Signify Health Issues Public Comment on Centers for Medicare & Medicaid Services Proposed Rule

WASHINGTON, June 30 -- Francois de Brantes, senior vice president of business development at Signify Health, Dallas, Texas, has issued a public comment on the Centers for Medicare and Medicaid Services' proposed rule entitled "Comprehensive Care for Joint Replacement Model Three Year Extension and Modifications to Episode Definition and Pricing". The comment was written on June 23, 2020, and posted on June 24, 2020:

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As the largest Convener in the Bundled Payments for Care Improvement (BPCI) and BPCI-Advanced (also "BPCI-A") models, and the largest implementer of episodes of care payment programs for private sector payers, employers and providers, Signify Health has accumulated a close to unparalleled experience in how to design, structure and operationalize such programs to increase their chances of success. As close partners with the Agency, we write to share our insights about and recommendations for CMMI to increase positive impact of bundled payments on the Medicare program and its beneficiaries.

In the request for comment on the proposed rule for the Comprehensive Joint Replacement program, CMS is seeking advice and suggestions on the design of a program that would include ambulatory surgery centers (ASCs). In particular, given that trends in care settings continue to transition in towards ASCs, CMS is soliciting comment on how it might best conceptualize and design a future bundled payment model focused on LEJR procedures performed in the ASC setting. Further, while the CJR model established hospitals as the financially accountable entity, CMS seeks comment on how a new model could better recognize the role of the surgeons and clinicians in LEJR episodes. Who should participate in the model and should the reconciliation payment and/or repayment obligations be shared between the facility and the rendering surgeon to better encourage collaboration? Are there any other clinicians who should share directly in the financial accountability? In general, would a prospective bundled payment or a retrospective target price benchmarked payment model approach work best? What types of quality measures would participants need to track and report? Should the model be ASC specific or site neutral such that inpatient, outpatient and ASC service sites would be paid the same rate, regardless of where the procedure was performed?

Sincerely,

Francois de Brantes

Senior Vice President, Business Development Episodes Of Care Division

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Medicare's CJR is the first attempt at mandating an alternative payment model throughout a number of selected geographic regions. Changes to the program therefore have ripple effects throughout the industry and we commend CMS for considering an expansion in the scope of CJR. We suggest you be bolder in some aspects and more circumscribed in others. Of particular note is pricing of bundles. A recent paper/1 shows that some of the policies that Medicare has adopted to reap ever greater savings from its programs may be driven by a wrongful assumption that it isn't getting enough. That seems to be a wrong assumption and could result in program outcomes that are the opposite of what is desired -- namely the abandonment by providers instead of a continued transformation of the delivery system.

Signify believes the role of surgeons is already well recognized in most episode-based models given that their services are often used to initiate an episode. We encourage CMS to incorporate mechanisms to encourage shared accountability into any new bundled payment model. The precedence hierarchy in BPCI Advanced serves a helpful tool for driving key coordination among a facility and the surgeons conducting surgeries there.

We encourage the agency to mirror the approach used in some of its earlier bundled payment models by allowing for broader participation among facilities and physician group practices. Further, we would encourage CMS to support the use of gainsharing and loss-sharing arrangements as a vehicle to incentivize engagement and collaboration across providers and facilities.

For this model, and in moving payment policy forward, CMS should design ASC bundled payments to be prospective payments as opposed to retrospective payment arrangements. Presumably, ASCs would be treating the lowest acuity LEJR patients with less variation in patient risk factors allowing for the development of relatively predictable prospective payment methodology. Regardless of the payment model approach, the methodology should be clearly defined, reflect current spending trends, adjust for extreme events, and offer participants achievable savings goals. We detail our recommendations below.

A. Elements Of Program Expansion:

As noted in the proposed rule, CMS has recognized the shift in site of service as a result of advances in medical technology that now permit complex procedures to be done in a variety of settings and even across geographies thanks to telehealth. With the launch of the Bundled Payment for Care Improvement, CMS has set the country on an important path to value-based payment, a path from which there can be no retreat. To the contrary, as has been exposed by the recent and on-going public health emergency, fee-for-service can have devastating effects on providers in much as it has had harmful effects on public and private sector payers. It is therefore critical that CMS continue to expand the scope of its programs to include additional settings, additional conditions and procedures. Furthermore, flexibility in site selection and the ability to perform and be paid for clinical interventions in settings other than acute care facilities is essential. Signify Health therefore strongly recommends that CMS include ASCs as part of a new and expanded CJR program.

There are also two important lessons that Signify has learned in the implementation of its episodes of care programs and that should be taken into account in a new CJR model:

* Bigger is Better: The larger the program size, the more systemic the delivery system changes and the more sustainable the program.

