Top 10 Comments on Proposed Mandatory Episode-Based Payment Model, TEAM
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June 13, 2024 –Time’s up and pencils down! Public comments on the Centers for Medicare & Medicaid Services (CMS) Fiscal Year 2025 Inpatient Prospective Payment System (IPPS) proposed regulation were due this past Monday, June 10, 2024. CMS received over 6,000 comments on the reg, many of which touched on a proposal from the Center for Medicare and Medicaid Innovation (CMMI) within CMS to initiate a new episode-based payment model, called the Transforming Episode Accountability Model (TEAM). This proposed model, described in a previous Regs & Eggs blog post, garnered significant attention from the provider community – particularly hospitals and their trade associations, since TEAM would require certain hospitals to participate. Other stakeholders, such as physician groups and post-acute providers, also provided input to CMMI, since they could be involved indirectly.
Although stakeholders’ comments on TEAM were extensive and detailed, my colleague Leigh Feldman and I will attempt to provide the top 10 overarching themes:
- Mandatory Versus Voluntary Model. Most commenters opposed CMMI’s proposal to require hospitals to participate in TEAM and urged CMMI to make the model voluntary instead. In the proposed reg, CMMI argued that voluntary models lead to “selection bias,” where the majority of providers who participate are those that are relatively confident they will do well in the model – leading to less overall savings to the Medicare program and a poorer evaluation, thereby decreasing the chance that the model could be successful if expanded or made permanent. In CMMI’s view, mandatory models have a better chance of achieving successful results that could be scalable.
However, commenters expressed concern about hospitals’ ability to participate in multiple models simultaneously and about CMMI’s ability to accurately attribute quality improvements and savings if providers were caring for patients in more than one model with the same overarching quality and cost goals. Many commenters expressed the belief that a mandatory model would not necessarily improve quality and reduce costs because of the impact it would have on hospitals already voluntarily participating in alternative payment models (APMs). For example, many hospitals are actively involved in accountable care organization (ACO) initiatives, and if they were forced to participate in TEAM, the increased time and administrative costs associated with being in multiple payment models could ultimately push hospitals to drop out. Since ACO initiatives already require hospitals to be accountable for total cost of care (including the episodes of care proposed in TEAM), it may not make financial sense for hospitals to be in both models. Overall, commenters argued that making TEAM mandatory would hinder, not accelerate, CMMI’s value-based care efforts.
Commenters also suggested specific alternatives, including: allowing hospitals to opt-in or select which episodes to include; exempting hospitals that currently participate in an APM or that choose to participate in the new States Advancing All-Payer Health Equity Approaches and Development (AHEAD) Model; delaying the start of the TEAM model; and adopting refinements for certain areas where value-based participation is high.
- Longer Transition to Risk. Although CMMI proposed a glide path for hospitals to take on downside financial risk for episodes of care, many commenters urged CMMI to take a more gradual approach. As proposed, the first year of the five-year model would be upside-only (meaning that hospitals would not be held financially accountable for an increase in expected spending relative to the benchmark). However, starting in year two, all hospitals, including small and rural hospitals, would face downside financial risk. Commenters argued that hospitals should have at least one more year before the transition to “two-sided risk” to give them enough time to revise workflows, enter into agreements with other types of providers, and make other administrative or technological changes necessary to be successful in TEAM. Because of the particular financial strain that many rural and safety-net hospitals currently face, some commenters urged CMMI to exempt these hospitals altogether from downside financial risk.
- Approach to Safety Net Hospitals. Commenters were generally concerned about CMMI’s approach to oversampling geographic areas that include a higher proportion of safety net hospitals for inclusion in TEAM. While CMMI’s intention in including safety net hospitals in the model was to help improve care for some of the most vulnerable patients, commenters stated that that proposal could backfire by increasing the financial strain placed on these hospitals and making it more difficult for them to serve patients. Commenters urged CMMI to revise its methodology for selecting geographic regions, limit safety net providers’ participation to upside-only risk or allow them to participate on a voluntary basis.
- Discount Percentage. Commenters opposed CMMI’s proposal to automatically include a 3% discount to the benchmark, with no chances for that percentage to be reduced based on performance on cost or quality, and urged CMMI to lower the discount percentage. To many hospitals, this 3% discount appeared to be just a payment cut and would not in any way act as an incentive to improve quality or reduce costs. Commenters noted that in light of the proposed 30-day episode length under TEAM, achieving the discounted target price would be more difficult, since costs at the beginning of the episode would be less variable than those later in a longer episode, such as the 90-day post-discharge episode duration used in the Bundled Payments for Care Improvement Advanced and Comprehensive Care for Joint Replacement models.
