

HIQR Hospital Inpatient Quality Reporting

Health IT Health Information Technology

HLMR HCAHPS Linear Mean Roll Up

HOOS Hip Dysfunction and Osteoarthritis Outcome Score

HOPD Hospital outpatient department

HRRP Hospital Readmissions Reductions Program

HRR Hospital Referral Region

HVBP Hospital Value-Based Purchasing Program

HIV Human Immunodeficiency Virus

ICD-9-CM International Classification of Diseases, 9th Revision, Clinical Modification

IRFQRICD-10-CM International Classification of Diseases, 10th Revision, Clinical Modification

ICR Intensive Cardiac Rehabilitation

IME Indirect medical education

IPPS Inpatient Prospective Payment System

IPF Inpatient psychiatric facility

IRF QRP Inpatient Rehabilitation Facility Quality Reporting Program

IPF QRP Inpatient Psychiatric Facility Quality Reporting Program

IRF Inpatient rehabilitation facility

KOOS Knee Injury and Osteoarthritis Outcome Score

LEJR Lower-extremity joint replacement

LIP Low-income percentage

LOS Length-of-stay

LTCH QRP Long-Term Care Hospital Quality Reporting Program

LTCH Long-term care hospital

LUPA Low-utilization payment adjustment

MAC Medicare Administrative Contractor

MACRA Medicare Access and CHIP Reauthorization Act of 2015

MAPCP Multi-Payer Advanced Primary Care Practice

MAT Measure Authoring Tool

MCC Major complications or comorbidities

MCCM Medicare Care Choices Model

MDC Major diagnostic category

MDH Medicare-Dependent Hospital

MedPAC Medicare Payment Advisory Commission

MIPS Merit-based Incentive Payment System

MP Malpractice

MSA Metropolitan Statistical Area

MS-DRG Medical Severity Diagnosis-Related Group

NPI National Provider Identifier

NPRA Net Payment Reconciliation Amount

NQF National Quality Forum

OCM Oncology Care Model

OIG Department of Health and Human Services' Office of the Inspector General

OPPS Outpatient Prospective Payment System

OQR Outpatient Quality Reporting

PBPM Per-beneficiary per-month

PCI Percutaneous Coronary Intervention

PCMH Primary Care Medical Homes

PE Practice Expense

PFS Physician Fee Schedule

PGP Physician group practice

PQRS Physician Quality Reporting System

PHA Partial hip arthroplasty

PPS Prospective Payment System

PRO Patient-Reported Outcome

PROMIS Patient-Reported Outcomes Measurement Information Systems

PRO-PM Patient-Reported Outcome Performance Measure

PTCA Percutaneous transluminal coronary angioplasty

PY Performance year

QIO Quality Improvement Organization

RAC Recovery Audit Contractor

RRC Rural Referral Center

RSCR Risk-Standardized Complication Rate

RSRR Risk-Standardized Readmission Rate

RSMR Risk-Standardized Mortality Rate

RVU Relative Value Unit

SCH Sole Community Hospital

SHFFT Surgical hip/femur fracture treatment

SILS2 Single Item Health Literacy Screening

SNF QRP Skilled Nursing Facility Quality Reporting Program

SNF Skilled nursing facility

THA Total hip arthroplasty

TIN Taxpayer identification number

TKA Total knee arthroplasty

TP Target price

UHDDS Uniform Hospital Discharge Data Set

VR-12 Veterans Rand 12 Item Health Survey

Table of Contents

I. Executive Summary

A. Purpose

B. Summary of the Major Provisions

1. Model Overview—EPM episodes of care

2. Model Scope

3. Payment

4. Similar, Previous, and Concurrent Models

5. Overlap with Ongoing CMS Efforts

6. Quality Measures and Reporting Requirements

7. Beneficiary Protections

8. Financial Arrangements

9. Data Sharing

10. Program Waivers

C. Summary of Economic Effects

II. Background

III. Provisions of the Proposed Regulations

A. Selection of Episodes for Episode Payment Models in this Rulemaking and Potential Future Directions

1. Selection of Episodes for Episode Payment Models in this Rulemaking

a. Overview

b. SHFFT Model

c. AMI and CABG Models

2. Advanced Alternative Payment Model Considerations

a. Overview for the EPMs

b. EPM Participant Tracks

c. Clinician Financial Arrangements Lists under the EPMs

d. Documentation Requirements

3. Future Directions for Episode Payment Models

a. Refinements to the BPCI Initiative Models

b. Potential Future Condition-Specific Episode Payment Models

c. Potential Future Event-Based Episode Payment Models for Procedures and Medical Conditions

d. Health Information Technology Readiness for Potential Future Episode Payment Models

B. Proposed Definition of the Episode Initiator and Selected Geographic Areas

1. Background

2. Proposed definition of episode initiator

3. Financial responsibility for episode of care

4. Proposed Geographic Unit of Selection and Exclusion of Selected Hospitals

5. Overview and Options for Geographic Area Selection for AMI and CABG Episodes

a. Exclusion of Certain MSAs

b. Proposed Selection Approach

(1) Factors Considered but Not Used

(2) Sample Size Calculations and the Number of Selected MSAs

(3) Method of Selecting MSAs

C. Episode Definition for EPMs

1. Background

2. Overview of Proposed Three New Episode Payment Models

3. Clinical Dimensions of AMI, CABG, and SHFFT Model Episodes

a. Definition of the Clinical Conditions Included in AMI, CABG, and SHFFT Model Episodes

(1) AMI (Medical Management and PCI) Model

(2) CABG Model

(3) SHFFT (Excludes Lower Extremity Joint Replacement) Model

b. Definition of the Related Services Included in EPM Episodes

4. EPM Episodes

a. Beneficiary Care Inclusion Criteria and Beginning of EPM Episodes

(1) General Beneficiary Care Inclusion Criteria

(2) Beginning AMI Model Episodes

(3) Beginning CABG Model Episodes

(4) Beginning SHFFT Episodes

(5) Special Policies for Hospital Transfers of Beneficiaries with AMI

b. Middle of EPM Episodes

c. End of EPM Episodes

(1) AMI and CABG Models

(2) SHFFT Model

D. Methodology for Setting EPM Episode Prices and Paying EPM Participants in the AMI, CABG, and SHFFT Models

1. Background

a. Overview

b. Key Terms for EPM Episode Pricing and Payment

2. Performance Years, Retrospective Episode Payments, and Two-Sided Risk EPMs

a. Performance Period

b. Retrospective Payment Methodology

c. Two-Sided Risk EPMs

3. Adjustments to Actual EPM Episode Payments and to Historical Episode Payments used to Set Episode Prices

a. Overview

b. Special Payment Provisions

c. Services that Straddle Episodes

d. High-Payment EPM Episodes

e. Treatment of Reconciliation Payments and Medicare Repayments when Calculating Historical EPM-Episode Payments to Update EPM Benchmark and Quality-Adjusted Target Prices

4. EPM-Episode Price-Setting Methodologies

a. Overview

(1) AMI model

(2) CABG model

(3) SHFFT model

b. EPM-Episode Benchmark and Quality-Adjusted Target Price Features

(1) Risk-Stratifying EPM-Episode Benchmark Prices based on MS-DRG and Diagnosis

(2) Adjustments to Account for EPM-Episode Price Variation

(a) Adjustments for Certain AMI Model Episodes with Chained Anchor Hospitalizations

(b) Adjustments for CABG Model Episodes

(d) Potential Future Approaches to setting Target Prices for AMI and Hip Fracture Episodes

(e) Summary of Pricing Methodologies for AMI, CABG, and SHFFT Model Episode Scenarios

(3) 3 Years of Historical Data

(4) Trending Historical Data to the Most Recent Year

(5) Update Historical EPM-Episode Payments for Ongoing Payment System Updates

(6) Blend Hospital-Specific and Regional Historical Data

(7) Define Regions as U.S. Census Divisions

(8) Normalize for Provider-Specific Wage Adjustment Variations

(9) Combining Episodes to Set Stable Benchmark and Quality-Adjusted Target Prices

(10) Effective Discount Factors

c. Approach to Combine Pricing Features for all SHFFT Model Episodes and AMI Model Episodes without CABG readmissions

d. Approach to Combine Pricing Features for CABG Model Episodes

(1) Anchor Hospitalization Portion of CABG Model Episodes

(2) Approach to Combine Pricing Features for Post-Anchor Hospitalization Portion of CABG Model Episodes

(3) Combine CABG Anchor Hospitalization Benchmark Price and CABG Post-Anchor Hospitalization Benchmark Price

e. Approach to Combine Pricing Features for AMI Model episodes with CABG Readmissions

5. Process for Reconciliation

a. Net Payment Reconciliation Amount (NPRA)

b. Payment Reconciliation

c. Reconciliation Report

6. Adjustments for Overlaps with Other Innovation Center Models and CMS Programs

a. Overview

b. Provider Overlap

(1) BPCI Participant Hospitals in Geographic Areas Selected for EPMs

(2) BPCI Physician Group Practice (PGP) Episode Initiators in Hospitals Participating in EPMs

c. Beneficiary Overlap

(1) Beneficiary Overlap with BPCI

(2) Beneficiary Overlap with the CJR Model and other EPMs

(3) Beneficiary Overlap with Shared Savings Models and Programs

d. Payment Reconciliation of Overlap with non-ACO CMS Models and Programs

7. Limits or Adjustments to EPM Participants' Financial Responsibility

a. Overview

b. Limit on Actual EPM-Episode Payment Contribution to Repayment Amounts and Reconciliation Payments

(1) Limit on Actual EPM-Episode Payment Contribution to Repayment Amounts

(2) Limitation on Reconciliation Payments

c. Additional Protections for Certain EPM Participants

(1) Proposed Policies for Certain EPM Participants to Further Limit Repayment Responsibility

(2) Considerations for Hospitals Serving a High Percentage of Potentially Vulnerable Populations

d. Application of Stop-Gain and Stop-Loss Limits

e. EPM Participant Responsibility for Increased Post-Episode Payments

8. Appeals Process

a. Overview

b. Notice of calculation error (first level appeal)

c. Dispute Resolution Process (second level of appeal)

d. Exception to the Notice of Calculation Error Process and Notice of Termination

e. Limitations on review

E. EPM quality measures, public display, and use of quality measures in the EPM payment methodology

1. Background

2. Selection of Proposed Quality Measures for the EPMs

a. Overview of Quality Measure Selection

b. AMI Model Quality Measures

c. CABG Model Quality Measures

d. SHFFT Model Quality Measures

3. Proposed Use of Quality Measures in the EPM Payment Methodologies

a. Overview of EPM Composite Quality Score Methodology

b. Determining Quality Measure Performance

c. Determining Quality Measure Improvement

d. Determining Successful Submission of Voluntary Data for AMI and SHFFT Models

(1) Hybrid AMI Mortality (NQF #2473) Voluntary Data

(2) Patient-Reported Outcomes and Limited Risk Variable Voluntary Data Following Elective Primary THA/TKA

e. Calculation of the EPM-Specific Composite Quality Score

(1) AMI Model Composite Quality Score

(2) CABG Model Composite Quality Score

(3) SHFFT Model Composite Quality Score

f. EPM Pay-for-Performance Methodologies to Link Quality and Payment

(1) Overview of Pay-for-Performance Proposals Applicable to the EPMs

(2) AMI and CABG Model Pay-for-Performance Methodology

(a) AMI Model Pay-for-Performance Methodology

(b) CABG Model Pay-for-Performance Methodology

(3) SHFFT Model Pay-for-Performance Methodology

4. Details on Quality Measures for the EPMs

a. AMI Model-Specific Measures

(1) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization (NQF #0230) (MORT-30-AMI)

(a) Background

(b) Data Sources

(d) Inclusion and Exclusion Criteria

(e) Risk-Adjustment

(f) Calculating the Risk-Standardized Mortality Ratio (RSMR) and Performance Period

(2) Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction (AMI Excess Days)

(a) Background

(b) Data Sources

(d) Inclusion and Exclusion Criteria

(e) Risk-Adjustment

(f) Calculating the Rate and Performance Period

(3) Hybrid Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization (NQF# 2473)(Hybrid AMI Mortality)

(a) Background

(b) Data Sources

(d) Inclusion and Exclusion Criteria

(e) Risk-Adjustment

(f) Calculating the Risk-Standardized Mortality Ratio (RSMR) and Performance Period

(g) Requirements for Successful Submission of AMI Voluntary Data

b. CABG Model-Specific Measure

(1) Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft (CABG) Surgery (NQF# 2558)(MORT-30-CABG)

(a) Background

(b) Data Source

(d) Inclusion and Exclusion Criteria

(e) Risk-Adjustment

(f) Calculating the Risk-Standardized Mortality Ratio (RSMR) and Performance Period

c. SHFFT Model-Specific Measures

(1) Hospital Level Risk Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1550) (Hip/Knee Complications)

(a) Background

(b) Data Sources

(d) Inclusion and Exclusion Criteria

(e) Risk Adjustment

(f) Calculating the Risk Standardized Complication Rate and Performance Period

(2) Hospital-Level Performance Measure(s) of Patient-Reported Outcomes Following Elective Primary Total Hip and/or Total Knee Arthroplasty

(a) Background

(b) Data Sources

(d) Inclusion and Exclusion Criteria

(e) Outcome

(f) Risk Adjustment (if applicable)

(g) Calculating the Risk Standardized Rate

(h) Requirements for Successful Submission of THA/TKA Patient-Reported Outcome-Based Voluntary Data

d. Measure Used for All EPMs

(1) Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey (NQF #0166)

(a) Background

(b) Data Sources

(d) Inclusion and Exclusion Criteria

(e) Case-Mix Adjustment

(f) HCAHPS Scoring

(g) Calculating the Rate and Performance Period

e. Potential Future Measures

5. Form, Manner, and Timing of Quality Measure Data Submission

6. Display of Quality Measures and Availability of Information for the Public from the AMI, CABG, and SHFFT Models

F. Compliance Enforcement and Termination of an Episode Payment Model

1. Overview and Background

2. Proposed Compliance Enforcement for EPMs

3. Proposed Termination of an Episode Payment Model

G. Monitoring and Beneficiary Protection

1. Introduction and Summary

2. Beneficiary Choice

3. Beneficiary Notification

4. Monitoring for Access to Care

5. Monitoring for Quality of Care

6. Monitoring for Delayed Care

H. Access to Records and Record Retention

I. Financial Arrangements under EPM

1. Background

2. Overview of the EPM Financial Arrangements

3. EPM Collaborators

4. Sharing Arrangements under EPM

a. General

b. Requirements

c. Gainsharing Payment, Alignment Payment, and Internal Cost Savings Conditions and Restrictions

d. Documentation Requirements

5. Distribution Arrangements under the EPM

a. General

b. Requirements

6. Downstream Distribution Arrangements under the EPM

a. General

b. Requirements

7. Summary of Proposals for Sharing, Distribution, and Downstream Distribution Arrangements under the EPM

8. Enforcement Authority

9. Beneficiary Engagement Incentives under the EPM

a. General

b. Technology Provided to an EPM Beneficiary

c. Clinical Goals of the EPM

d. Documentation of Beneficiary Incentives

10. Compliance with Fraud and Abuse Laws

J. Proposed Waivers of Medicare Program Requirements

1. Overview

2. Summary of Waivers Adopted Under the CJR Model

3. Analysis of Current Model Data

a. Analysis of Waiver Usage

b. Analysis of Discharge Destination—Post-Acute Care Usage

c. Analysis of Hospital Mean Length of Stay Data

4. Post-Discharge Home Visits

a. AMI Model

b. CABG Model

c. SHFFT Model

5. Billing and Payment for Telehealth Services

6. SNF 3-Day Rule

a. Waiver of SNF 3-Day Rule

b. Additional Beneficiary Protections under the SNF 3-Day Stay Rule Waiver

7. Waivers of Medicare Program Rules to Allow Reconciliation Payment or Repayment Actions Resulting from the Net Payment Reconciliation Amount