Published evidence/2 and our own experience indicates that the participants most likely to be successful are those whose program sizes are larger. Further, those that have been in the program longer increase their program size over time as they gain familiarity with the clinical processes needed to improve outcomes. In addition, the evidence/3 also suggests that full participant engagement in alternative payment programs creates a desirable spillover effect, benefiting providers' other patients as well as payers. The CJR could easily be expanded by adding other common orthopedic surgeries that are prevalent in the Medicare program, such as ankle repairs and shoulder replacements, generalizing the process improvements made for hip and knee replacements, and creating a deeper level of engagement for participating providers. Signify recommends that CMS consider adding other orthopedic procedures to the CJR model to increase its appeal to providers and deepen their engagement in care improvement processes.

* Program Uncertainty Impedes Participation: Provider participation is constrained due to concerns about pricing methodology and its effect on potential program savings.

Concerns over pricing methodology that create disincentives to achieving savings goals consistently damage more robust participation. And while CJR is a mandatory model, providers are not forced to participate. Our own interactions with facilities and physician groups in CJR regions report that some simply view CJR as incidental to their core activities and not worth any investment in time or effort given program uncertainty. Reducing uncertainty while maintaining risk is an essential distinction of an effective program./4

In the proposed rule, CMS is recommending that target prices be recalculated every year and, further, that the target prices set at the beginning of the performance period be retrospectively adjusted to account for market-wide changes in Medicare payments for the episodes. The combination amounts to conflating risk with uncertainty likely leading to an abandonment of the program by providers. Medicare must recognize that even in a mandatory model, the active participation of providers is required to generate on-going program savings. If providers in the CJR markets decide to ignore the program, they may incur some financial penalties as a result of the reconciliations for one or two years, but the market trends will eventually increase instead of decreasing, and the rebasing will show an increase in costs and an increase in episode costs instead of savings. Continuously punishing improved performance will inevitably lead to an opposite behavior than the one initially sought by the program. Further, there is a likelihood that providers whose episode margins are squeezed to close to nothing will price-shift to the private sector as they have consistently./5

Medicare will only achieve a Pyrrhic victory and at the expense of private sector payers.

Instead of continuously rebasing the price and applying a retrospective market trend factor during the reconciliations, Medicare should, instead, adjust the site-neutral price only taking into account the increased shift in sites of service to outpatient facilities, keeping the base pricing constant. That shift will then increase, and including ASCs in the site neutral pricing will further achieve Medicare's goal without penalizing the providers managing the episodes and investing in care improvements.

Signify would therefore recommend that CMS avoid continuous rebasing other than to account for site of service shift, and should not apply any retrospective trend adjustment in order to eliminate program uncertainty.

B. Additional Essential Design Elements Of A New CJR Model:

As CMS considers expanding the CJR model to ambulatory surgery centers, engaging surgeons more directly, it's important to outline some of the additional design elements that are critical to success in episodes of care/bundled payment programs (and other alternative payment models).

a. Refined episode definitions -- Medicare's bundled payment programs have, to-date, followed a consistent pattern of including all costs of care apart from a small set of exclusions. However, including services that are irrelevant to the episode introduces random variation in financial outcomes and increases uncertainty in program outcomes. Further, it will significantly hamper Medicare's ability to move to prospectively paid episodes as we explain further in this document. Medicare has developed the Episode Grouper for Medicare and, as part of that effort, has defined a set of episodes that are refined and could be used for a new version of CJR. We recommend CMS shift to these more refined episodes for this and any other bundled payment program.

b. Relevance and actionability of quality measures -- in general, quality measures should only be included if they have been validated and accepted as influencing patient outcomes and controllable by the accountable provider. For the new CJR model, Signify would recommend that quality measures include upstream process measures that help the provider focus on the appropriateness of the surgery, such as assurance of smoking cessation, exercising, and clearance from any other provider managing the patient's existing co-occurring conditions. Outcome measures such as an improvement in functional status and an absence of avoidable complications are also essential.

c. Timeliness of feedback -- feedback on performance should be as close to the performance period as possible to give providers an opportunity to impact results during the performance period. By shifting to once-yearly reconciliations that would take place six months after the end of the performance period, CMS will deprive providers of much-needed information during the course of the performance period. Signify would recommend that all episode initiators be formally engaged in Medicare's Blue Button initiative to facilitate access to close-to-real-time Medicare data. Further, Medicare should make available its claims data to all participants through a Medicare-certified entity that has access to the Virtual Research Data Center.

