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Association Comments on Possible Episode-Based Payment Model

In an Aug. 17 letter to the Centers for Medicare & Medicaid Services (CMS), America’s Essential Hospitals responded to a request for information on a potential new episode-based payment model.

CMS is exploring the new model to promote health equity, with the goal of enhancing access to patient-centered care for underserved groups and including them in value-based care systems.

America’s Essential Hospitals recommended that CMS:

  • Target specific conditions, such as chronic diseases that have known disparities, to improve outcomes for underserved groups. These groups often have worse outcomes due to barriers to care.
  • Incorporate appropriate risk adjustment methodologies that account for social risk factors. This would ensure hospitals serving complex patients are not unfairly penalized.
  • Focus the next model on medical rather than surgical episodes. Underserved populations have been underrepresented in surgical models but have higher needs for medical services.
  • Implement an equity adjustment to create incentives for improving outcomes for underserved populations. Similar to hospital value-based purchasing (VBP), this could be a bonus for serving underserved patients well.
  • Provide upfront investments to build capacity and infrastructure for improving health equity. This funding can help hospitals innovate to meet patients’ needs.
  • Improve data collection on social determinants of health and health disparities. This includes establishing standards, improving the use of Z codes, and enhancing interoperability.

The association’s comment letter also outlined the importance of CMS formally defining essential hospitals.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions.


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