On March 21, 2017, the Centers for Medicare and Medicaid Services (“CMS”) published an interim final rule (“Interim Final Rule”) delaying (i) the effective date of several new Medicare payment models developed by the CMS Innovation Center to advance care coordination, and (ii) the implementation of updates to an additional existing model.

Specifically, the Interim Final Rule delays a January 3, 2017 final rule (“Original Final Rule”) with the following implications:

• The delay of the effective dates of three new episodic payment models – each designed to test the propriety of episodic payments for certain cardiac and orthopedic conditions and procedures – until October 1, 2017.

• The delay of the effective date of the Cardiac Rehabilitation Incentive Payment Model – designed to encourage providers in 90 geographic areas to provide cardiac rehabilitation services via the implementation of a retrospective incentive payment program – until October 1, 2017.

• The delay of the effective date of amendments to the Comprehensive Care for Joint Replacement Model – designed to test the propriety of a bundled payment reimbursement methodology for an episode of care associated with hip and knee replacements – until October 1, 2017.

The original effective date of the Original Final Rule was initially delayed on the heels of a January 20, 2017 “Regulatory Freeze Pending Review” memorandum from Reince Priebus, Assistant to the President and Chief of Staff, to the heads of executive departments and agencies.  Among the actions urged within the memorandum was the temporary postponement of regulations published but yet to take effect, for the purpose of reviewing questions of fact, law and policy.  Accordingly, in explanation of the Interim Final Rule, CMS noted that the additional three-month delay is necessary, not only to bolster participant preparedness and capabilities as regarding implementation, but also to ensure adequate time for the agency to consider and, as may be appropriate, undertake modifications.

CMS is accepting comments on the Interim Final Rule through April 19, 2017. We anticipate that this will be a particularly important and active comment period for healthcare industry stakeholders. There are concerns amongst such stakeholders that the Interim Final Rule signals an impending retreat by CMS from value-based payment reforms – reforms that are intended to shift the industry away from a fee-for-service model towards mechanisms based on processes of care, the quality of health outcomes, and cost. A major initiative of the Affordable Care Act, such payment reform has been welcomed by many payers and providers and experimentation is underway far beyond the CMS pilot programs.