CMS Implements New Incentive Payment Model Addressing Quality Over Quantity


On January 3, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule implementing three new episode payment models (“EPMs”) under Medicare Parts A and B, and a Cardiac Rehabilitation (“CR”) Incentive Payment Model. The stated goal of these new EPMs is to improve the quality of care provided to beneficiaries while reducing episode spending through more emphasis on financial accountability.


Traditionally, Medicare makes payments to providers for items and services under the fee-for-service (“FFS”) program over the course of treatment, which is considered an “episode of care.” This model incentivizes volume rather than quality. These new EPMs allow for participants to receive payments based in part on reduction in Medicare expenditures that arise from efforts to redesign care based on quality improvements. In other words, the new EPMs offer financial incentive to those participants who are spending less money overall by implementing high-quality patient care that ultimately helps to stretch Medicare dollars further.


The new EPMs focus on episodes of care for acute myocardial infarction (“AMI”), coronary artery bypass graft (“CABG”), and surgical hip/femur fracture treatment excluding lower extremity joint replacement. Under these EPMs, hospitals will be able to consider the following strategies for redesigning care:

  • Increasing post-hospitalization follow-up and medical management
  • Coordinating across the inpatient and post-acute care spectrum
  • Conducting appropriate discharge planning
  • Improving adherence to treatment or drug regimens
  • Reducing readmissions and complications during post-discharge period
  • Managing chronic diseases and conditions that may be related to the EPMs’ episodes
  • Choosing the most appropriate post-acute care setting
  • Coordinating between providers and suppliers such as hospitals, physicians, and post-acute care providers

The EPMs are set for a five (5) year test to study performance, from July 1, 2017, to December 31, 2021.


Lastly, the final rule also implements a Cardiac Rehabilitation (“CR”) incentive payment model to test the effects of providing financial incentives to hospitals for the treatment of AMI or CABG on both quality of care and Medicare expenditures. This is meant to encourage coordination and address the underutilization of medically necessary CR and intensive CR services for 90 days post-discharge where the patient’s care is paid under either an EPM or the traditional Medicare fee-for-service program.



To access the final rule, click here: CMS Final Rule