8. New Waiver for Providers and Suppliers of Cardiac Rehabilitation and Intensive Cardiac Rehabilitation Services Furnished to EPM Beneficiaries During an AMI or CABG Episode

K. Data Sharing

1. Overview

2. Beneficiary Claims Data

3. Aggregate Regional Data

4. Timing and Period of Baseline Data

5. Frequency and Period of Claims Data Updates for Sharing Beneficiary-Identifiable Claims Data During the Performance Period

6. Legal Permission to Share Beneficiary-Identifiable Data

7. Data Considerations with Respect to EPM and CJR Collaborators

L. Coordination with other agencies

IV. Evaluation Approach

A. Background

B. Design and Evaluation Methods

C. Data Collection Methods

D. Key Evaluation Research Questions

E. Evaluation Period and Anticipated Reports

V. Comprehensive Care for Joint Replacement Model

A. Participant Hospitals in the CJR Model

B. Inclusion of Reconciliation and Repayment Amounts when Updating Data for Target Prices

C. Quality-Adjusted Target Price

D. Reconciliation

1. Hospital Responsibility for Increased Post-Episode Payments

2. ACO Overlap and Subsequent Reconciliation Calculation

3. Stop-Loss and Stop-Gain Limits

4. Proposed Modifications to Reconciliation Process

E. Use of Quality Measures and the Composite Quality Score

1. Hospitals Included in Quality Performance Distribution

2. Quality Improvement Points

3 Relationship of composite quality score to quality categories

4. Maximum Composite Quality Score

5e. Acknowledgement of Voluntary Data Submission

6. Calculation of the HCAHPS Linear Mean Roll-up (HLMR) Score

F. Accounting for Overlap with CMS ACO Models and the Medicare Shared Savings Program

G. Appeals Process

H. Beneficiary Notification

1. Physician and PGP Provision of Notice

2. Other CJR collaborators provision of notice

3. Beneficiary Notification Compliance and Records

4. Compliance with § 510.110

I. Compliance Enforcement

1. Failure to comply.

J. Financial Arrangements under the CJR model

1. Definitions related to Financial Arrangements

a. Addition to the definition of CJR collaborators

b. Deleting the term collaborator agreements

c. Addition of CJR activities

2. Sharing arrangements

a. General

b. Requirements

c. Gainsharing Payment, Alignment Payment, and Internal Cost Savings Conditions and Restrictions.

d. Documentation

3. Distribution arrangements

a. General

b. Requirements

4. Downstream Distribution Arrangements under the CJR model

a. General

b. Requirements

5. Summary of Proposals for Sharing, Distribution, and Downstream Distribution

K. Beneficiary Incentives under the CJR model

L. Access to Records and Record Retention

M. Waivers of Medicare Program Rules to Allow Reconciliation Payment or Repayment Actions Resulting From the Net Payment Reconciliation Amount

N. SNF 3-day Waiver Beneficiary Protections

O. Advanced Alternative Payment Model Requirements

1. Overview for CJR

2. CJR Participant Hospital Track

3. Clinician Financial Arrangements Lists under the CJR Model

4. Documentation Requirements

VI. Cardiac Rehabilitation Incentive Payment Model

A. Background

B. Overview of the CR Incentive Payment Model

1. Rationale for the CR Incentive Payment Model

2. General Design of the CR Incentive Payment Model

C. CR Incentive Payment Model Participants

D. CR/ICR Services that Count Towards CR Incentive Payments

E. Determination of CR Incentive Payments

1. Determination of CR Amounts that Sum to Determine a CR Incentive Payment

2. Relation of CR Incentive Payments to EPM Pricing and Payment Policies and Sharing Arrangements for EPM-CR participants

3. CR Incentive Payment Report

4. Proposed Timing for Making CR Incentive Payments

F. Provisions for FFS-CR Participants

1. Access to Records and Retention for FFS-CR participants

2. Appeals Process for FFS-CR Participants

a. Overview

b. Notice of Calculation Error (first level appeal).

c. Dispute Resolution Process (second level of appeal)

d. Exception to the Notice of Calculation Error Process and Notice of Termination.

e. Limitations on review.

3. Data Sharing for FFS-CR Participants

a. Overview

b. Data Sharing with CR participants

4. Compliance Enforcement for FFS-CR Participants and Termination of the CR Incentive Payment Model

5. Enforcement Authority for FFS-CR Participants

6. Beneficiary Engagement Incentives for FFS-CR Participants

7. Waiver of Physician Definition for Providers and Suppliers of CR/ICR Services Furnished to FFS-CR Beneficiaries During an AMI Care Period or CABG Care Period

a. Overview of Program Rule Waivers Under an EPM

b. General Physician Requirements for Furnishing CR/ICR Services

c. Proposed Waiver of Physician Definition For Providers and Suppliers of CR/ICR Services Furnished to EPM Beneficiaries During AMI or CABG Model Episodes

d. Proposed Waiver of Physician Definition For Providers or Suppliers of CR/ICR Services Furnished to FFS-CR Beneficiaries During AMI Care Periods or CABG Care Periods

G. Considerations Regarding Financial Arrangements Under the CR Incentive Payment Model

VII. Collection of Information Requirements

VIII. Response to Comments

IX. Regulatory Impact Analysis

A. Statement of Need

1. Need for EPM Proposed Rule

2. Need for CJR Modifications

3. Need for CR Incentive Payment Model

4. Aggregate Impact of EPMs, CJR, and CR Incentive Payment Model

B. Overall Impact

C. Anticipated Effects

1. Overall Magnitude of the Model and its Effects on the Market

a. EPMs

b. CJR

c. CR Incentive Payment Model

d. Aggregate Effects on the Market

2. Effects on the Medicare Program

a. EPMs

(1) Assumptions

(2) Analyses

(3) Uncertainties

b. CJR

(1) Assumptions and Uncertainties

(2) Analyses

c. CR Incentive Payment Model

(1) Assumptions and Uncertainties

(2) Analysis

3. Effects on Beneficiaries

4. Effects on Small Rural Hospitals

5. Effects on Small Entities

6. Effects on Collection of Information

7. Unfunded Mandates

D. Alternatives Considered

E. Accounting Statement and Table

F. Conclusion

Regulations Text

I. Executive Summary

A. Purpose

The purpose of this proposed rule—Advancing Care Coordination through Episode Payment Models, is to propose the creation and testing of three new episode payment models (EPMs) and a Cardiac Rehabilitation (CR) incentive payment model under the authority of the Center for Medicare and Medicaid Innovation (CMMI or “the Innovation Center”). Section 1115A of the Social Security Act (“the Act”) authorizes the Innovation Center to test innovative payment and service-delivery models to reduce Medicare, Medicaid, and Children's Health Insurance Program expenditures while preserving or enhancing the quality of care furnished to such programs' beneficiaries. Under the fee-for-service (FFS) program, Medicare makes separate payments to providers and suppliers for the items and services furnished to a beneficiary over the course of treatment (an episode of care). With the amount of payments dependent on the volume of services delivered, providers may not have incentives to invest in quality-improvement and care-coordination activities. As a result, care may be fragmented, unnecessary, or duplicative. The goal for the proposed EPMs is to improve the quality of care provided to beneficiaries in an applicable episode while reducing episode spending through financial accountability.

The proposed EPMs would include models for episodes of care surrounding an acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment excluding lower extremity joint replacement (SHFFT). Under the proposed rule, the Centers for Medicare & Medicaid Services (CMS) will test whether an EPM for AMI, CABG, and SHFFT episodes of care will reduce Medicare expenditures while preserving or enhancing the quality of care for Medicare beneficiaries. We anticipate the proposed models would benefit Medicare beneficiaries by improving the

coordination and transition of care, improving the coordination of items and services paid for through FFS Medicare, encouraging more provider investment in infrastructure and redesigned care processes for higher-quality and more efficient service delivery, and incentivizing higher-value care across the inpatient and post-acute care spectrum. We propose to test the proposed EPMs for 5 performance years, beginning July 1, 2017, and ending December 31, 2021.

In this proposed rule, we use the terms “AMI episode,” “CABG episode,” and “SHFFT episode” to refer to episodes of care as described in section III.C. of this proposed rule.

Within this proposed rule, we propose three distinct EPMs focused on episodes of care for AMI, CABG, and SHFFT episodes. We chose these episodes for the proposed models because, as discussed in depth in section III.A. of this proposed rule, we believe hospitals would have significant opportunity to redesign care and improve quality of care furnished during the applicable episode. In addition, significant variation in spending occurs during these high-expenditure, common episodes. The proposed EPMs would enable hospitals to consider the most appropriate strategies for care redesign, including: (1) increasing post-hospitalization follow-up and medical management for patients; (2) coordinating across the inpatient and post-acute care spectrum; (3) conducting appropriate discharge planning; (4) improving adherence to treatment or drug regimens; (5) reducing readmissions and complications during the post-discharge period; (6) managing chronic diseases and conditions that may be related to the proposed EPMs' episodes; (7) choosing the most appropriate post-acute care setting; and (8) coordinating between providers and suppliers such as hospitals, physicians, and post-acute care providers. The proposed EPMs would offer hospitals the opportunity to examine and better understand their own care processes and patterns with regard to patients in AMI, CABG, and SHFFT episodes, as well as the processes of post-acute care providers and physicians.

We previously have used our statutory authority under section 1115A of the Act to test other episode payment models such as the Bundled Payments for Care Improvement (BPCI) initiative and Comprehensive Care for Joint Replacement (CJR) model. Bundled payments for multiple services in an episode of care hold participating organizations financially accountable for that episode of care. Such models also allow participants to receive payments based in part on the reduction in Medicare expenditures that arise from such participants' care redesign efforts. This payment can be used for investments in care redesign strategies and infrastructure, as well as to incentivize collaboration with other providers and suppliers furnishing services to beneficiaries included in the models.

We believe the proposed EPMs would further the Innovation Center's mission and the Administration's goal of increasingly paying for value and outcomes, rather than for volume alone,

by promoting the alignment of financial and other incentives for all health care providers caring for beneficiaries during SHFFT, CABG, or AMI episodes. The acute care hospital where an eligible beneficiary has an initial hospitalization for one of the procedures or clinical conditions included in these proposed EPMs would be held accountable for spending during the episode of care. EPM participants could earn reconciliation payments by appropriately reducing expenditures and meeting certain quality metrics. EPM participants also would gain access to data and educational resources to better understand care patterns during the inpatient hospitalization and post-acute periods, as well as associated spending. Payment approaches that reward providers for assuming financial and performance accountability for a particular episode of care create incentives for the implementation and coordination of care redesign between participants and other providers and suppliers such as physicians and post-acute care providers.

Episodes for AMI, CABG, and SHFFT beneficiaries initiated by all U.S. IPPS hospitals not in Maryland and constructed using standardized Medicare FFS Parts A and B claims, as proposed in this rule that end in CY 2014.

The proposal for the AMI, CABG, and SHFFT models would require the participation of hospitals in multiple geographic areas that might not otherwise participate in testing episode payment for the proposed episodes of care. CMS is testing other episode payment models with the BPCI initiative and the CJR model. The BPCI initiative is voluntary; providers applied to participate and chose from 48 clinical episodes. BPCI participants entered the at-risk phase between 2013 and 2015 and have the option to continue participating in the initiative through FY 2018. In the CJR model, acute care hospitals in selected geographic areas are required to participate in the CJR model for all eligible lower-extremity joint replacement (LEJR) episodes that initiate at a CJR participant hospital. The CJR model began its first of 5 performance years on April 1, 2016. Realizing the full potential of new EPMs will require the engagement of an even broader set of providers than have participated to date in our episode payment models such as the BPCI initiative and the CJR model. As such, we are interested in testing and evaluating the impact of episode payment for the three proposed EPMs in a variety of circumstances, including those hospitals that may not otherwise participate in such a test.

While we note that testing of the CJR model that began in April 2016 will allow CMS to gain experience with requiring hospitals to participate in an episode payment model, the clinical circumstances of the episodes we are proposing (AMI, CABG, and SHFFT) differ in important ways from the LEJR episodes included in the CJR model. LEJR procedures are common among the Medicare population, and the majority of such procedures are elective. In contrast, under the three proposed EPMs, CMS would test episode payment for certain cardiac conditions and procedures, as well as SHFFT. We expect the patient population included in these episodes would be substantially different from the patient population in CJR episodes, due to the clinical nature of the cardiac and SHFFT episodes. Beneficiaries in these episodes commonly have chronic conditions that contribute to the initiation of the episodes, and need both planned and unplanned care throughout the EPM episode following discharge from the initial hospitalization that begins the episode. Both AMI and CABG model episodes primarily include beneficiaries with cardiovascular disease, a chronic condition which likely contributed to the acute events or procedures that initiate the episodes. About half the average AMI model historical episode spending was for the initial hospitalization, with the majority of spending following discharge from the initial hospitalization due to hospital readmissions, while there was relatively less spending on SNF services, Part B professional services, and hospital outpatient services. In CABG model historical episodes, about three-quarters of episode spending was for the initial hospitalization, with the remaining episode spending relatively evenly divided between Part B professional services and hospital readmissions, and a lesser percentage on SNF services. Similar to AMI episodes, post-acute care provider use was relatively uncommon in CABG model historical episodes, while hospital readmissions during CABG model historical episodes were relatively common. SHFFT model historical episodes also were accompanied by substantial spending

for hospital readmissions, and post-acute care provider use in these episodes also was high. The number of affected beneficiaries and potential impact of the models on quality and Medicare spending present an important opportunity to further the Administration's goal of shifting health care payments to support the quality of care over the quantity of services by promoting better coordination among health care providers and suppliers and greater efficiency in the care of beneficiaries in these models, while reducing Medicare expenditures.

Pay-for-performance episode payment models such as the three EPMs proposed in this rulemaking financially incentivize improved quality of care and reduced cost by aligning the financial incentives of all providers and suppliers caring for model beneficiaries with these goals. This alignment leads to a heightened focus on care coordination and management throughout the episode that prioritizes the provision of those items and services which improve beneficiary outcomes and experience at the lowest cost. A more detailed discussion of the evidence supporting the episode selection for these models can be found in section III.A.1. of the proposed rule.

Sylvia Mathews Burwell, HHS Secretary, Progress Towards Achieving Better Care, Smarter Spending, Healthier People,

http://www.hhs.gov/blog/2015/01/26/progress-towards-better-care-msarter-spending-healthier-people.html

(January 26, 2015).

