AHA Comments on CMS’ Proposed Transforming Episode Accountability Model (TEAM)

June 10, 2024

The Honorable Chiquita Brooks-LaSure
Administrator
Centers for Medicare & Medicaid Services
Hubert H. Humphrey Building
200 Independence Avenue, S.W., Room 445-G
Washington, DC 20201

Submitted Electronically

RE: CMS-1808-P, Medicare and Medicaid Programs and the Children’s Health Insurance Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2025 Rates; Quality Programs Requirements; and Other Policy Changes, (Vol. 89, No. 86), May 2, 2024.

Dear Administrator Brooks-LaSure,

On behalf of our nearly 5,000 member hospitals, health systems and other health care organizations, our clinician partners — including more than 270,000 affiliated physicians, 2 million nurses and other caregivers — and the 43,000 health care leaders who belong to our professional membership groups, the American Hospital Association (AHA) appreciates the opportunity to provide feedback on the proposed Transforming Episode Accountability Model (TEAM). We are submitting separate comments on the agency’s proposed changes to the inpatient and long-term care hospital prospective payment system (PPS).

We are supportive of the Department of Health and Human Services (HHS) Secretary’s goal of moving toward more accountable, coordinated care through new alternative payment models (APMs). However, we have deep concerns regarding TEAM. CMS is proposing to mandate a model that is has significant design flaws and, as proposed, places too much risk on providers with too little opportunity for reward in the form of shared savings, especially considering the significant upfront investments required. If CMS cannot make extensive changes to the model, it should not implement it at this time. To do so would make TEAM no more than a backdoor payment cut to hospitals, as it fails to provide hospitals a fair opportunity to achieve enough savings to garner a reconciliation payment.

Additionally, the programmatic details of TEAM are almost identical to previous iterations of the CMS Innovation Center’s (CMMI) episode-based APMs, including Bundled Payments for Care Improvement Advanced (BPCI-A), and Comprehensive Care for Joint Replacement (CJR). However, we are concerned that the programmatic details of TEAM are almost identical to previous iterations of bundled payment models like CJR and BPCI-A, which, according to CMMI’s own report, have neither generated significant net savings nor met statutory criteria for expansion.¹ In particular, the relevant statute at 42 U.S.C. 1315a(b)(2)(A) directs the agency to “focus on models expected to reduce program costs under the applicable subchapter.” Yet, according to the most recent data from CMS, CJR reported cumulative losses of $142.6 million to the Medicare program in its last year and may have widened disparities in lower extremity joint replacement (LEJR) rates for some populations.² BPCI-A generated a net loss of $114 million in its third year, and beneficiaries reported unfavorable results for functional status and care experience measures.³ Thus, because TEAM is based on the extremely similar BPCI-A and CJR models, and because those prior models failed to meet statutory criteria for expansion as they failed to reduce program costs and generate net savings, we have serious concerns that the agency is stretching its legal authority. Moreover, in not accounting for lessons learned from previous models, we feel the agency has missed a critical opportunity to move bundled payment models forward in a meaningful way.

Moreover, the tremendous scope of this rule and its aggressive 60-day comment period has made it challenging for us to fully evaluate and analyze the proposal and its tremendous impact on hospitals and health systems. The five types of surgical procedures proposed for inclusion in TEAM comprise over 11% of inpatient PPS payments in 2023 – a staggering amount that does not even include the outpatient payments that would be at risk as part of the model. While we worked closely with our hospital and health system members to assess the potential impact of TEAM on the important work they do in caring for their patients and communities, the incredibly short comment period severely hampers our ability to provide comprehensive comments. That said, it is clear a number of changes need to occur to make this model feasible.