C. Implementing a Prospectively Paid Program:

Consistent with our comments on pricing, we strongly recommend that CMS shift to prospectively paid episodes, emulating the activities in the private sector. Private sector employers have been contracting for prospectively paid episodes for close to ten years and the movement has further accelerated in the past two years. What employers are looking for is price predictability and stability along with an explicit warranty on the care provided. Prospectively paid episodes provide all three. There are, however, several considerations that have to be made when implementing such a program: a. Pricing -- contrarily to the current complex rules involved in reconciliations, which include trend factors, applying discounts, shared savings caps and other mechanisms, pricing for prospectively paid episodes is done up front and set. Any discount is applied up front and all methods should be completely transparent. We would recommend a discount of no more than 2% in consideration of the differences in relative ex ante efficiency of the ASCs relative to outpatient hospital departments and inpatient facilities. And that's because, as we mention above, CMS should price these episode in such a way as they are site neutral. Over time, the pricing should change to account for increased shifts to lower acuity, more efficient settings but not any other changes.

b. Payment -- very few providers, if any, have the administrative tools to pay "downstream" providers or any provider other than themselves that could and would be involved in the episode of care. As explained further in this document, we recommend that CMS enable conveners and other risk-bearing entities to be distributing agents. CMS should require the posting of sureties, much as it does today for risk-bearing conveners to ensure that payments to downstream providers are made and accurate.

c. Withholds and back-end reconciliations -- Most prospectively paid episode programs in the private sector include withholds that serve two purposes: (1) a surety against quality performance, with the release of the withhold contingent on reaching certain quality gates and or improvement over baseline performance, and (2) to compensate Medicare for claims "leakage." Even with refined episode definitions, it's highly likely that some providers involved in the episode and/or whose services would be included in the episode will submit their claims for payment directly to Medicare and its administrative contractors. Those claims need to be netted out of the withhold.

d. Administrative "bundling engine" -- to reduce the potential for claims that should be included in a prospectively paid episodes to be paid by the Medicare Administrative Contractor (MAC), MACs should have access to a bundling engine through which they would run billed claims prior to paying them to determine their inclusion in a triggered episode and determine whether or not it should be paid. Several private sector organizations have developed bundling engines and other platforms to manage prospectively paid episode programs. As mentioned above, CMS also has access to the Episode Grouper for Medicare and could make that available to the MACs, along with refined episode definitions, to administer the prospectively paid episode program.

D. Criticality of Risk-bearing Conveners:

Implementing an episode-of-care payment program like CJR is complex and risky, and healthcare providers are at various states of readiness to participate. Signify helps providers to engage in these programs with boots on the ground and technology. Moreover, our recent implementations of private sector episodes of care programs have reinforced the criticality of these elements. Put plainly, health plans have struggled to engage physician groups, hospitals and even large health systems in two-sided risk programs. With Signify's help and that of other conveners, these struggles are coming to an end.

Clinical Support Outside the Four Walls of the Facility

This will be even more important for ASCs and surgeons since they lack the infrastructure that acute care facilities may have.

First, we extend clinicians' impact by wrapping operational, clinical and social services around the patient to support post-acute transitions and to optimize care. Signify clinicians perform comprehensive transition visits that identify care gaps and, where needed, facilitate follow-up with patients' primary care physicians to address both clinical and social care needs. In addition, Signify's post-acute specialists work with facilities to ensure the right care at the right time and in the right setting. This focus has proven results: 10 percent fewer readmissions during episodes of care and 13 percent lower length of stay in institutional settings.

Ensure Active Participation

While this is a mandatory program, we mention above that making it mandatory doesn't mean you can mandate providers actively participate. They can just as easily ignore the program altogether. Our ability to provide downside financial risk protection matters.

Second, we deploy to all of our provider partners specialized, episode-centric software that integrates with hospital, physician practice and post-acute EMRs, helping our partners make real-time decisions for patient care as well as track program performance across sites of care. The application incorporates the best practices regularly gathered from implementations so as to more rapidly spread innovation.

Signify has helped its partners manage the care of tens of thousands of patients experiencing joint replacement surgeries across the United States. The infrastructure we build around the clinician has reduced unnecessary hospitalizations and allowed patients to spend more healthy days at home. In the last year of the BPCI Classic program, Signify's partners reduced the patient need for skilled nursing and inpatient rehabilitation by 42 and 76 percent, respectively. And patients returned to the hospital 40% less than they did before Signify and its partners began participating in BPCI Classic.

As CMS transitions to prospective payment for episodes, it should draw from its experience in implementing prospective for population health models. CMS could look to the Next Generation ACO model and to Direct Contracting for ways to structure altering the cash flow to provide payments earlier in the episode to assist in making care redesign investments. Prospectively-paid bundled payments will require CMS to identify patients from the Part B claim form submitted by facilities for payment. We recommend that facilities initially continue to receive payments directly from their existing fiscal intermediary, with a lump-sum payment to Awardees or Conveners equal to the balance of the episode target price.