The proposed models would also allow CMS to gain additional experience with episode-payment approaches for hospitals with variance in (1) historic care and utilization patterns; (2) patient populations and care patterns; (3) roles within their local markets; (4) volumes of services; (5) levels of access to financial, community, or other resources; and (6) levels of population and health-care-provider density, including local variations in the availability and use of different categories of post-acute care providers. We believe that participation in the proposed EPMs by a large number of hospitals with diverse characteristics would result in a robust data set for evaluating this payment approach and would stimulate the rapid development of new evidence-based knowledge. Testing the proposed EPMs in this manner would also allow us to learn more about patterns of inefficient utilization of health care services and how to incentivize quality improvement for beneficiaries receiving services in AMI, CABG, and SHFFT episodes. This knowledge potentially could inform future Medicare payment policies.

We propose the CR incentive payment model to test the effects on quality of care and Medicare expenditures of providing financial incentives to hospitals for beneficiaries hospitalized for treatment of AMI or CABG to encourage care coordination and greater utilization of medically necessary CR and intensive cardiac rehabilitation (ICR) services for 90 days post-hospital discharge where the beneficiary's overall care is paid under either an EPM or the Medicare FFS program. Despite the evidence from multiple studies that CR services improve health outcomes, the literature also indicates that these services are underutilized, estimating that only about 35 percent of AMI patients older than 50 receive this indicated treatment.

4 5 6

Recent analysis confirms a similar pattern of underutilization for Medicare beneficiaries who are eligible for and could benefit from CR.

Anderson L et al. Exercise-based cardiac rehabilitation for coronary heart disease. Cochrane Database Syst Rev. 2016 Jan 5;1:CD001800.

Receipt of outpatient cardiac rehabilitation among heart attack survivors—United States, 2005. MMWR Morbidity and mortality weekly report. 2008 Feb 1:57(4):89-94.

Considering the evidence demonstrating that CR/ICR services improve long-term patient outcomes, the room for improvement in CR/ICR service utilization for beneficiaries eligible for this benefit, and the need for ongoing, chronic treatment for underlying coronary artery disease (CAD) among beneficiaries that have had an AMI or a CABG, we believe that there is a need for improved long-term care management and care coordination for beneficiaries that have had an AMI or a CABG and that incentivizing the use of CR/ICR services is an important component of meeting this need. We want to reduce barriers to high-value care by testing a financial incentive for hospitals that encourages the management of beneficiaries that have had an AMI or a CABG in ways that may contribute to long-term improvements in quality and reductions in Medicare spending. We seek public comment on the proposals contained in this proposed rule, and also on any alternatives considered.

B. Summary of the Major Provisions

1. Model Overview—EPM Episodes of Care

Under the proposed EPMs, as described further in section III.B.2. of this proposed rule, an AMI, CABG, or SHFFT model episode would begin with an inpatient admission to an anchor hospital assigned to one of the following MS-DRGs upon beneficiary discharge. Acute care hospital services furnished to beneficiaries in AMI, CABG, and SHFFT episodes currently are paid under the Inpatient Prospective Payment System (IPPS) through several Medicare Severity-Diagnosis Related Groups (MS-DRGs): for AMI episodes, AMI MS-DRGs (280-282) and those Percutaneous Coronary Intervention (PCI) MS-DRGs (246-251) representing IPPS admissions for AMI that are treated with PCIs; CABG MS-DRGs (231-236); and SHFFT MS-DRGs (480-482). Episodes would end 90 days after the date of discharge from the anchor hospital, as defined under § 512.2. Defining EPMs' episodes of care in such a manner offers operational simplicity for both providers and CMS. The proposed EPMs' episodes would include the inpatient stays and all related care covered under Medicare Parts A and B within the 90 days after discharge, including hospital care, post-acute care, and physician services.

2. Model Scope

Consistent with the CJR model, we propose that acute care hospitals would be the episode initiators and bear financial risk under the proposed AMI, CABG and SHFFT models. In comparison to other health care facilities, hospitals are more likely to have resources that would allow them to appropriately coordinate and manage care throughout an episode, and hospital staff members already are involved in hospital-discharge planning and post-acute care recommendations for recovery, key dimensions of high-quality and efficient care. We propose to require all hospitals that are paid under the IPPS, have a CMS Certification Number (CCN), and have an address located in selected geographic areas to participate in the EPMs, with limited exceptions. An eligible beneficiary who receives care at such a hospital will automatically be included in the applicable EPM. We propose to select geographic areas through a random sampling methodology.

Under the CR incentive payment model, we propose to provide a CR incentive payment specifically to selected hospitals with financial responsibility for AMI or CABG model episodes (hereinafter EPM-CR participants) because they are already engaged in managing the AMI or CABG model beneficiary's overall care for a period of time following hospital discharge. Similarly, we believe there are opportunities to test the same financial incentives for hospitals where the beneficiary's overall care is paid under the Medicare FFS program. Thus,

we also propose to provide a CR incentive payment specifically to selected hospitals that are not AMI or CABG model participants (hereinafter FFS-CR participants).

Our proposed geographic-area selection process is detailed further in section III.B.4. of this proposed rule.

3. Payment

We propose to test the AMI, CABG, and SHFFT EPMs for 5 performance years. The first performance year will begin July 1, 2017. During these performance years we propose to continue paying hospitals and other providers and suppliers according to the usual Medicare FFS payment systems. However, after the completion of a performance year, the Medicare claims payments for services furnished to the beneficiary during the episode, based on claims data, would be combined to calculate an actual episode payment. The actual episode payment would then be reconciled against an established EPM quality-adjusted target price. The amount of this calculation, if positive, would be paid to the participant. This would be called a reconciliation payment. If negative, we would require repayment from the participant hospital beginning with episodes ending in the second quarter of performance year 2 of the EPMs. EPM participants' quality performance also would be assessed at reconciliation; each participant would receive a composite quality score and a corresponding quality category. EPM participants that achieve a quality category of “acceptable” or higher would be eligible for a reconciliation payment. We also propose to phase in the requirement that participants whose actual episode payments exceed the quality-adjusted target price pay the difference back to Medicare beginning for performance year 2. Under this proposal, Medicare would not require repayment from hospitals for performance year 1 for actual episode payments that exceed their target price in performance year 1, and an applicable discount factor would be used for calculating repayment amounts for performance years 2 and 3, consistent with our final policies for the CJR model. In contrast to the CJR model, due to the clinical characteristics and common patterns of care in AMI episodes, we propose payment adjustments in the cases of certain transfers and readmissions of beneficiaries to inpatient hospitals for these episodes. These payment adjustments are discussed in detail in section III.D.4.b.(1). of this proposed rule. We also propose to limit how much a hospital can gain or lose based on its actual episode payments relative to quality-adjusted target prices. Finally, we propose additional policies to further limit the risk of high payment cases for all participants and for special categories of participants as described in section III.D. of this proposed rule.

In addition to the EPMs, we propose to test a CR incentive payment model to encourage the utilization of CR/ICR services for beneficiaries hospitalized for treatment of AMI or CABG. To determine the CR incentive payment, we propose to count the number of CR/ICR services for the relevant time periods under the Outpatient Prospective Payment System (OPPS) and PFS on the basis of the presence of paid claims of the HCPCS codes that report CR/ICR services and the units of service billed. The initial level of the per-service CR incentive amount would be $25 per CR/ICR service for each of the first 11 CR/ICR services paid for by Medicare during an AMI or CABG model episode or AMI or CABG care period. After 11 CR/ICR services are paid for by Medicare for a beneficiary, the level of the per-service CR incentive amount would increase to $175 per CR/ICR service for each additional CR/ICR service paid for by Medicare during the AMI or CABG model episode or AMI care period or CABG care period. A more detailed discussion of the CR incentive payment is located in section VI.E.1 of this proposed rule. The CR performance years would be the same as the performance years proposed for the EPMs in section III.D.2.a. of this proposed rule. Further details about the payment structure and design of the CR incentive payment model can be found in section VI. of this proposed rule.

4. Similar, Previous, and Concurrent Models

The proposed EPMs are informed by other models and demonstrations currently and previously conducted by CMS, and would explore additional ways to use episode payment to enhance coordination of care and improve the quality of care.

We recently announced practices that will participate in the Oncology Care Model (OCM), an episode payment model for physician practices administering chemotherapy. Under OCM, practices will enter into payment arrangements that include both financial and performance accountability for episodes of care surrounding chemotherapy administration to cancer patients. We will coordinate with other payers to align with OCM in order to facilitate enhanced services and care at participating practices.

More information on the OCM can be found on the Innovation Center's Web site at

http://innovation.cms.gov/initiatives/Oncology-Care/.

CMMI previously tested innovative episode payment approaches in the Medicare Acute Care Episode (ACE) demonstration,

and, as described in this proposed rule, currently is testing additional approaches under the BPCI initiative and the CJR model. The ACE demonstration tested a bundled payment approach for cardiac and orthopedic inpatient surgical services and procedures. All Medicare Part A and Part B services pertaining to the inpatient stay were included in the ACE demonstration episodes of care. Evaluations of the ACE demonstration found that while there was not strong quantitative evidence indicating improvements in quality, there was qualitative evidence that hospitals worked to improve processes and outcomes as a result of their participation in the demonstration.

Information on the ACE Demonstration can be found on the Innovation Center's Web site at

http://innovation.cms.gov/initiatives/ACE/.

We currently are testing the BPCI initiative, which is composed of four related payment models that link payments for multiple services that a Medicare beneficiary receives during an episode of care into a bundled payment. Under the initiative, entities enter into payment arrangements with CMS that include financial and performance accountability for episodes of care. Episodes of care under the BPCI initiative begin with either: (1) An inpatient hospital stay or (2) post-acute care services following a qualifying inpatient hospital stay. The BPCI initiative is evaluating the effects of episode-based payment approaches on patient experience of care, outcomes, and cost of care for Medicare FFS beneficiaries. Participating organizations chose from 48 clinical episodes, including hip and femur procedures except major joint, acute myocardial infarction, percutaneous coronary intervention, and coronary artery bypass graft surgery. BPCI Model 2 is an episode payment model in which a qualifying acute care hospitalization initiates a 30-, 60-, or 90-day episode of care. The episode includes the inpatient stay in an acute care hospital and all related services covered under Medicare Parts A and B during the episode, including post-acute care services.

Our experience testing BPCI Model 2 informed the design of the three

proposed EPMs. Although some interim evaluation results from the BPCI models are available, final evaluation results for the models within the BPCI initiative are not yet available. However, we believe that CMS' experiences with BPCI support the design of the proposed EPMs. Stakeholders both directly and indirectly involved in testing BPCI models have conveyed that they perceive the initiative to be an effective mechanism for advancing better, more accountable care and aligning providers along the care continuum. This message has been reinforced through CMS site visits to participating entities, the Bundled Payments summit in Washington, in-person meetings with Awardees at CMS, and Awardee-led Affinity Group discussions. The BPCI initiative incorporates 48 clinical episodes, including cardiac and orthopedic episodes similar to those proposed for the AMI, CABG, and SHFFT models. These clinical episodes are being tested by over 1200 Medicare providers, including acute care hospitals, physician group practices, skilled nursing facilities, and home health agencies. Cardiac and orthopedic clinical episodes are among the most popular episodes in BPCI, indicating that BPCI awardees participating in BPCI believe they can reduce cost and improve quality for beneficiaries in these episodes of care.

More information on BPCI Model 2 can be found on the Innovation Center's Web site at

http://innovation.cms.gov/initiatives/BPCI-Model-2/.

Our design and implementation of the CJR model, which is an episode payment model for LEJR episodes, also informed the design of the proposed AMI, CABG, and SHFFT EPMs. After releasing a proposed rule in July 2015 and receiving nearly 400 comments from the public, in November 2015 we released final regulations implementing the CJR model. Approximately 800 acute care hospitals (approximately 23 percent of all IPPS hospitals) now participate in the CJR model. The first CJR performance year began on April 1, 2016. The CJR model will continue for 5 performance years, ending on December 31, 2020. The proposed AMI, CABG, and SHFFT models build upon our experience designing and implementing the CJR model, including feedback from providers and other public stakeholders during the CJR model's rulemaking and implementation processes.

Further information of why specific elements of the models and initiatives were incorporated into the EPMs' designs is discussed later in this proposed rule.

5. Overlap With Ongoing CMS Efforts

We propose to exclude from participation in the AMI, CABG, and SHFFT models certain acute care hospitals participating in BPCI Models 2 and 4 for the hip and femur procedures except major joint or for all three of the BPCI cardiac episodes (AMI, PCI, and CABG). We propose to exclude beneficiaries in the proposed EPMs' episodes from being included in certain Innovation Center ACO models, the Next Generation ACO Model and Comprehensive ESRD Care. Other CMS programs, such as the Medicare Shared Savings Program and other accountable care organization (ACO) or total cost of care initiatives will remain eligible for EPM episode initiation. We propose to account for overlap, that is, where EPM beneficiaries also are included in other models and programs to ensure the financial policies of the models are maintained and results and spending reductions are attributed to one model or program. More detail on our proposed policies for accounting for provider- and beneficiary-level overlap is discussed in section III.D.6. of this proposed rule.

The amendments made by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10, April 16, 2015) created two paths for eligible clinicians to link quality to payments: The Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs). These two paths create a flexible payment system called the Quality Payment Program as proposed by CMS in the Quality Payment Program proposed rule (81 FR 28161 through 28586). The MIPS streamlines and improves on three current programs—the Physician Quality Reporting System (PQRS), the Physician Value-based Payment Modifier (VM), and the Medicare Electronic Health Record (EHR) Incentive Program—and continues the focus on quality and value in one cohesive program. Through participation in Advanced APMs, eligible clinicians can become Qualifying APM Participants (QPs) for a year beginning with CY 2019 and receive an APM Incentive Payment (or, in later years, a more favorable payment update under the PFS) for the year.

So that the EPMs may be able to meet the criteria to be Advanced APMs based on the requirements proposed in the Quality Payment Program proposed rule, we propose to require EPM participants to use Certified Electronic Health Record Technology (CEHRT) (as defined in section 1848(o)(4) of the Act) in Track 1 of each EPM. We propose that EPM participants in these tracks must use certified health information technology (IT) functions, in accordance with the definition of CEHRT under our regulation at 42 CFR 414.1305, to document and communicate clinical care with patients and other health care professionals as described in the Quality Payment Program proposed rule (81 FR 28161 and 28299). We also make similar proposals with respect to CJR.

We propose to implement two different tracks within the EPMs whereby EPM participants that meet proposed requirements for use of CEHRT and financial risk would be in Track 1 (an Advanced APM track) and EPM participants that do not meet these requirements would be in Track 2 (a non-Advanced APM track). The different tracks would not change how EPM participants operate within the EPM itself, beyond the requirements associated with selecting to meet CEHRT use requirements. The only distinction between the two tracks is that only Track 1 EPMs could be considered an Advanced APM for purposes of the Quality Payment Program based on the proposed criteria in the Quality Payment Program proposed rule. We make similar proposals with respect to CJR. We would consider modifying requirements proposed in this rule as necessary to reconcile them with policies adopted in the Quality Payment Program final rule. A more detailed discussion of the proposals for how EPMs and CJR could qualify as Advanced APMs, and how eligible clinicians participating in the EPMs and CJR would be identified and affected, can be found in sections III.A.2 and V.O. of this proposed rule.