Make Participation Voluntary

The proposed rule would mandate TEAM participation for all acute care inpatient PPS hospitals in select geographies. However, mandatory participation is not practicable or advisable. Many organizations are neither of an adequate size nor in a financial position to support the investments necessary to transition to mandatory bundled payment models. Requiring hospitals to take on large, diverse bundles would require more risk than many can manage, threatening their ability to maintain access to quality care in their communities. We strongly urge CMS to make model participation voluntary and allow organizations to select the episodes for which they feel they can improve quality of care and best impact cost savings.

Lower the Discount Factor

The proposed rule includes a very aggressive 3% discount factor given the context of other TEAM design features. Indeed, based on our analysis, each of the five clinical episode categories would have most of the episode spending accounted for by the anchor hospitalization or outpatient procedure, with three of the five having at least three-quarters of spending accounted for by the anchor hospitalization or outpatient procedure. This is extremely problematic as hospitals do not have an ability to decrease the anchor hospitalization payment amount, which leaves virtually no opportunity for them to achieve efficiencies and meet, let alone exceed, the proposed 3% discount factor. Thus, we recommend that a discount factor of no more than 1% be applied.

Modify Several Design Elements

The proposed rule has several problematic design elements delineated below and explained more thoroughly in the attached. If CMS cannot make significant changes to our concerns below, the agency should not implement TEAM. At the very minimum, CMS should:

• Revise the risk adjustment factor. We recommend that the risk adjustment factor capture complication or comorbidity/major complication or comorbidity (CC/MCC) flags from the anchor hospitalization and hierarchical condition codes (HCC) flags three years prior to the hospitalization.
• Establish Longer Glidepath to Two-sided Risk. We recommend extending the upside-only glidepath to a minimum of two years.
• Revise the Low-volume Threshold. We recommend CMS increase the low-volume threshold to ensure statistical significance, establish separate thresholds within each episode category and fully exclude organizations not meeting those thresholds from participation.
• Make Participation for Safety-net, Rural and Special Designation Hospitals Upside Only. According to our analysis, these organizations are projected to have the most significant financial losses, and they already serve more complex patient populations often with lower margins.
• Exclude Hospitals Participating in Other APMs. CMS is creating “double jeopardy” for organizations participating in multiple APMs, and thus should exclude participants in accountable care organizations (ACOs), the States Advancing All-Payer Health Equity Approaches and Development (AHEAD) model, and the Increasing Organ Transplant Accountability model (IOTA). 
• Revise Quality Measure Set. At the very least, we recommend excluding the three measures CMS is considering for TEAM that have not yet even been adopted for the inpatient PPS quality reporting program.
• Lower Composite Quality Score (CQS) Threshold. Under the proposed approach, model participants would only receive a full reconciliation payment if their CQS is in 100th percentile nationally, essentially meaning that the CQS would serve only to decrease a participant’s reconciliation payment.
• Waive Applicable Fraud and Abuse Laws. We recommend waiving physician self-referral laws and anti-kickback statutes so that organizations can form the financial arrangements necessary to implement the proposed rule.
• Extend Certain Waivers to Support Care Delivery. We urge CMS to give providers maximum flexibility to identify and place beneficiaries in the clinical setting that best serves their short- and long-term recovery goals.

The changes we recommend would help facilitate hospitals’ success in providing quality care to Medicare beneficiaries, achieving savings for the Medicare program and having an opportunity for reward that is commensurate with the risk they are assuming. Our detailed comments are attached. Please contact me if you have questions or feel free to have a member of your team contact Jennifer Holloman, AHA’s senior associate director of policy, at jholloman@aha.org.

Sincerely,

/s/

Ashley Thompson
Senior Vice President
Public Policy Analysis and Development

Cc:     Elizabeth Fowler, Director, Center for Medicare and Medicaid Innovation (CMMI)

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¹ https://www.cms.gov/priorities/innovation/data-and-reports/2022/rtc-2022
² https://www.cms.gov/priorities/innovation/data-^{and-reports/2023/cjr-py5-ar-findings-aag
3} https://www.cms.gov/priorities/innovation/data-and-reports/2023/bpci-adv-ar4-findings-aag