New cardiac rehab incentives model could hit high spenders hard

On July 25, 2016, HHS announced a bundled cardiac rehabilitation incentive payment model to test the impact of providing an incentive payment to hospitals where beneficiaries are hospitalized for a heart attack or bypass surgery. The model (81 FR 50793), which officially published on August 2, 2016, would be based on beneficiary utilization of cardiac rehabilitation and intensive cardiac rehabilitation services in the 90-day care period following a hospital discharge.

Experts at Avalere Health contend that the financial impact will be modest for most hospitals who are required to use this model or those that use the model voluntarily. The Avalere analysis found that 85 percent of hospitals would not experience gains or losses that exceed $500,000 per year. Avalere notes, however, that some institutions could face significant penalties if their current spending far exceeds the average spending for their region.

The model

Under the model, hospitals will use the incentive payment to coordinate cardiac rehabilitation and support beneficiary adherence to the cardiac rehabilitation treatment plan. The new cardiac bundled payments will be phased in starting July 1, 2017, and will apply to three types of cardiac care:

  • coronary artery graft (bypass) surgery (CABG);
  • heart attack patients who are medically managed with drugs and other non-interventional therapies; and
  • heart attack patients receiving percutaneous coronary intervention (PCI), such as stents, angioplasty, or other interventions.

The payments would be available to hospital participants in 45 geographic areas that were not selected for the cardiac care bundled payment models, as well as 45 geographic areas that were selected for the cardiac care bundled payment models.

The payments will be made as follows: (1) an initial payment of $25 per cardiac rehabilitation service for each of the first 11 services paid for by Medicare during the care period for a heart attack or bypass surgery; and (2) after 11 services are paid for by Medicare for a beneficiary, the payment would increase to $175 per service.

The number of cardiac rehabilitation program sessions would be limited to a maximum of two one-hour sessions per day for up to 36 sessions over up to 36 weeks, with the option for an additional 36 sessions over an extended period of time if approved by the Medicare Administrative Contractor. Intensive cardiac rehabilitation program sessions would be limited to 72 one-hour sessions, up to six sessions per day, over a period of up to 18 weeks.

Further findings

Avalere believes that hospitals could achieve savings under the payment model by targeting both device spending and care management for surgical and medically-managed patients. Avalere’s analysis also found that:

  • 60 to 70 percent of spending for CABG and PCI episodes are incurred during the initial hospital stay;
  • only 35 percent of spending for heart attack patients who are managed with drugs are related to the inpatient stay; and
  • 47 percent of spending on medically-managed heart attack patients is linked to post-discharge care, including post-acute services and readmissions to acute care settings.

Avalere’s analysis was based on a review of Medicare Part A data from 2013 and 2014.

Comments on the proposed payment model may be submitted until October 3, 2016.