6. Quality Measures and Reporting Requirements

Similar to the quality measures selected for the CJR model, we propose to use established measures used in other CMS quality-reporting programs for the proposed EPMs' episodes. We propose to use these measures to test EPMs' success in achieving its goals under section 1115A of the Act and to monitor for beneficiary safety. For the SHFFT model, we propose applying the same quality measures selected for the CJR model.

The following proposed quality measures for SHFFT episodes are:

• THA/TKA Complications: Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (National Quality Forum [NQF] #1550)

• Hospital Consumer Assessment of Healthcare Providers and Systems (HCAPHS) Survey (NQF #0166)

• Successful Voluntary Reporting of Patient-Reported Outcomes

We propose the following measures for the AMI model:

• MORT-30-AMI: Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute Myocardial Infarction (AMI) Hospitalization (NQF #0230).

• AMI Excess Days: Excess Days in Acute Care after Hospitalization for Acute Myocardial Infarction (acute care days include emergency department, observation, and inpatient readmission days)

• HCAPHS Survey (NQF #0166), linear mean roll-up (HLMR) scores like CJR

We propose the following measures for the CABG model:

• MORT-30-CABG: Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft Surgery (NQF #2558)

• HCAPHS Survey (NQF #0166), HLMR scores like CJR

Finally, we are proposing and requesting public feedback on options for including successful implementation testing of the Hybrid AMI measure as a quality measure for the AMI episode. The Hybrid AMI measure will assess a hospital's 30-day risk-standardized acute myocardial infarction mortality rate and will incorporate a combination of claims data and EHR data submitted by hospitals.

Additionally, similar to the CJR model, we propose to adopt a pay-for-performance methodology for EPMs that relies upon a composite quality score to assign respective EPM participants to four quality categories. These quality categories will determine an EPM participant's eligibility for a reconciliation payment should such EPM participant achieve spending below the quality-adjusted target price, as well as the effective discount percentage at reconciliation. Points for quality performance and improvement (as applicable) will be awarded for each episode measure and then summed to develop a composite quality score that will determine the EPM participant's quality category for the episode. Quality performance will make up the majority of available points in the composite quality score, with improvement points available as “bonus” points for the measure. This approach resembles the CJR model methodology.

7. Beneficiary Protections

As with the CJR model, Medicare beneficiaries in the proposed models will retain the right to obtain health services from any individual or organization qualified to participate in the Medicare program. Eligible beneficiaries who receive services from model participants would not have the option to opt out of inclusion in the applicable model. We propose to require participants to supply beneficiaries with written information regarding the design and implications of these models as well as the beneficiaries' rights under Medicare, including their right to use their providers of choice. We would make a robust effort to reach out to beneficiaries and their advocates to help them understand the models. We also propose to use our existing authority, if necessary, to audit participant hospitals if claims analysis indicates an inappropriate change in delivered services. Beneficiary protections are discussed in greater depth in section III.G. of this proposed rule.

8. Financial Arrangements

We propose to use the same general framework finalized in the CJR model to hold participants financially responsible for AMI, CABG and SHFFT model episodes as discussed in section III.I. of this proposed rule. Specifically, only the EPM participants would be directly subject to the requirements of this proposed rule for the proposed EPMs. EPM participants would be responsible for ensuring that other providers and suppliers collaborating with the EPM participants on care redesign for the applicable EPM episodes are in compliance with the applicable EPM's terms and conditions.

We propose adding hospitals to the list of providers and suppliers eligible for gainsharing as EPM collaborators due to the expected participation of multiple hospitals in the episode care for some beneficiaries in AMI and CABG episodes. We further propose adding ACOs to be eligible for gainsharing as EPM collaborators due to the interest of ACOs in gainsharing during the CJR model rulemaking and the ongoing challenges of addressing overlap between episode payment models and ACOs. We also propose provisions that allow for certain gainsharing within ACOs, detailed further in section III.I. of this proposed rule.

In contrast, the CR incentive payment model is specifically tied to increased utilization of CR/ICR services within AMI and CABG model episodes and, therefore, is designed to reward increased referral of AMI and CABG model beneficiaries to CR/ICR programs, as well as supporting beneficiary adherence to the referral and participation in CR/ICR services, rather than the quality and efficiency of EPM episodes themselves. Thus, we do not propose to allow CR incentive payments to be included in sharing arrangements, and the CR incentive payments may be shared with other individual and entities only under circumstances which comply with all existing laws and regulations, including fraud and abuse laws. Financial arrangements are discussed in further detail in section VI.E. of the proposed rule.

9. Data Sharing

Based on our experience with various Medicare programs and models, including the BPCI initiative, the CJR model, the Shared Savings Program, and the Pioneer ACO model, we believe that providing certain beneficiary claims data to model participants will be essential to their success. We propose to share data with participants upon request throughout the performance period of the models to the extent permitted by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule and other applicable law. We propose to share upon request both raw claims-level data and claims summary data with participants. This approach would allow participants without prior experience analyzing claims to use summary data for analysis of care and spending patterns, while allowing those participants who prefer raw claims-level data the opportunity to analyze claims. We propose to provide participants with up to 3 years of retrospective claims data upon request that will be used to develop their quality-adjusted target price. In accordance with the HIPAA Privacy Rule, we would limit the content of this data to the minimum data necessary for the participant to conduct quality assessment and improvement activities and effectively coordinate care.

10. Program Waivers

Section 1115A of the Act authorizes the Secretary to waive Medicare program requirements as necessary to implement provisions for testing models. Under the CJR model, CMS waived certain program rules regarding the direct supervision requirement for certain post-discharge home visits, telehealth services, and the skilled nursing facility (SNF) 3-day rule. CMS finalized these waivers to offer providers and suppliers more flexibility so that they may increase coordination of care and management of beneficiaries in model episodes. Adopting the CJR waivers for the proposed EPMs required further examination to determine if such adoption would increase financial vulnerability to the Medicare program or would create inappropriate incentives to reduce the quality of

beneficiary care. As discussed in section III.J. of this proposed rule, we propose to do the following:

• Adopt waivers of the telehealth originating site and geographic site requirement and to allow in-home telehealth visits for all three proposed EPMs, as well as the general waiver to allow post-discharge nursing visits in the home;

• Provide model-specific limits to the number of post-discharge nursing visits and make model-specific decisions about offering the SNF 3-day stay waiver; and

• Adopt a waiver for furnishing cardiac and intensive cardiac rehabilitation services to allow a Nurse Practitioner, Clinical Nurse Specialist, or Physician Assistant, in addition to a physician, to perform specific physician functions.

C. Summary of Economic Effects

As shown in our impact analysis, we expect the EPMs to result in savings to Medicare of $170 million over the 5 performance years of the model. We note that a composite quality score will be calculated for each hospital in order to determine eligibility for a reconciliation payment and whether the hospital qualifies for quality incentive payments that will reduce the effective discount percentage experience by the hospital at reconciliation for a given performance year.

More specifically, in performance year 1 of the model, we estimate a Medicare cost of approximately $12 million, as hospitals will not be subject to downside risk in the first year and the first quarter of the second performance year of the model. As we introduce downside risk beginning in the second quarter of performance year 2 of the model, we estimate Medicare savings of approximately $13 million. In performance year 3 of the model, we estimate Medicare savings of $30 million. In performance years 4 and 5 of the model, we will move from target episode pricing that is based on a hospital's experience to target pricing based on regional experience, and we estimate Medicare savings of $61 million and $79 million, respectively.

As a result, we estimate the net savings to Medicare to be $170 million over the 5 performance years of the model. We anticipate there will be a broader focus on care coordination and quality improvement for EPMs among hospitals and other providers and suppliers within the Medicare program that will lead to both increased efficiency in the provision of care and improved quality of the care provided to beneficiaries.

Additionally, the CR incentive model estimates that the impact on the Medicare program may range from up to $27 million of additional spending to $32 million of savings between 2017 and 2024, depending on the change in utilization of CR/ICR services based on the proposed incentive structure.

Finally, the change in the estimated net financial impact to the Medicare program from the CJR model modifications in this proposed rule is $22 million in spending, and the updated assumptions regarding the number of hospitals that will report quality data result in an increase of $14 million dollars in spending. The total estimated net financial impact to the Medicare program from both the modifications in the proposed rule and revised assumptions are $35 million in spending.

We note that under section 1115A(b)(3)(B) of the Act, the Secretary is required to terminate or modify a model unless certain findings can be made with respect to savings and quality after the model has begun. If during the course of testing the model it is determined that termination or modification is necessary, such actions will be undertaken through rulemaking.

II. Background

This proposed rule proposes the implementation of three new EPMs and a CR incentive payment model under the authority of section 1115A of the Act. Under the AMI, CABG, and SHFFT EPMs, acute care hospitals in certain selected geographic areas will be financially accountable for quality performance and spending for applicable episodes of care. We propose to retrospectively apply through a reconciliation process the episode payment methodology; hospitals and other providers and suppliers would continue to submit claims and receive payment via the usual Medicare FFS payment systems throughout the proposed EPMs' performance years. Hospitals participating in the proposed EPMs would receive target prices, which reflect expected spending for care during an episode as well as a discount to reflect savings to Medicare, on a prospective basis, prior to the beginning of a performance year. All related care covered under Medicare Parts A and B and furnished within 90 days after the date of hospital discharge from the anchor hospitalization which initiated the applicable EPM episode would be included in the episode of care. We believe the proposed models will further our goals of improving the efficiency and quality of care for Medicare beneficiaries for these medical conditions and procedures.

III. Provisions of the Proposed Regulations

A. Selection of Episodes, Advanced Alternative Payment Model Considerations, and Future Directions

1. Selection of Episodes for Episode Payment Models in This Rulemaking

a. Overview

CMS has been engaged since 2013 in testing various approaches to episode payment for Medicare FFS beneficiaries for 48 clinical episodes in the BPCI initiative. As of April 1, 2016, the BPCI initiative has 1,522 participants in the risk-bearing phase, comprised of 321 Awardees and 1,201 Episode Initiators. The breakdown of BPCI participants by provider type is as follows: Acute care hospitals (385); skilled nursing facilities (681); physician group practices (283); home health agencies (99); inpatient rehabilitation facilities (9); and long-term care hospitals (1).

In BPCI Models 2 and 3, there is participation across all 48 clinical episodes, and in Model 4 there is participation in 19 clinical episodes. The 10 clinical episodes with the most participation are: major joint replacement of the lower extremity; simple pneumonia and respiratory infections; congestive heart failure; chronic obstructive pulmonary disease; bronchitis; asthma; hip and femur procedures except major joint; sepsis; urinary tract infection; acute myocardial infarction (medical management only); medical non-infectious orthopedic; and other respiratory.

https://innovation.cms.gov/initiatives/bundled-payments/.

https://innovation.cms.gov/Files/x/bpcianalyticfile.xlsx.

In November 2015, CMS released the Final Rule for the Comprehensive Care for Joint Replacement (CJR) model (80 FR 73274 through 73554), the first test of episode payment for Medicare FFS beneficiaries in which providers are required to participate. The CJR model, which began on April 1, 2016, focuses on the episode-of-care for lower-extremity joint replacement (LEJR) procedures. As discussed in the Final Rule (80 FR 73277), LEJR episodes were chosen for the CJR model because they represent one of the most common high-expenditure, high-utilization procedures furnished to Medicare beneficiaries and have significant variation in episode spending. We believe this high volume, coupled with substantial variation in utilization and spending across individual providers and geographic

regions, created a significant opportunity to test whether an episode payment model focused on a defined set of procedures could improve the quality and coordination of care, as well as result in savings to Medicare. Notably, both BPCI and the CJR model are focused on care that is related to an inpatient hospitalization, with CJR and BPCI Model 2 episodes beginning with an inpatient hospitalization (anchor hospitalization) and extending up to 90 days post-hospital discharge.

In this rulemaking, we propose three new EPMs that, like the CJR model, would require provider participation in selected geographic areas. Episodes in the new EPMs would begin with admissions for hospitalizations in IPPS hospitals, and would extend 90 days post-hospital discharge. The episodes included in these three EPMs are AMI, CABG, and SHFFT excluding lower extremity joint replacement. The proposed AMI model includes beneficiaries discharged under AMI MS-DRGs (280-282), representing IPPS admissions for AMI that are treated with medical management. The proposed AMI model also includes beneficiaries discharged under PCI MS-DRGs (246-251) with AMI International Classification of Disease, Tenth Edition, Clinical Modification (ICD-10-CM) diagnosis codes for initial AMI diagnoses in the principal or secondary diagnosis code positions, representing IPPS admissions for AMI that are treated with PCIs. The proposed CABG model includes beneficiaries discharged under CABG MS-DRGs (231-236), representing IPPS admissions for this coronary revascularization procedure irrespective of AMI diagnosis. The proposed SHFFT model includes beneficiaries discharged under hip and femur procedures except major joint replacement MS-DRGs (480-482), representing IPPS admissions for hip-fixation procedures in the setting of hip fractures.

Similar to the selection of LEJR episodes for the CJR model (80 FR 73277), we selected the AMI, CABG, and SHFFT episodes because they represent high-expenditure, high-volume episodes-of-care experienced by Medicare beneficiaries. Based on analysis of historical episodes beginning in CY 2012-2014, the average annual number of historical episodes that began with IPPS hospitalizations and extended 90 days post-hospital discharge, and therefore would have been included in the proposed models, is approximately 168,000 for AMI; 48,000 for CABG; and 109,000 for SHFFT.

The total annual Medicare spending for these historical episodes was approximately $4.1 billion, $2.3 billion, and $4.7 billion, respectively.

Each of the episodes provides different opportunities in an EPM to improve the coordination and quality of care, as well as efficiency of care during the episode, based on varying current patterns of utilization and Medicare spending.

However, in contrast to LEJR episodes in CJR, which are predominantly elective and during which hospital readmissions are rare and substantial post-acute care provider utilization is common, the proposed AMI, CABG, and SHFFT model episodes have very different current patterns of care. Beneficiaries in these episodes commonly have chronic conditions that contribute to the initiation of the episodes and need both planned and unplanned care throughout the EPM episode following discharge from the initial hospitalization that begins the episode. Both AMI and CABG model episodes primarily include beneficiaries with cardiovascular disease, a chronic condition which likely contributed to the acute events or procedures that initiate the episodes. About half the average AMI model historical episode spending was for the initial hospitalization, with the majority of spending following discharge from the initial hospitalization due to hospital readmissions, while there was relatively less spending on SNF services, Part B professional services, and hospital outpatient services. In CABG model historical episodes, about three-quarters of episode spending was for the initial hospitalization, with the remaining episode spending relatively evenly divided between Part B professional services and hospital readmissions, and a lesser percentage on SNF services. Similar to AMI episodes, post-acute care provider use was relatively uncommon in CABG model historical episodes, while hospital readmissions during CABG model historical episodes were relatively common. SHFFT model historical episodes also were accompanied by substantial spending for hospital readmissions, and post-acute care provider use in these episodes also was high.