Program participants should be enabled to pay providers and suppliers using existing Medicare payment rates, or separately negotiated rates, at their option. We believe Conveners or other CMS-approved risk-bearing entities should be eligible to perform the claims payment function, although the standards required for CMS approval should include a demonstrated ability to pay claims using Medicare payment policies, including proven computerized claims systems similar to those used by Medicare Fiscal Intermediaries or Medicare Advantage Plans. A schedule of administrative requirements should be developed that Conveners must demonstrate they have in place before CMS enters into a prospective contract.

Conclusion

We thank the Innovation Center for considering our recommendations to achieve the agency's overarching goal of moving organizations towards increased quality and care coordination at a lower cost to Medicare. Private payors and other organizations have begun to follow suit, likewise experiencing improved health outcomes and lowered systemic costs. There is increased evidence of spillover effect and CMS must take great care to avoid discouraging provider participation in its programs. A mandated program cannot compel participation, it can only compel the application of the observed results of a performance period. Applying a financial penalty will yield savings to the Medicare Trust Fund but risks disengaging providers from actively transforming the delivery system and creating a lasting impact. We urge CMS to carefully consider this when designing the pricing policies for CJR and a new model that would incorporate ASCs. We look forward to continuing to work with you as a trusted, valued partner to further expand the impact and reach of Medicare's bundled payment programs.

Appendix: Signify's Demonstrated Savings to the Medicare Program

Thousands of healthcare providers are accepting financial responsibility in BPCI Advanced, the Innovation Center's largest payment model. A multitude of different types of organizations have volunteered to take risk on over one hundred types of medical and surgical hospitalizations. As shown in the following graph, Signify, in partnership with its convened providers, expects to generate $240 million in annual savings to Medicare for Model Year 3 alone under this voluntary program, and we expect the same for Model Year 4 under current program constraints.

Overall, between BPCI and BPCI-A, and across all models and Model Years, Signify and its provider partners have guaranteed over $800 million in savings to the Medicare program while improving beneficiary outcomes.

See graph here (https://www.regulations.gov/contentStreamer?documentId=CMS-2020-0013-0068&attachmentNumber=1&contentType=pdf)

The BPCI "Classic" initiative demonstrated that all types of clinicians and institutional providers are capable of driving significant reductions in utilization stemming from unwarranted variation in outcomes and avoidable complications, while improving patient outcomes through careful focus on, and investment around, specific patient episodes. Now, in BPCI Advanced, we partner with over 1,000 healthcare organizations of every type that are generating savings in excess of the guaranteed discount to Medicare. As illustrated in the following graph, these institutions and groups have shown continued performance improvement over the course of the BPCI initiative, reflecting the impact that new workflows, software systems and dedicated personnel can have on outcomes and efficiency.

Across many types of Clinical Episodes, including cardiology, gastroenterology and orthopedic episodes, the BPCI initiative improved patients' recovery from hospital stays. Clinical programs that were fully operational in the BPCI initiative produced significant improvements in quality to deliver savings - a 10.6 percent reduction in SNF discharge rates, a 13.0 percent reduction in post-acute stay duration, and a 10.1 percent reduction in readmission rates./6

By encouraging a broad cross-section of providers to accept responsibility for health outcomes, CMMI has expanded the population of patients benefiting from the clinical interventions of hospitals and physicians in this model. In addition, and as illustrated in the following graph, the program's endurance and design modifications have increased its appeal. As such, our experience suggests that this alternative payment model framework, if applied even more broadly, could cover over two-thirds of Medicare hospitalizations/7 and half of Medicare's expenses associated with acute care episodes./8

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1/ Navothe et al, "Alternative Payment Models: Victims of Their Own Success?", JAMA 2020

2/ DeLia, D. et al, "Statistical uncertainty in the Medicare shared savings program" (December 2012); available at www.ncbi.nlm.nih.

3/ Gray, C.F. et al, "Bundled Payment 'Creep': Institutional Redesign for Primary Arthroplasty Positively Affects Revision Arthroplasty. Journal of Arthroplasty," (February 2019).

4/ Knight (1921) "Risk, Uncertainty and Profit" Houghton Mifflin; Kahneman, Tversky (1979) "Prospect Theory: An Analysis of Decisions Under Risk" Econometrica.

5/ White, C. Whaley, C. "Prices Paid to Hospitals by Private Health Plans Are High Relative to Medicare and Vary Widely" RAND 2019

6/ Internal Signify analysis of BPCI program savings across Episode Initiators.

7/ Signify analysis of Medicare Provider Utilization and Payment Data, Inpatient Charge Data FY 2016.

8/ Dobson DaVanzo & Assoc., "Medicare Payment Bundling: Insights from Claims Data and Policy Implications" (2012); available at https://www.aha.org/system/files/2018-11/ahaaamcbundlingreport.pdf

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The proposed rule can be viewed at: https://www.regulations.gov/docket?D=CMS-2020-0013

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