Skilled Nursing Leaders Applaud Plan to Nix Mandatory Bundles

Two prominent skilled nursing industry groups are applauding a recent proposal from the Centers for Medicare & Medicaid Services (CMS) to scale back mandatory bundled payment models.

Specifically, the Episode Payment Models (EPMs) and the Cardiac Rehabilitation (CR) incentive payment model are on the chopping block. Under the proposal, which was issued Tuesday afternoon, CMS would also roll back regulations regarding the mandatory bundled payment models. It would also reduce the number of mandatory geographic areas participating in the Innovation Center’s Comprehensive Care for Joint Replacement (CJR) initiative from 67 areas to 33.

The new bundled payment models were originally scheduled to begin on Jan. 1, 2018.


Under mandatory bundled payment models like CJR, a hospital is incentivized to manage the costs of a whole 90-day episode of care, from surgery through post-acute care. Skilled nursing providers have pushed back against these bundles, concerned that they incentivize hospitals to bypass SNFs in an effort to get more patients in lower-cost home health settings.

The American Health Care Association (AHCA)—the nation’s largest association of skilled nursing providers—gave its nod to the proposed changes.

“Eliminating mandatory bundles and other changes proposed in this rule reflect feedback provided by long term and post-acute care providers. Our members do not oppose bundling payments in general but we cannot support mandatory demonstrations or models where we are not meaningfully included,” AHCA president and CEO Mark Parkinson said in an Aug. 15 statement. “We look forward to continuing to work together with CMS to find effective ways to improve quality of care and reduce costs through innovative payment models.”


Likewise, LeadingAge, an organization that represents non-profit long-term care providers, had positive remarks about the proposal.

“LeadingAge is encouraged that CMS is taking a second look at these two programs based upon feedback from providers,” the group’s policy team said in a statement to Skilled Nursing News. “The proposed rule appears to validate our sentiments that there are too many programs coming too fast for providers to effectively implement these new models of care.”

The move also garnered support from within the home health care industry. Despite home health seeing some opportunity in CJR, some within that industry see the mandatory bundles as being implemented too fast.

Despite the immediate praise, the proposal could affect the way some skilled nursing providers do business. Tom DiVittorio, senior vice president and chief financial officer at Genesis HealthCare (NYSE: GEN), previously said cardiac bundles could present a “very different opportunity for us.”

“The patients that are coming to us post cardiac surgery…typically have significant comorbid conditions and that is why they have been historically coming to the skilled nursing industry,” DiVittorio said on an Aug. 7, 2016 call with analysts.

Still, cardiac programs aren’t currently a big part of the company’s business and therefore won’t significantly impact it, explained Lori Mayer, vice president of investor relations at Genesis.

The proposed rule is scheduled to be posted to the Federal Register on Aug. 17. The proposal will be open to public comment for 60 days, ending Oct. 16.

Read the full proposed rule here.

Written by Tim Regan

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