- Episode Length and Duration. Stakeholders suggested that CMMI start TEAM with fewer covered conditions to reduce the burden of the model and the potential for care disruptions. Other commenters also felt that the 30-day episodes may not be appropriate and representative of costs in all care scenarios and argued for a more flexible approach, including the potential inclusion of longer episodes spanning from 60 to 90 days.
- Use of Regional Data and Rebasing. Comments were mixed on CMMI’s proposal to use 100% of regional data to determine a hospital’s benchmark rather than using a hospital’s historical spending. The downside to using historical spending, noted by both CMMI and commenters, is that it penalizes hospitals that successfully reduce their costs by making more difficult to achieve additional savings over time. However, other commenters noted that hospitals in lower-cost regions may have more difficulty succeeding in TEAM. For example, if a hospital is located in a region where many hospitals and health systems have participated in a previous episode-based payment model, the costs in that region could already be low. Forcing hospitals to compete against a benchmark that takes into account years of collective efforts to reduce costs could prove to be extremely challenging.
Commenters also argued that CMMI’s proposal to rebase the target price annually, weighting the most recent year at 50%, would further penalize hospitals in low-cost regions. They noted that if the benchmark is ratcheted down every year, sooner or later “there will be no more juice to squeeze” in terms of trying to cut costs.
- Risk Adjustment. Many commenters expressed concern about various aspects of CMMI’s proposal to risk adjust the episodes. Commenters noted that the proposed risk adjustment methodology does not account for the differences in the acuity of patients treated in the inpatient or outpatient settings, or who receive an emergent versus elective procedure. In commenters’ view, the risk adjustment methodology also does not appropriately account for patients’ clinical factors that lead to spending variation. Commenters argued that having a more granular risk adjustment methodology that can differentiate among these factors would lead to more accurate benchmarks.
- Quality Strategy. Commenters generally opposed CMMI’s selection of quality measures and its approach to adjusting positive and negative reconciliation payments based on quality performance. Commenters did not believe that the proposed measures themselves would actually measure performance under TEAM. Further, while the measures were all part of the Hospital Inpatient Quality Reporting Program, the model includes both inpatient and outpatient episodes. Regarding payment methodology, commenters were concerned that CMMI took an “all or nothing” approach to quality for hospitals that would receive a positive reconciliation payment (i.e., hospitals that successfully reduce costs). Under CMS’s proposed approach, hospitals that would otherwise receive a positive reconciliation amount must receive a score of 100 to retain the full amount. Any score below 100 would result in CMS deducting a portion of the positive reconciliation amount. Conversely, if hospitals would receive a negative reconciliation payment, a higher quality score would reduce the amount that they owed back to CMS. Some commenters argued that the quality score should work the same regardless of whether hospitals receive a positive or negative reconciliation payment – in other words, in both cases, a higher quality score should be financially advantageous to hospitals. Thus, if hospitals would otherwise receive a positive payment adjustment, their adjustment should be increased by the amount of their quality score. Such a change from the proposal, in the view of commenters, would help incentivize better quality of care and quality improvement over time.
- Data Sharing. Since benchmarks would be calculated at the regional level, commenters urged CMMI to provide data regarding regional spending trends. Commenters stated that CMMI should provide data further in advance than one month prior to the start of TEAM, and should provide a mechanism for real-time updates to help hospitals better identify opportunities to reduce spending.
- Non-Hospital Participation. While some commenters supported CMMI’s proposal to make hospitals the main participants in TEAM, others urged CMMI to take an approach similar to other episode-based payment models, where other types of providers can directly participate. While there would be opportunities for non-hospital providers to indirectly participate in TEAM, since hospitals would be the direct participants, the hospitals themselves must engage with non-hospital providers if hospitals want their help meeting cost and quality goals.
With comments now in, CMMI has the hefty task of reviewing the comments and deciding whether to finalize the proposal, modify it or scrap it completely. CMMI could make this decision in the FY 2025 IPPS final reg, which will be released around August 1, 2024. If CMMI needs more time to go through the comments, it could decide (with others from the Biden administration weighing in heavily) to finalize, modify or scrap TEAM in a future final reg released after the IPPS reg. If and when CMMI does tell the anxious health policy community what its plans are for TEAM, it must respond to each comment received – so watch for how CMMI addresses all the important issues that different stakeholders raised!
Until next week, this is Jeffrey (and Leigh) saying, enjoy reading regs with your eggs.
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