The number of affected beneficiaries and potential impact of the models on quality and Medicare spending present an important opportunity to further the Administration's goal of shifting health care payments to support the quality of care over the quantity of services by promoting better coordination among health care providers and suppliers and greater efficiency in the care of beneficiaries in these models, while reducing Medicare expenditures.

Sylvia Mathews Burwell, HHS Secretary, Progress Towards Achieving Better Care, Smarter Spending, Healthier People,

http://www.hhs.gov/blog/2015/01/26/progress-towards-better-care-msarter-spending-healthier-people.html

(January 26, 2015).

We selected all of the proposed EPM episodes based on their clinical homogeneity, site-of-service, and MS-DRG assignment considerations. We anticipate these proposed new EPMs, like the CJR model, would benefit Medicare beneficiaries by improving the coordination and transition of care among various care settings to facilitate beneficiaries' return to their communities as their recoveries progress, improving the coordination of items and services paid through Medicare FFS, encouraging more provider investment in infrastructure and redesigned care processes for higher quality and more efficient service delivery, and incentivizing higher value care across the inpatient and post-acute care spectrum spanning the episode-of-care (80 FR 73276). However, improving value in the EPMs through these means requires a cohort of beneficiaries with similar clinical features such that coordination and care redesign efforts can be targeted. Therefore, we propose EPM episodes built on common pathologic and treatment processes; that is, beneficiaries included in both the AMI and CABG models have cardiovascular pathologies that drive their clinical courses during the

episodes, and SHFFT model beneficiaries all share similar diagnoses of hip fracture and treatment with hip fixation that drive their clinical courses during their respective episodes.

b. SHFFT Model

The SHFFT model was selected to complement the CJR model. The SHFFT model is being tested in the same hospitals participating in the CJR model as discussed in section III.B.4 of this proposed rule, so that all surgical treatment options for Medicare beneficiaries with hip fracture (hip arthroplasty and fixation) would be included in episode payment models. Hip fracture is a serious and sometimes catastrophic event for Medicare beneficiaries. In 2010, 258,000 people aged 65 and older were admitted to the hospital for hip fracture, with an estimated $20 billion in lifetime cost for all hip fractures in the United States in a single year.

In 2013, fracture of the neck of the femur (the most common location for hip fracture) was the eighth most common principal discharge diagnosis for hospitalized Medicare FFS beneficiaries, constituting 2.7 percent of discharges.

Mortality associated with hip fracture is 5-10 percent after 1 month and approximately 33 percent at 1 year.

Hip arthroplasty and hip fixation, or “hip pinning,” represent the two broad surgical options for treating hip fractures.

The CJR model episodes begin with admission to acute care hospitals for LEJR procedures assigned to MS-DRG 469 (Major joint replacement or reattachment of lower extremity with major complications or comorbidities) or MS-DRG 470 (Major joint replacement or reattachment of lower extremity without major complications or comorbidities) upon beneficiary discharge and paid under the IPPS, including total and partial hip replacement in the setting of hip fracture (80 FR 73280). Therefore, the SHFFT model, which would additionally test an episode payment for hip fixation, provides an opportunity to complete the transition to episode payment for the surgical treatment and recovery of the significant clinical condition of hip fracture.

Smith et al. Increase in Disability Prevalence Before Hip Fracture. J Am Geriatr Soc. 2015 Oct;63(10):2029-35.

Krumholz HM, Nuti SV, Downing NS, Normand ST, Wang Y. Mortality, Hospitalizations, and Expenditures for the Medicare Population Aged 65 Years or Older, 1999-2013. JAMA. 2015; 314(4):355-365.

Parker et al. Hip Fracture. BMJ. 2006 Jul 1;333(7557):27-30.

American Academy of Orthopaedic Surgeons, OrthoInfo: Hip Fractures,

http://orthoinfo.aaos.org

(April 12, 2016).

c. AMI and CABG Models

The AMI and CABG models, which we propose to be tested at a single set of hospitals as discussed in section III.B.5 of this proposed rule, were selected to include all beneficiaries who have an AMI treated medically or with revascularization with PCI, as well as all beneficiaries who undergo CABG (whether performed during the care of an AMI or performed electively for stable ischemic heart disease or other indication). Both cardiac models represent clinical conditions that result in a significant burden of morbidity and expenditures in the Medicare population. CABG typically is the preferred revascularization modality for patients with ST elevation AMI where the coronary anatomy is not amenable to PCI or there is a mechanical complication (for example, ventricular septal defect, rupture of the free wall of the ventricle, or papillary-muscle rupture with severe mitral regurgitation); for patients with CAD other than ST elevation AMI where there is left main coronary artery disease or multi-vessel disease with complex lesions; and for patients with clinically significant CAD in at least one vessel and refractory symptoms despite medical therapy and PCI.

Despite the greater acute morbidity related to major cardiothoracic surgery, CABG is associated with lower longer-term rates of major adverse cardiac and cerebrovascular events in comparison to PCI for certain groups of patients.

Moreover, a recent study found that in a group of patients with ischemic cardiomyopathy, the rates of death from any cause, death from cardiovascular causes, and death from any cause or hospitalization for cardiovascular causes were significantly lower over 10 years among patients who underwent CABG in addition to receiving medical therapy than among those who received medical therapy alone.

While about 30 percent of CABGs are performed during the care of AMIs, we propose to include these particular AMI beneficiaries generally in the same episode as CABG for other indications, rather than in the AMI episode, since we anticipate hospitals will seek to improve the quality and efficiency of care for that surgical intervention, regardless of indication.

Alexander JH, Smith PK. Coronary-Artery Bypass Grafting. N Engl J Med. 2016 May 19;374(2):1954-1964.

Sepehripour et al. Developments in surgical revascularization to achieve improved morbidity and mortality. Expert Rev Cardiovasc Ther. 2016 Mar;14(3):367-79. doi: 10.1586/14779072.2016.1123619. Epub 2015 Dec 17.

Velazquez et al. Coronary Artery Bypass Surgery in Patients with Ischemic Cardiomyopathy. N Engl J Med. 2016 Apr 3.

Episodes for CABG beneficiaries initiated by all U.S. IPPS hospitals not in Maryland and constructed using standardized Medicare FFS Parts A and B claims, as proposed in this rule, that end in CY 2014.

We propose AMI as the episode for an EPM because we recognize it as a significant clinical condition for which evidence-based clinical guidelines are available for the most common AMI scenarios that begin with a beneficiary's presentation for urgent care, most commonly to a hospital emergency department. The hospital phase involves medical management for all patients, as well as potential revascularization, most commonly with PCI. Secondary prevention and plans for long-term management begin early during the hospitalization and extend following hospital discharge and are addressed in clinical guidelines.

24 25

The AMI model is the first Innovation Center episode payment model that includes substantially different clinical care pathways (medical management and PCI) for a single clinical condition in one episode in a model and, as such, represents an important next step in testing episode payment models for clinical conditions which involve a variety of different approaches to treatment and management.

Amsterdam EA, Wenger NK, Brindis RG, Casey DE Jr, Ganiats TG, Holmes DR Jr, Jaffe AS, Jneid H, Kelly RF, Kontos MC, Levine GN, Liebson PR, Mukherjee D, Peterson ED, Sabatine MS, Smalling RW, Zieman SJ. 2014 ACC/AHA guideline for the management of patients with non-ST-elevation acute coronary syndromes: a report of the American College of Cardiology/American Heart Association Task Force on Practice Guidelines. Circulation. 2014;130:e344-e426.

O'Gara PT, Kushner FG, Ascheim DD, Casey DE Jr, Chung MK, de Lemos JA, Ettinger SM, Fang JC, Fesmire FM, Franklin BA, Granger CB, Krumholz HM, Linderbaum JA, Morrow DA, Newby LK, Ornato JP,Ou N, Radford MJ, Tamis-Holland JE, Tommaso CL, Tracy CM, Woo YJ, Zhao DX. 2013 ACCF/AHA guideline for the management of ST-elevation myocardial infarction: a report of the American College of Cardiology Foundation/American Heart Association Task Force on Practice Guidelines. Circulation. 2013;127:

The American Heart Association estimates that every 42 seconds, someone in the United States has a myocardial infarction.

AMI remains

one of the most common hospital diagnoses among Medicare FFS beneficiaries, and almost 20 percent of beneficiaries discharged for AMI are readmitted within 30 days of hospital discharge.

27 28

In 2013, AMI was the sixth most common principal discharge diagnosis for hospitalized Medicare FFS beneficiaries, constituting 2.9 percent of discharges.

Of the approximately 395,000 Medicare FFS beneficiaries with short-term acute care hospital discharges (excluding Maryland) for AMI in FY 2014, 60 percent were discharged under MS-DRGs proposed to be included in the AMI model, specifically 33 percent under AMI MS-DRGs and 25 percent under PCI MS-DRGs.

An additional 3 percent of beneficiaries were in MS-DRGs assigned for death from AMI in the hospital. Although 5 percent of beneficiaries with hospital discharges for AMI were discharged under CABG MS-DRGs, we note that because both PCI and fibrinolysis can restore blood flow in an acutely occluded coronary artery more quickly than CABG, these interventions are currently preferred to CABG in most cases of AMI. Furthermore, over recent years cardiovascular clinical practice patterns have generally shifted away from surgical treatment of coronary artery occlusion toward percutaneous, catheter-based interventions.

The remaining 34 percent of beneficiaries with AMI diagnoses were distributed across a heterogeneous group of over 300 other MS-DRGs, such as septicemia, respiratory system diagnosis with ventilator support, and major cardiovascular procedures. For this latter group of beneficiaries, the AMI diagnosis appeared in a secondary position on the hospital claim in more than 90 percent of the cases, therefore most likely representing circumstances where the beneficiary hospitalized for another clinical condition experienced an AMI during the hospital stay. By focusing the AMI model on AMIs treated medically or with revascularization with PCI, we propose to test a condition-specific EPM that is discretely defined and includes a significant majority of beneficiaries with AMI in the AMI model. In CYs 2012-2014, the average Medicare spending for an AMI episode that extends 90 days post-hospital discharge was approximately $24,200.

From the AMI model, we expect to better understand the impact such an EPM can have on efficiency and quality of care for beneficiaries across the entire spectrum of AMI care, including diagnosis, treatment, and recovery, as well as short-term secondary prevention.

Mozaffarian D, Benjamin EJ, Go AS, Arnett DK, Blaha MJ, Cushman M, Das SR, de Ferranti S, Després J-P, Fullerton HJ, Howard VJ, Huffman MD, Isasi CR, Jiménez MC, Judd SE, Kissela BM, Lichtman JH, Lisabeth LD, Liu S, Mackey RH, Magid DJ, McGuire DK, Mohler ER III, Moy CS, Muntner P, Mussolino ME, Nasir K, Neumar RW, Nichol G, Palaniappan L, Pandey DK, Reeves MJ, Rodriguez CJ, Rosamond W, Sorlie PD, Stein J, Towfighi A, Turan TN, Virani SS, Woo D, Yeh RW, Turner MB; on behalf of the American Heart Association Statistics Committee and Stroke Statistics Subcommittee. Heart disease and stroke

statistics—2016 update: A report from the American Heart Association. Circulation. 2016 Jan 26; 133(4):447-54.

Krumholz HM, Nuti SV, Downing NS, Normand ST, Wang Y. Mortality, Hospitalizations, and Expenditures for the Medicare Population Aged 65 Years or Older, 1999-2013. JAMA. 2015; 314(4):355-365.

Dharmarajan K, Hsieh AF, Lin Z et al. Diagnoses and Timing of 30-Day Readmissions After Hospitalization for Heart Failure, Acute Myocardial Infarction, or Pneumonia. JAMA. 2013; 309(4):355-363.

Krumholz HM, Nuti SV, Downing NS, Normand ST, Wang Y. Mortality, Hospitalizations, and Expenditures for the Medicare Population Aged 65 Years or Older, 1999-2013. JAMA. 2015; 314(4):355-365.

Inpatient claims from all U.S. IPPS hospitals not in Maryland were derived from the October 2013-September 2014 Inpatient Claims File located in the Chronic Conditions Warehouse.

Epstein et al. JAMA. 2011 May 4; 305(17): 1769-1776.

Episodes for beneficiaries with AMI diagnosis initiated by all U.S. IPPS hospitals not in Maryland and constructed using standardized Medicare FFS Parts A and B claims, as proposed in this rule that began in CYs 2012-2014.

Beneficiaries in the proposed AMI and CABG models would all have CAD. In 2010 in the U.S, the prevalence of CAD in the population 65 years and older was about 20 percent.

Patients with CAD also often experience other conditions with significant health-related implications, including diabetes. To improve care for patients with CAD, most approaches in the private and public sectors focus on improving the efficiency and quality of care around procedures such as PCI and CABG. The BPCI models are an example of such an approach. As discussed previously in this section, our proposal for the AMI model extends beyond a procedure-based EPM to include beneficiaries hospitalized for medical management or PCI for AMI in a single EPM, and we propose to test the CABG model, which also would include beneficiaries with AMI, at the same participant hospitals. We believe that hospitalization for AMI, whether accompanied solely by medical management or including revascularization during the initial hospitalization or in a planned CABG readmission, is a sentinel event indicating the need for an increased focus on condition-specific management, as well as on care coordination and active management to prevent future acute events, both during the AMI and CABG model episodes and beyond. We also believe that improving the quality and efficiency of CAD care over a long period of time is important given the chronic nature of this condition that has serious implications for beneficiary health.

National Center for Chronic Disease Prevention and Health Promotion, Division for Heart Disease and Stroke Prevention, August 10, 2015.

The AMI and CABG models provide an opportunity for us to incentivize CAD-specific care management and care coordination for AMI and CABG model beneficiaries that lay the groundwork for longer-term improvements in quality and efficiency of care for beneficiaries with CAD. We note that the quality measures proposed for use in the pay-for-performance methodologies of the AMI and CABG models do not currently include longer-term outcomes or patient experience outside of the AMI or CABG model episode itself, as discussed in sections III.E.2.b. and c. of this proposed rule, although we are interested in comments about potential future measures that could incorporate longer-term outcomes. Moreover, as discussed in section VI. of this proposed rule, we also propose to test a cardiac rehabilitation (CR)/intensive cardiac rehabilitation (ICR) incentive payment, hereinafter CR incentive payment, in AMI and CABG model participants located in some of the MSAs selected for AMI and CABG model participation, as well as in hospitals located in some of the MSAs that are not selected for AMI or CABG model participation. We would evaluate the effects of the CR incentive payment in the context of an episode payment model and Medicare FFS on utilization of CR/ICR, as well as short-term (within the period of time extending 90 days following hospital discharge from an AMI or CABG hospitalization) and longer-term outcomes. We believe this test may result in valuable findings about effective strategies to increase utilization of CR/ICR services that have a strong evidence-base for their effectiveness but a long history of underutilization.

2. Advanced Alternative Payment Model Considerations

a. Overview for the EPMs

The MACRA created two paths for eligible clinicians to link quality to payments: The MIPS and Advanced APMs. These two paths create a flexible payment system called the Quality Payment Program as proposed by CMS in the Quality Payment Program proposed rule (81 FR 28161 through 28586).

