White House “Regulatory Freeze” Delays Implementation of Bundled Payment Models

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In the February 17, 2017 Federal Register, CMS announced that it will delay implementation of several bundled payment initiatives until March 21, 2017.  The Advancing Care Coordination Through Episode Payment Models (EPMs), Cardiac Rehabilitation (CR) Incentive Payment Model, and changes to the Comprehensive Care for Joint Replacement (CJR) Model were set to go into effect on February 18, 2017.  CMS stated that the delay was required under a White House memorandum issued on January 20, which calls for regulations already published in the Federal Register, but which have not taken effect, must be postponed for 60 days for further review. 

King & Spalding previously covered the implementation of the bundled payment models here.  The EPMs would require that a discharging hospital be responsible for the cost and quality of an “episode” of care from admission through 90 days post-discharge in the context of acute myocardial infarction, coronary artery bypass graft and surgical hip/femur fracture treatment.  The heart attack and bypass surgery models were to be implemented in 98 metropolitan statistical areas (MSAs), while the hip/femur fracture model was to be implemented in the 67 MSAs where the CJR Model is currently proceeding. 

The CR Model would give hospitals in 90 MSAs retrospective incentive payments for patient utilization of cardiac rehabilitation services 90 days post-discharge following hospitalization treatment for an acute myocardial infarction or coronary artery bypass graft surgery. 

Lastly, the CJR Model was to expand to include hip and femur fractures and be modified to be more consistent with other payment models.

White House Chief of Staff Reince Priebus issued a memorandum to the heads of all executive departments and agencies calling for, with limited exception, a “regulatory freeze pending review.”  The notice requires that no new regulations be sent to the Office of the Federal Register “until a department or agency head appointed or designated by the President . . . reviews and approves the regulations.”  For regulations already submitted, but that have not yet been published in the Federal Register, agencies must “immediately withdraw” them and proceed with the review described above.  As is the case for the bundled payment model, published but not-yet-effective regulations are delayed by 60 days, with instructions to agencies to “consider proposing for notice and comment a rule to delay the effective date for regulations beyond that 60-day period.”

The final rule delaying the effective date is available here.  The prior final rule, meant to implement the above provisions, was published on January 3, 2017 and is available here.  Mr. Priebus’ memorandum is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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