As proposed in the Quality Payment Program proposed rule, an APM must meet three criteria to be considered an Advanced APM (81 FR 28298). First, the APM must provide for payment for covered professional services based on quality measures comparable to measures described under the

performance category described in section 1848(q)(2)(B)(i) of the Act, which is the MIPS quality performance category. Under the Quality Payment Program proposed rule, we proposed that the quality measures on which the Advanced APM bases payment for covered professional services (as that term is defined in section 1848(k)(3)(A) of the Act) must include at least one of the following types of measures, provided that they have an evidence-based focus and are reliable and valid (81 FR 28302):

• Any of the quality measures included on the proposed annual list of MIPS quality measures.

• Quality measures that are endorsed by a consensus-based entity.

• Quality measures developed under section 1848(s) of the Act.

• Quality measures submitted in response to the MIPS Call for Quality Measures under section 1848(q)(2)(D)(ii) of the Act.

• Any other quality measures that CMS determines to have an evidence-based focus and be reliable and valid.

As we discussed in the Quality Payment Program proposed rule, because the statute identifies outcome measures as a priority measure type and we wanted to encourage the use of outcome measures for quality performance assessment in APMs, we further proposed in that rule that, in addition to the general quality measure requirements, an Advanced APM must include at least one outcome measure if an appropriate measure is available on the MIPS list of measures for that specific QP Performance Period, determined at the time when the APM is first established (81 FR 28302 through 28303).

Second, the APM must either require that participating APM Entities bear risk for monetary losses of a more than nominal amount under the APM or be a Medical Home Model expanded under section 1115A(c) of the Act. Except for Medical Home Models, we proposed in the Quality Payment Program proposed rule that, for an APM to meet the nominal amount standard, the specific level of marginal risk must be at least 30 percent of losses in excess of expected expenditures; a minimum loss rate, to the extent applicable, must be no greater than 4 percent of expected expenditures; and total potential risk must be at least 4 percent of expected expenditures (81 FR 28306).

Third, the APM must require participants to use CEHRT (as defined in section 1848(o)(4) of the Act), as specified in section 1833(z)(3)(D)(i)(I) of the Act, to document and communicate clinical care with patients and other health care professionals. Specifically, where the APM participants are hospitals, the APM must require each hospital to use CEHRT (81 FR 28298 through 28299).

In this proposed rule, we propose to adopt two different tracks for the EPMs—Track 1 in which EPMs and EPM participants would meet the criteria for Advanced APMs as proposed in the Quality Payment Program proposed rule, and Track 2 in which the EPMs and EPM participants would not meet those proposed criteria. For the proposed AMI, CABG, and SHFFT models, we propose pay-for-performance methodologies that use quality measures that we believe would meet the proposed Advanced APM quality measure requirements in the Quality Payment Program proposed rule. As discussed in sections III.E.2. and 3. of this proposed rule, all but one of the AMI, CABG, and SHFFT model measures used in the EPM pay-for-performance methodologies are NQF-endorsed and have an evidence-based focus and are reliable and valid. Therefore, we believe they would meet the proposed Advanced APM general quality measure requirements. The Excess Days in Acute Care after Hospitalization for AMI (AMI Excess Days) measure, which is proposed for the AMI model, is not currently NQF-endorsed, but we believe it meets the measure requirements by having an evidence-based focus and being reliable and valid because this measure has been proposed and adopted through rulemaking for use in the Hospital Inpatient Quality Reporting (HIQR) Program.

Each of the proposed EPM pay-for-performance methodologies includes one outcome measure that is NQF-endorsed, has an evidence-based focus, and is reliable and valid. The EPM quality measures are discussed in detail in section III.E. of this proposed rule, where we assign the quality measures to quality domains. For the AMI model, we propose to use the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Acute Myocardial Infarction (NQF #0230) (MORT-30-AMI) outcome measure. For the CABG model, we propose to use the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft (CABG) Surgery (NQF# 2558) (MORT-30-CABG) outcome measure. Finally, for the SHFFT model, we propose to use the Hospital-level RSCR following elective primary THA and/or TKA (NQF #1550) (Hip/Knee Complications) outcome measure. Thus, based on the proposed use of these three outcomes measures in the EPMs, we believe the proposed AMI, CABG, and SHFFT models would meet the requirement proposed for Advanced APMs in the Quality Payment Program proposed rule for use of an outcome measure that also meets the general quality measure requirements.

In terms of the proposed nominal risk criteria for Advanced APMs, beginning in performance year 2 for episodes ending between April 1, 2018 and December 31, 2018, EPM participants would begin to bear downside risk for excess actual EPM-episode spending above the quality-adjusted target price as discussed in section III.D.2.c. of this proposed rule. The marginal risk for excess actual EPM-episode spending above the quality-adjusted target price would be 100 percent over the range of spending up to the stop-loss limit, which would exceed 30 percent marginal risk, and there would be no minimum loss rate. As a result, we believe the EPMs would meet the marginal risk and minimum loss rate elements of the nominal risk criteria for Advanced APMs proposed in the Quality Payment Program proposed rule. Total potential risk for most EPM participants would be 5 percent of expected expenditures beginning in the second quarter of performance year 2, and increasing in subsequent performance years as discussed in section III.D.7.b. of this proposed rule. Therefore, we believe the total potential risk applicable to most EPM participants, with the lowest total potential risk being 5 percent for EPM episodes ending on or after April 1, 2018 in performance year 2, would meet the total potential risk element of the nominal risk amount standard for Advanced APMs proposed in the Quality Payment Program proposed rule because it is greater than the value of at least 4 percent of expected expenditures.

We note that we propose that EPM participants that are rural hospitals, sole community hospitals (SCHs), Medicare Dependent Hospitals (MDHs) and Rural Referral Centers (RRCs) would have a stop-loss limit of 3 percent beginning in the second quarter of performance year 2 as discussed in section III.D.7.c. of this proposed rule. Because 3 percent is less than the proposed threshold of at least 4 percent of expected expenditures for total potential risk proposed for Advanced APMs in the Quality Payment Program proposed rule, those rural hospitals, SCHs, MDHs, and RRCs that are EPM participants subject to special protections would be in Track 2 EPMs that would not meet the proposed nominal risk standard for Advanced

APMs for performance year 2. We recognize that this proposal might initially limit the ability of rural hospitals, SCHs, MDHs, and RRCs to be in Track 1 EPMs that are Advanced APMs. We believe this potential limitation on rural hospitals, SCHs, MDHs, and RRCs is appropriate for the following reasons: (1) Greater risk protections for these hospitals proposed for the EPMs beginning in the second quarter of performance year 2 and subsequent performance years compared to other EPM participants are necessary, regardless of their implications regarding Advanced APMs based on the nominal risk standard proposed in the Quality Payment Program proposed rule, because these hospitals have unique challenges that do not exist for most other hospitals, such as being the only source of health care services for beneficiaries or certain beneficiaries living in rural areas or being located in areas with fewer providers, including fewer physicians and post-acute care facilities; and (2) under the risk arrangements proposed for the EPMs, these hospitals would not bear an amount of risk in performance year 2 that we determined to be more than nominal in the Quality Payment Program proposed rule. However, we seek comment on whether we should allow EPM participants that are rural hospitals, SCHs, MDHs, or RRCs to elect a higher stop-loss limit for the part of performance year 2 where downside risk applies in order to permit these hospitals to be in Track 1 EPMs for that part of performance year 2. We note that by performance year 3, the stop-loss limit for these hospitals with special protections under the EPMs would increase to 5 percent under our proposal, so these hospitals could be in Track 1 EPMs based on the nominal risk standard proposed in the Quality Payment Program proposed rule.

As addressed in the Quality Payment Program proposed rule, it is necessary for an APM to require the use of CEHRT in order to meet the criteria to be considered to be an Advanced APM. Therefore, according to the requirements proposed in the Quality Payment Program proposed rule, so that the EPMs may meet the proposed criteria to be Advanced APMs, we propose to require EPM participants to use CEHRT (as defined in section 1848(o)(4) of the Act) to participate in Track 1 of the EPMs. We propose that Track 1 EPM participants must use certified health IT functions, in accordance with the definition of CEHRT under our regulation at 42 CFR 414.1305, to document and communicate clinical care with patients and other health care professionals as proposed in the Quality Payment Program proposed rule (81 FR 28299). We believe this proposal would allow Track 1 EPMs to be able to meet the proposed criteria to be Advanced APMs.

Without the collection of identifying information on eligible clinicians (physicians, nonphysician practitioners, physical and occupational therapists, and qualified speech-language pathologists) who would be considered Affiliated Practitioners as proposed in the Quality Payment program proposed rule under the EPMs, CMS would not be able to consider participation in the EPMs in making determinations as to whom could be considered a QP (81 FR 28320). As detailed in the Quality Payment Proposed rule, these determinations are based on whether the eligible clinician meets the QP threshold under either the Medicare Option starting in payment year 2019 or the All-Payer Combination Option, which is available starting in payment year 2021 (81 FR 28165). Thus, we make proposals in the following sections to specifically address these issues that might otherwise preclude the EPMs from being considered Advanced APMs, or prevent us from operationalizing them as Advanced APMs. Based on the proposals for Advanced APM criteria in the Quality Payment Program proposed rule, we seek to align the design of the proposed EPMs with the proposed Advanced APM criteria and enable CMS to have the necessary information on eligible clinicians to make the requisite QP determinations.

b. EPM Participant Tracks

To be considered an Advanced APM, the APM must require participants to use CEHRT (as defined in section 1848(o)(4) of the Act), as specified in section 1833(z)(3)(D)(i)(I) of the Act. We propose that all EPM participants must choose whether to meet the CEHRT use requirement. EPM participants that do not choose to meet and attest to the CEHRT use requirement would be in Track 2 of the EPMs. EPM participants selecting to meet the CEHRT use requirement would be in Track 1 of the EPMs and would be required to attest in a form and manner specified by CMS to their use of CEHRT that meets the definition in our regulation at § 414.1305 to document and communicate clinical care with patients and other health professionals, consistent with the proposal in the Quality Payment Program proposed rule for the CEHRT requirement for Advanced APMs (81 FR 28299). EPM participants choosing not to meet and attest to the CEHRT use requirement would not be required to submit an attestation.

We believe that the selection by EPM participants to meet and attest to the CEHRT use requirement would create no significant additional administrative burden on EPM participants. Moreover, the choice of whether to meet and attest to the CEHRT use requirement would not otherwise change any EPM participant's requirements or opportunity under the EPM. However, to the extent that eligible clinicians who enter into financial arrangements related to Track 1 EPM participants are considered to furnish services through an Advanced APM, those services could be considered for purposes of determining whether the eligible clinicians are QPs.

The proposals for CEHRT use and attestation for EPM participants are included in § 512.120(a). We seek comment on our proposals for EPM participant CEHRT use requirements.

c. Clinician Financial Arrangements Lists Under the EPMs

In order for CMS to make determinations as to eligible clinicians who could be considered QPs based on services furnished under the EPMs (to the extent the models are determined to be Advanced APMs), we require accurate information about eligible clinicians who enter into financial arrangements under the Track 1 EPMs under which the Affiliated Practitioners support the participants' cost or quality goals as discussed in section III.I. of this proposed rule. We note that eligible clinicians could be EPM collaborators engaged in sharing arrangements with an EPM participant; PGP members who are collaboration agents engaged in distribution arrangements with a PGP that is an EPM collaborator; or PGP members who are downstream collaboration agents engaged in downstream distribution arrangements with a PGP that is also an ACO participant in an ACO that is an EPM collaborator. These terms as they apply to individuals and entities with financial arrangements under the EPMs are discussed in section III.I. of this proposed rule. A list of physicians and nonphysician practitioners in one of these three types of arrangements could be considered an Affiliated Practitioner List of eligible clinicians who are affiliated with and support the Advanced APM Entity in its participation in the Advanced APM as proposed in the Quality Payment Program proposed rule. Therefore, this list could be used to make determinations of who would be

considered for a QP determination based on services furnished under the EPMs (81 FR 28320).

Thus, we propose that each EPM participant that chooses to meet and attest to the CEHRT use requirement must submit to CMS a clinician financial arrangements list in a form and manner specified by CMS on a no more than quarterly basis. The list must include the following information for the period of the EPM performance year specified by CMS:

• For each EPM collaborator who is a physician, nonphysician practitioner, or provider of outpatient therapy services during the period of the EPM performance year specified by CMS:

++ The name, tax identification number (TIN), and national provider identifier (NPI) of the EPM collaborator.

++ The start date and, if applicable, end date, for the sharing arrangement between the EPM participant and the EPM collaborator.

• For each collaboration agent who is a physician or nonphysician practitioner of a PGP that is an EPM collaborator during the period of the EPM performance year specified by CMS:

++ The TIN of the PGP that is the EPM collaborator, and the name and NPI of the physician or nonphysician practitioner.

++ The start date and, if applicable, end date, for the distribution arrangement between the EPM collaborator that is a PGP and the physician or nonphysician practitioner who is a PGP member.

• For each downstream collaboration agent who is a physician or nonphysician practitioner member of a PGP that is also an ACO participant in an ACO that is an EPM collaborator during the period of the EPM performance year specified by CMS:

++ The TIN of the PGP that is the ACO participant, and the name and NPI of the physician or nonphysician practitioner.

++ The start date and, if applicable, end date, for the downstream distribution arrangement between the collaboration agent that is both PGP and an ACO participant and the physician or nonphysician practitioner who is a PGP member.

• If there are no individuals that meet the requirements to be reported as EPM collaborators, collaboration agents, or downstream collaboration agents, the EPM participant must attest in a form and manner required by CMS that there are no individuals to report on the clinician financial arrangements list.

As discussed in the Quality Payment program proposed rule, those physicians or nonphysician practitioners who are included on the Affiliated Practitioner List as of December 31 of a performance period would be assessed to determine whether they qualify for APM Incentive Payments (81 FR 28320).

While the required submission of this information may create some additional administrative requirements for certain EPM participants, we expect that Track 1 EPM participants could modify their contractual relationships with their EPM collaborators and, correspondingly, require those EPM collaborators to include similar requirements in their contracts with collaboration agents and in the contracts of collaboration agents with downstream collaboration agents.

The proposal for the submission of a clinician financial arrangements list by EPM participants that meet and attest to the CEHRT use requirement for the EPMs is included in § 512.120(b). We seek comments on the proposal for submission of this information. We are especially interested in comments about approaches to information submission, including the periodicity and method of submission to CMS that would minimize the reporting burden on EPM participants while providing CMS with sufficient information about eligible clinicians in order to facilitate QP determinations to the extent EPMs are considered Advanced APMs.

d. Documentation Requirements

For each EPM participant that chooses to meet and attest to CEHRT use, we propose that the EPM participant must maintain documentation of their attestation to CEHRT use and clinician financial arrangements lists submitted to CMS. These documents would be necessary to assess the completeness and accuracy of materials submitted by an EPM participant in the Track 1 EPM and to facilitate monitoring and audits. For the same reason, we further propose that the EPM participant must retain and provide access to the required documentation in accordance with § 512.110.

The proposal for documentation of attestation to CEHRT use and clinician financial arrangements lists submitted to CMS is included in § 512.120(c). We seek comment on this proposal for required documentation.

3. Future Directions for Episode Payment Models

a. Refinements to the BPCI Initiative Models

The BPCI initiative Models 2, 3, and 4 would not currently qualify as Advanced APMs based on the two of the Advanced APM criteria in the Quality Payment Program proposed rule, payment based on quality measures and CEHRT use (81 FR 28298). Specifically, BPCI participants are not currently required to use CEHRT, and although CMS examines the quality of episode care in the BPCI evaluation, BPCI episode payments are not specifically tied to quality performance. Instead, BPCI episode payments are based solely on episode spending performance, although we expect that reductions in spending would generally be linked to improved quality through reductions in hospital readmissions and complications. However, building on the BPCI initiative, the Innovation Center intends to implement a new voluntary bundled payment model for CY 2018 where the model(s) would be designed to meet the criteria to be an Advanced APM.

b. Potential Future Condition-Specific Episode Payment Models

In the context of our proposal for the AMI and CABG models that include beneficiaries with CAD who experience an acute event or a major surgical procedure, we seek comment on model design features for potential future condition-specific episode payment models that could focus on an acute event or procedure or longer-term care management, including other models for beneficiaries with CAD that may differ from the design of the EPMs proposed in this rulemaking. We believe such future models may have the potential to be Advanced APMs that emphasize outpatient care and, like the proposed AMI and CABG models, could incentivize the alignment of physicians and other eligible professionals participating in the Advanced APM through accountability for the costs and quality of care. Such condition-specific episode payment models may provide for a transition from hospital-led EPMs to physician-led accountability for episode quality and costs, especially given the importance of care management over long periods of time for beneficiaries with many chronic conditions.

We request that commenters provide specific information regarding all relevant issues for potential future condition-specific episode payment models, including identifying beneficiaries for the model; including services in the episode definition; beginning and ending episodes; pricing episodes, including risk-adjustment; designating the accountable entity for the quality and cost of the episode, including the role of physician-led

opportunities; sharing of responsibility for quality and spending between primary care providers, specialty physicians, and other health care professionals; incentivizing the engagement of physicians and other providers and suppliers in episode care; measuring quality and including quality performance and improvement in the payment methodology; interfacing with other CMS models and programs responsible for population health and costs, such as ACOs and Primary Care Medical Homes (PCMHs); and other considerations specific to identifying future models as Advanced APMs; and any other issues of importance for the design of such an EPM.

c. Potential Future Event-Based Episode Payment Models for Procedures and Medical Conditions

Given the proposed EPM methodology discussed in section III.C.4.a. of this proposed rule for the three models that would begin the episodes with initial hospitalizations, the proposed AMI, CABG, and SHFFT episodes are similar to the LEJR episodes in the CJR model because they reflect clinical conditions for which care is almost always begun during an inpatient hospitalization, either on an emergency or elective basis. In addition, the clinical conditions represented by these EPM episodes generally result in straightforward assignment to MS-DRGs at discharge that are specific to clinical conditions included in the episodes. This contrasts with procedure-related clinical conditions for which the site-of-service can be inpatient or outpatient (for example, elective PCI for non-AMI beneficiaries) or hospitalization for medical conditions for which the ultimate MS-DRG assigned is less clear at the beginning of an episode (for example, hospitalization for respiratory symptoms which may lead to discharge from heart failure, pneumonia, or other MS-DRGs based on reporting of ICD-CM diagnosis codes on hospital claims).

To address the issues related to the development of future episode payment models for a broader range of clinical conditions, we seek comment on model design features that would be important for episode payment models targeting procedures that may be performed in both the inpatient and outpatient setting, as well as models focused on hospitalization for acute medical conditions which may overlap or interact (for example, sepsis related to pneumonia or acute kidney injury related to congestive heart failure exacerbation). In particular, episode payment models must clearly define the beginning of the episode as well as set an episode price that is appropriate for beneficiaries included in the episode, which has commonly been based on historical spending for such beneficiaries in both existing CMS models and the three proposed EPMs. These parameters pose specific challenges as the variety of clinical conditions targeted for episode payments expands beyond lower extremity orthopedic procedures and acute cardiac conditions, and we expect that such potential future models would need to be designed differently than the CJR model or the EPMs proposed in this rulemaking.

For example, because procedures such as PCI for non-AMI beneficiaries or cardioverter defibrillator implantations can occur in the inpatient or outpatient setting, an episode payment model would need to include beneficiaries receiving such procedures at all sites-of-service so as to not influence decisions on where procedures are performed based on payment-related rather than clinical considerations. Episode payment models that begin with the same procedure performed in the inpatient or outpatient setting would require methodological development beyond the approaches that have been used thus far in CMS's other EPMs that rely upon the MS-DRG for a hospitalization to begin an episode and identify historical episodes for setting episode prices. Such models that involve episode payment for procedures furnished in the inpatient or outpatient setting may allow for significant physician-led opportunities that would allow the models to be identified as Advanced APMs. We seek comment on how these types of procedures could be included in future episode payment models, including identifying the accountable entity, and the role of physician-led opportunities; defining the episode beginning and end; setting episode prices; applying risk-adjustment to account for differences in expected episode spending for a heterogeneous population of beneficiaries; and any other issues of importance for the design of such an episode payment model.

We also seek comment on potential future episode payment models that would include care for medical conditions that result in the serious health event of an inpatient hospitalization, which often represents, regardless of the specific reason for the hospitalization, a common pathway that includes failure of outpatient care management and care coordination for beneficiaries with chronic conditions. While we do include in the proposed AMI model beneficiaries who solely receive medical treatment, we note that beneficiaries with AMI are almost always hospitalized and their MS-DRGs at discharge are generally predictable and consistent based on their AMI diagnoses. This is not the case for a number of medical conditions for which grouping by MS-DRGs is more complicated or less consistent. Many non-procedural hospitalizations of Medicare beneficiaries are ultimately categorized based on the principal ICD-CM diagnosis code reported on a claim, which in turn is mapped to a Major Diagnostic Category (MDC) based on the involved organ system, which then leads to the assignment of any of various specific MS-DRGs based on the medical groups in the MDC. For example, the medical groups for the Respiratory System MDC are pulmonary embolism, infections, neoplasms, chest trauma, pleural effusion, pulmonary edema and respiratory failure, chronic obstructive pulmonary disease, simple pneumonia, RSV pneumonia and whooping cough, interstitial lung disease, pneumothorax, bronchitis and asthma, respiratory symptoms and other respiratory diagnoses.

Unlike a beneficiary who undergoes a surgical procedure or who is hospitalized for a specific medical condition such as AMI, the ultimate MS-DRG at discharge assigned to a beneficiary hospitalized for diagnosis and management of respiratory symptoms may not be clear during the hospitalization itself, or even afterward, until the inpatient claim is submitted and paid by Medicare. This makes it challenging for providers to engage in care delivery redesign targeted to a specific patient population identified by MS-DRG. Additionally, it is possible that beneficiaries hospitalized for certain medical conditions also may follow common clinical pathways before and after discharge for which similar care redesign strategies could be developed and used despite those beneficiaries' assignments to different MS-DRGs for their anchor hospitalizations. Thus, we believe that hospitalization for most medical conditions would require special consideration in the development of potential future episode payment models that goes beyond CMS's current approach of relying upon the MS-DRG for the anchor hospitalization to begin an episode and identify historical episodes for setting episode prices. We seek comment on design features needed to address these considerations, including defining the beginning and end of episodes; setting episode prices,

including risk-adjustment, that would support the provision of appropriate and coordinated care for beneficiaries following hospital discharge for a period of time during the episode; and any other issues of importance for the design of such an episode payment model.

Medical Severity Diagnosis Related Groups (MS-DRGs): Definitions Manual. Version 33.0A. 3M Health Information Systems. (October 1, 2015).

d. Health Information Technology Readiness for Potential Future Episode Payment Models

We are particularly interested in issues related to readiness of providers and suppliers that are not hospitals to take on financial responsibility for episode cost and quality in potential future episode payment models. We have some experience in BPCI Models 2 and 3 with non-hospital providers and suppliers, specifically post-acute care providers and physician group practices (PGPs), who assume financial responsibility for the cost of episode care. In BPCI Model 2, PGPs may directly bear financial responsibility for episode cost for up to 48 clinical conditions for the anchor inpatient admission and up to 90 days post-hospital discharge. In BPCI Model 3, PGPs and post-acute care providers, including skilled nursing facilities, home health agencies, inpatient rehabilitation facilities, and long-term care hospitals, may directly bear financial responsibility for episode cost for up to 48 clinical conditions for a duration that extends up to 90 days following initiation of post-acute care following discharge from an inpatient hospitalization.

Under these circumstances, PGPs and post-acute care providers typically need to use health IT to assist them in effectively coordinating the care of BPCI beneficiaries across settings throughout the episodes. The risk-bearing entities participating in BPCI have expressed readiness to take on financial responsibility for episode cost, and they commonly rely upon health IT for assistance in managing the care for BPCI beneficiaries across settings for episodes that extend for a substantial period of time. However, a recent national survey of IT in nursing homes showed common use of IT for administrative activities but less use for clinical care.

Anecdotally, stakeholders have told us that accountable non-hospital providers and suppliers, especially those that are not integrated with health systems, may have less well-developed tools for following patients throughout episodes, potentially resulting in greater challenges in reducing the cost and improving the quality of episode care under the BPCI models. Therefore, we understand that limitations in the availability of health IT that can be used in beneficiary management across care settings may pose a significant barrier to the readiness of non-hospital providers and suppliers to assume financial responsibility for episodes in potential future episode payment models.

Alexander Gregory L. “An Analysis of Nursing Home Quality Measures and Staffing.” Quality management in health care 17.3 (2008): 242-251. PMC. Web. 16 July 2016.

In the CJR model, acute care hospitals are financially responsible for cost and quality during LEJR episodes-of-care. CJR model participant hospitals may form partnerships with post-acute care providers such as skilled nursing facilities and home health agencies, as well as physicians and PGPs, to share financial risk and collaborate on care redesign strategies, as in BPCI. Although hospitals are the financially responsible entities under the CJR model, we recognize that partnerships with post-acute care providers could be a crucial driver of episode spending and quality, given that many beneficiaries in the CJR model receive post-acute care services after discharge from the hospital. We also recognize that tools such as health IT may be critical for certain care management and quality strategies targeted toward the goal of lower cost and higher quality episode care. Limitations in the availability of health IT may pose a barrier to effective post-acute care provider collaboration and sharing of financial risk in episode payment models even when hospitals are the financially responsible entities under such models, such as the CJR model and the three new EPMs proposed in this rulemaking.

We recognize that there is wide variation in the readiness of other providers and suppliers to bear financial responsibility for episodes, either directly or indirectly through sharing arrangements with the directly responsible entities where those arrangements may include upside and downside risk. For instance, adoption of health IT among providers in the post-acute care market, such as skilled nursing facilities, continues to lag behind hospitals and providers of ambulatory care services. In addition to facing significant resource constraints, post-acute care providers were not included as an eligible provider type under the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs. The recent extension of Medicaid 90/10 funding offers new opportunities for states to include post-acute care providers in projects focused on infrastructure development, but will not address the cost of health IT adoption among post-acute care providers.

https://www.medicaid.gov/federal-policy-guidance/downloads/SMD16003.pdf

To ensure that post-acute care providers and other types of providers and suppliers can succeed under future episode payment models, either as the directly financially responsible entity or as collaborators with other directly financially responsible entities, we are interested in opportunities to increase provider readiness as part of the design of potential future episode payment models and the potential refinement of current episode payment models. Specifically, we would like to explore: Incentives to encourage post-acute care providers, as well as other providers and suppliers that furnish services to episode payment model beneficiaries, to make necessary investments in health IT infrastructure; payment mechanisms that could leverage savings achieved under episode payment models to contribute to these investments; and any other strategies to enhance the adoption, implementation, and upgrading of certified health IT. We seek comment on these ideas, as well as the following questions:

• What are key challenges associated with the inclusion of post-acute care providers as the financially responsible entity or as collaborators with other financially responsible entities in episode payment models today?

• What would be a sufficient financial incentive or bonus to enhance the adoption, implementation, and upgrading of certified health IT in post-acute care settings?

• How else can episode payment models encourage the use of certified health IT and information sharing among providers and suppliers caring for episode payment model beneficiaries to improve care coordination and patient outcomes?

• Within the existing CJR model, are there additional opportunities to encourage investment in adoption, implementation, and upgrading of certified health IT among post-acute care providers to support improvements in care coordination and patient outcomes? What CJR model refinements could enable direct investments to support these improvements, particularly among post-acute care providers who are unaffiliated with CJR model participant hospitals but who provide services to CJR model beneficiaries, including post-acute care providers who may enter into financial arrangements with CJR model participant hospitals as CJR collaborators?

B. Proposed Definition of the Episode Initiator and Selected Geographic Areas

1. Background

The proposed new EPMs will complement the current CJR model and continue efforts to move Medicare towards paying providers based on quality and value. As discussed during rulemaking for the CJR model, CMS is interested in testing and evaluating the impact of an episode payment approach for a broad range of episodes in a variety of other circumstances. In addition to including hospitals that have not chosen to voluntarily participate in earlier models, we also are interested in expanding the range of episodes included beyond elective surgical procedures such that the impact on a broader range of beneficiaries, hospitals, and circumstances may be tested. We also are interested in evaluating the impact on hospitals when an increasing percentage of care to Medicare beneficiaries is paid for through alternative payment models.

As with CJR, we propose in § 512.105(c) that the hospital be the accountable financial entity and that these episode payment models be implemented in all IPPS hospitals in the geographic areas selected, subject to exclusions as specified in §§ 512.230 and 512.240 of the proposed rule. While these are considered new episode payment models and do not reflect an expansion or extension of any previous models, they do intentionally build significantly upon the work of BPCI and, most significantly, the framework established for CJR under 42 CFR part 510 published on November 24, 2015. Given the extensive consideration given to many of these issues during the CJR model planning and rulemaking periods, we believe this is important as we seek to build a model that is scalable across all providers and episode types. We also seek to limit the burden for hospitals and other providers that may be participating across multiple episode types. Therefore, to the extent applicable and appropriate, we have sought consistency with rules established for the CJR model. We seek comment on those areas where alternative options are proposed or should be considered that would not add additional operational burden or complexity.

2. Proposed Definition of Episode Initiator

Under the proposed EPMs, we propose, consistent with our definition under the CJR model that episodes would begin with the admission to an IPPS acute-care hospital that triggers an AMI, CABG or SHFFT episode as specified in section III.C.4.a. of this proposed rule. As with the CJR model, we propose that hospitals would be the only episode initiators in these episode payment models. For purposes of these episodes payment models the term ”hospital” means a hospital as defined in section 1886(d)(1)(B) of the Act. This statutory definition of hospital includes only acute care hospitals paid under the IPPS. Under this proposal, all acute care hospitals in Maryland would be excluded and payments to Maryland hospitals would be excluded in the regional pricing calculations as described in section III.D.4. of this proposed rule. This is the same policy that is being followed with the CJR model. In addition, we also propose to exclude other all-payer state models which may be implemented in the future. We welcome comments on this proposal and whether there are potential approaches for including Maryland acute-care hospitals or, potentially, other hospitals in future all-payer state models in these episode payment models.

As implemented with the CJR model, we propose to designate IPPS hospitals as the episode initiators to ensure that all services covered under FFS Medicare and furnished by EPM participant hospitals in selected geographic areas to beneficiaries who do not meet the exclusion criteria specified in section III.C.4. of this proposed rule are included. In addition, the episodes must not be BPCI episodes that we are proposing to exclude as outlined in this section and in section III.C.4. of this proposed rule. We believe that utilizing the hospital as the episode initiator is a straightforward approach for these models because patients covered under these DRGs and diagnoses require hospital admission for these services, whether provided on an emergent or planned basis. Under these new models covering medical admissions and services that are not necessarily elective, we will be able to expand our testing of a more generalized bundled payment model. Finally, as described in section III.B.4., our proposed geographic area selection approach relies upon our definition of hospitals as the entities that initiate episodes.

3. Financial Responsibility for the Episode of Care

As with the CJR model, we continue to believe it is most appropriate to identify a single type of provider to bear financial responsibility for making repayment, if any, to CMS under the model and propose to make hospitals, as the episode initiators, financially responsible for the episode of care for the following several reasons:

• Hospitals play a central role in coordinating episode-related care and ensuring smooth transitions for beneficiaries undergoing services related to SHFFT, AMI and CABG episodes. A large portion of a beneficiary's recovery trajectory from an AMI, CABG, or SHFFT begins during the hospital stay.

• Most hospitals already have some infrastructure related to health information technology, patient and family education, and care management and discharge planning. This includes post-acute care coordination infrastructure and resources such as case managers, which hospitals can build upon to achieve efficiencies under these EPMs.

• By definition, these episodes always begin with an acute care hospital stay. While often preceded by an emergency room visit and possible transfer from another hospital's emergency room, or followed by post-acute care, these parties are not necessarily always present and would not be appropriate to target as the financially responsible party for this purpose.

EPM episodes may be associated with multiple hospitalizations through transfers. When multiple hospitalizations occur, we propose that the financial responsibility be given to the hospital to which the episode is attributed as described in section III.C.4. We recognize that, particularly where the admission may be preceded by an emergency room visit and subsequent transfer to a tertiary or other regional hospital facility, patients often wish to return home to their local area for post-acute care. Many hospitals have recently heightened their focus on aligning their efforts with those of community providers, both those in the immediate area as well as more outlying areas from which they receive transfers and referrals, to provide an improved continuum of care. In many cases, this is due to the incentives under other CMS models and programs, including ACO initiatives such as the Shared Savings Program, the Hospital Readmissions Reduction Program (HRRP), and the CJR model. By focusing on the hospital as the accountable or financially responsible entity, we hope to continue to encourage this coordination across providers and seek comment on ways we can best encourage these relationships within the scope of these EPMs.

In support of our proposal that hospitals be the episode initiators under these EPMs, we believe that hospitals

are more likely than other providers to have an adequate number of episode cases to justify an investment in episode management for these EPMs. We also believe that hospitals are most likely to have access to resources that would allow them to appropriately manage and coordinate care throughout these episodes. Finally, the hospital staff is already involved in discharge planning and placement recommendations for Medicare beneficiaries, and more efficient post-acute care service delivery provides substantial opportunities for improving quality and reducing costs under EPMs. For those hospitals that are already participating in CJR, we believe the efforts that have been put in place to support patients receiving LEJR will be supportive of the new EPMs proposed under this rule, particularly for SHFFT episodes which we propose to implement in the same geographic areas as the CJR model.

Finally, as noted when planning for the CJR model, although the BPCI initiative includes the possibility of a physician group practice as a type of episode initiating participant, the physician groups electing to participate in BPCI have done so because their practice structure supports care redesign and other infrastructure necessary to bear financial responsibility for episodes. These physician groups are not necessarily representative of the typical group practice. As with the CJR model, the infrastructure necessary to accept financial responsibility for episodes is not present across all physician group practices, and thus we do not believe it would be appropriate to designate physician group practices to bear the financial responsibility for making repayments to CMS under the proposed EPMs. We seek comment on our proposal to establish financial responsibility and accountability under the AMI, CABG, and SHFFT EPMs consistent with our implementation of the CJR model.

Currently, there are SHFFT, AMI, and CABG episodes being tested in BPCI Models 2, 3 or 4. The last remaining BPCI Model 1 hospital will end December 31, 2016 and will, therefore, not overlap with EPM. In addition, under BPCI, there are episodes for PCI, which, if an AMI were also involved, would fall under the AMI model being proposed here. We are proposing that IPPS hospitals located in an area selected for any one of the episode payment models proposed in this rule that also are episode initiators for episodes in the risk-bearing phase of BPCI Models 2 or 4, be excluded from participating in the AMI, CABG, or SHFFT EPMs if the applicable episode otherwise would qualify to be covered under BPCI. This exclusion would be in effect only during the time that the relevant qualifying episodes are included in one of the BPCI models. Likewise, we are proposing that if the EPM participant is not an episode initiator for overlapping episodes under BPCI Models 2 or 4, but these same episodes are initiated during the anchor hospitalization by a physician group practice (PGP) under BPCI Model 2 (where the services are provided at the episode initiating hospital) then the episode also shall be covered under BPCI and be excluded from the EPMs being proposed under this rule. Otherwise qualifying EPM episodes (that is, those that are not part of an overlapping BPCI AMI, CABG, PCI or SHFFT episode) at the participant hospital would be included in these new EPMs. However, because BPCI participation is voluntary and participating providers may select which episodes to participate in, a BPCI participating provider will participate in any of the proposed AMI, CABG, or SHFFT EPMs for any episodes not otherwise preempted under their BPCI participation. For example, a BPCI Model 2 hospital in an AMI episode model geographic area participating in BPCI only for CABGs will be an EPM participant in the AMI model. Similarly, an acute care hospital participating in BPCI for LEJR but not SHFFT episodes would be exempt from participation in the CJR model in a CJR model geographic area but would participate in the SHFFT model for SHFFT episodes. In addition, providers participating in BPCI may also collaborate with an EPM participant for episodes not covered under BPCI. It should be noted that due to differences in how the AMI episode is defined under the AMI model versus BPCI and the inclusion of PCI MS-DRGs under the latter, a patient with the same discharge MS-DRG and diagnoses may qualify for a PCI episode under BPCI and an AMI episode under the AMI model. Our intent is to give precedence to BPCI regardless of which episode a patient qualifies for if the patient would be covered under BPCI.

In section III.D.6. we discuss in more detail how we propose to handle situations when a beneficiary receives services that would qualify for inclusion in more than one CMS payment model during the same or overlapping periods of time. We welcome input on how these overlaps should be handled to best encourage ongoing care coordination while minimizing the impact on other models and limiting confusion and operational burden for providers.

While we propose that the EPM participant be financially responsible for the episode of care under these EPMs, we also believe that effective care redesign requires meaningful collaboration among acute care hospitals, post-acute care providers, physicians, and other providers and suppliers within communities to achieve the highest value care for Medicare beneficiaries. We believe it may be essential for key providers to be aligned and engaged, financially and otherwise, with the EPM participants, with the potential to share financial responsibility with those EPM participants. We note that all relationships between and among providers and suppliers must comply with all relevant laws and regulations, including the fraud and abuse laws and all Medicare payment and coverage requirements unless otherwise specified further in this section and in sections III.I. and III.J. of this proposed rule. Depending on a hospital's current degree of clinical integration, new and different contractual relationships among hospitals and other health care providers may be important, although not necessarily required, for EPM success in a community. We acknowledge that financial incentives for other providers may be important aspects of the model in order for EPM participants to partner with these providers and incentivize certain strategies to improve episode efficiency.

While we acknowledge the important role of conveners in the BPCI model, and AMI, CABG, and SHFFT model participants may wish to enter into relationships with EPM collaborators and other entities in order to manage the episode of care or distribute risk, we propose that the ultimate financial responsibility of the episode remains with the EPM participant. Exceptions to this general rule for beneficiaries covered under certain risk bearing ACO arrangements are outlined in section III.D.6. As with the CJR model, we do not intend to restrict the ability of EPM participants to enter into administrative or risk sharing arrangements related to these EPMs, except to the extent that such arrangements are already restricted or prohibited by existing law. We refer readers to section III.I. of this proposed rule for further discussion of model design elements that may outline financial arrangements between EPM participants and other providers and suppliers.

4. Proposed Geographic Unit of Selection and Exclusion of Selected Hospitals

In order to determine the geographic unit of selection for these episode payment models, we conducted an analysis similar to that used for the CJR model. For the CJR model, we considered using a stratified random sampling methodology to select: (1) Certain counties based on their Core-Based Statistical Area (CBSA) status; (2) certain zip codes based on their Hospital Referral Regions (HRR) status or (3) certain states. We concluded that selection based on MSAs provided the best balance between choosing smaller geographic units while still capturing the impact of market patterns reflecting the mobility of patients and providers and limiting the potential risk for patient shifting and steerage between MSAs. HRRs are based on where patients receive selected tertiary care services which do not include orthopedic services. Therefore, HRRs may not be representative of where patients receive specialty orthopedic care or more routine orthopedic services such as hip and knee arthroplasty. Selection of states rather than MSAs would have greatly reduced the number of independent geographic areas subject to selection and, therefore, the statistical power of the evaluation. For similar reasons and to maintain consistency with the CJR model, we are, similarly, recommending implementation at the MSA level.

We also similarly considered whether these new models should be limited to hospitals where a high volume of these episodes occur, which would result in a more narrow test on the effects of an episode-based payment, or whether to include all hospitals in particular geographic areas, which would result in testing the effects of an episode-based payment approach more broadly across an accountable care community seeking to coordinate care longitudinally across settings. However, as with the CJR model, there would be more potential for behavioral changes that could include patient shifting and steering between hospitals in a given geographic area that could impact the test. Additionally, this approach would provide less information on testing payments for these episodes across a wide variety of hospitals with different characteristics. Selecting geographic areas and including all IPPS hospitals in those areas not otherwise excluded due to BPCI overlap as previously described and in section III.D.6. of this proposed rule as model participants would help to minimize the risk of participant hospitals shifting higher cost cases out of the EPM.

In determining where to implement these EPMs, we also considered whether implementation of the CJR model in the same geographic area should be a factor. We realize that there is likely to be considerable overlap in the selection criteria between MSAs where the SHFFT EPM might be appropriate and those MSAs where the CJR model is now being implemented. While limiting burden on hospitals is an important consideration, we also believe that the infrastructure being put in place as a result of the CJR model presents significant advantages for implementation of the SHFFT model. For similar reasons, and in order to minimize patient steerage and/or transfer for reasons due solely to the implementation of these new payment models, we believe that it is appropriate to implement the AMI model and CABG model together in the same geographic areas, albeit not necessarily in the same areas as the CJR model.

Therefore, given the authority in section 1115A(a)(5) of the Act, which allows the Secretary to elect to limit testing of a model to certain geographic areas, we propose that the SHFFT model be implemented in those MSAs where the CJR model is being implemented. We also are proposing that the AMI and CABG models be implemented in MSAs selected independently based on the criteria discussed in this proposed rule. This will result in four separate categories of MSAs: (1) MSAs where only the CJR and SHFFT model episodes are being implemented; (2) MSAs where only the CABG model and AMI model episodes are being implemented; (3) MSAs where the CJR as well as the AMI, CABG, and SHFFT models are being implemented; and (4) MSAs where neither CJR nor any of the new episode payment models are being implemented. We believe this will provide an opportunity to test the impact of implementing EPMs across not only a greater diversity of episodes but also as an increasing percentage of hospital discharges. We seek comment on our proposal to implement the SHFFT model in the same geographic region as the CJR model and to implement both the AMI model and the CABG model in the same MSAs, some of which may overlap with MSAs where the CJR and SHFFT models also are being implemented.

5. Overview and Options for Geographic Area Selection for AMI and CABG Episodes

We propose that the AMI and CABG EPMs be implemented together in the same MSAs. These AMI/CABG-participating MSAs may or may not also be LEJR/SHFFT-participating MSAs. The selection of MSAs for AMI/CABG EPMs would occur through a random selection of eligible MSAs.

We propose to require participation in the AMI and CABG models of all hospitals, with limited exceptions as previously discussed in section III.B.4. of this proposed rule, paid under the IPPS that are physically located in a county in an MSA selected through the methodology outlined in section III.B.5.b. in this proposed rule, to test and evaluate the effects of an episode-based payment approach for the proposed EPMs. We propose to determine that a hospital is located in an area selected if the hospital is physically located within the boundary of any of the counties in that MSA as of the date the selection is made.

Although MSAs are revised periodically, with counties added or removed from certain MSAs, we propose to maintain the same cohort of selected hospitals throughout the 5-year performance periods of the EPMs with limited exceptions as described later in this section. Thus, we propose neither to add hospitals to an EPM if after the start of such EPM new counties are added to one of the selected MSAs nor to remove hospitals from an EPM if counties are removed from one of the selected MSAs. We believe that this approach will best maintain the consistency of the participants in the EPMs, which is crucial for our ability to evaluate their respective results. However, we retain the possibility of adding a hospital that is opened or incorporated within one of the selected counties after the selection is made and during the period of performance. (See section III.D. of this proposed rule for discussion of how target prices will be determined for such hospitals.)

The manner in which CMS tracks and identifies hospitals is through the CMS Certification Number (CCN). In keeping with this approach, these EPMs will administer model related activities at the CCN level including the determination of physical location. The physical location associated with the CCN at the time of an EPM's start will be used to determine whether that CCN is located in a selected MSA. For hospitals that share a CCN across various locations, all hospitals under that CCN would be required to participate in the applicable EPM if the physical address associated with the CCN is in the MSA selected, unless otherwise excluded. Similarly, all hospitals under the same CCN, even if some are physically located in the MSA

selected for participation, would not participate in the applicable EPM if the physical address associated with the CCN is not in the MSA.

We considered including hospitals in a given MSA based on whether the hospitals were classified into the MSA for IPPS wage index purposes. However, such a process would be more complicated, and we could not find any compelling reasons favoring such approach. For example, we could assign hospitals to metro divisions of MSAs when those divisions exist. In addition, there is the IPPS process of geographic reclassification by which a hospital's payments can be based on a geographic area other than the one where the hospital is physically located. For the purpose of the EPMs, it is simpler and more straightforward to use a hospital's physical location as the basis of its assignment to a geographic unit. This decision would have no impact on a hospital's payment under the IPPS. We seek comment on our proposal to include a hospital as an EPM participant based on the physical location associated with the CCN of the hospital in one of the counties included in a selected MSA.

a. Exclusion of Certain MSAs

We considered whether certain MSAs should be exempt from the possibility of selection for the AMI/CABG EPMs' implementation. We considered exclusions based on the anticipated number of AMI episodes and CABG episodes in the MSA. We also considered exclusions based on the degree to which such EPMs' episodes would be impacted by

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