CMS confirmed Tuesday it will cancel two mandatory bundled payment programs and scale back another—and not all hospitals are happy about it.

The move came after the new administration at CMS twice delayed the start date of the programs: Episode Payment Models (EPMs), the Cardiac Rehabilitation Incentive (CRI) payment model and the expansion of the Comprehensive Care for Joint Replacement (CJR) model. Both HHS Secretary Tom Price, MD, an orthopedic surgeon, and CMS Administrator Seema Verma, MPH, have been critical of mandatory bundles in the past. They were expected to seek to make participation in these programs voluntary.

Those predictions came true in a new proposed rule that would cancel EPMs and CRI, while halving the number of geographic areas where participation in CJR will be mandatory.

“Changing the scope of these models allows CMS to test and evaluate improvements in care processes that will improve quality, reduce costs, and ease burdens on hospitals,” Verma said in a statement. “Stakeholders have asked for more input on the design of these models. These changes make this possible and give CMS maximum flexibility to test other episode-based models that will bring about innovation and provide better care for Medicare beneficiaries.”

The proposed rule stated CMS considered retaining EPMs and CRI on a voluntary basis, but determined there wasn’t enough time to alter the model designs, payment methodologies, financial arrangements and quality measures in time for the Jan. 1, 2018 start date.

While the move retains mandatory bundles in CJR in 34 geographic areas—with 33 other areas proposed for voluntary participation, CMS also signaled it won’t pursue further mandatory payment models, saying it “expects to increase opportunities for providers to participate in voluntary initiatives,” including future EPMs which wouldn’t require rulemaking.

While most healthcare organizations had been in favor of pushing back the start date of the programs, several had asked CMS to maintain mandatory participation. One of them was Pennsylvania’s Geisinger Health System, which had argued in April a mandatory program limited providers’ ability to “game the system” through adverse selection and transfers.

Its response to the cancelation, however, was less critical.

“While the mandatory nature of the current programs would allow more robust data to study the process, there are also unintended consequences,” said John Bulger, DO, MBA, chief medical officer at Geinsinger Health Plan and of population health at Geisinger Health System, told HealthExec. “The (accountable care organization) and (Bundled Payments for Care Improvement) programs have challenging administrative interactions. For providers who want to begin down the value path, having the opportunity to voluntarily participate in bundled payment is a good place to start.”

The American Hospital Association had supported bundled payment models as “programs that could help transform care delivery through improved care coordination and financial accountability.” In a statement to HealthExec, AHA’s senior vice president for public policy analysis and development, Ashley Thompson, said it’s concerned the cancellation may be “disruptive to providers who have expended valuable resources to put these programs in place.”

The Federation of American Hospitals (FAH) had a different opinion. It had argued for the models to be canceled on the basis that mandating participation was beyond CMS’ authority under the Center for Medicare and Medicaid Innovation (CMMI). FAH President and CEO Chip Kahn supported the agency’s decision.

“FAH very much welcomes Secretary Price’s thoughtful efforts to reduce the regulatory burden on providers while at the same time advancing innovations in patient care delivery through voluntary demonstration programs under CMMI,” Kahn told HealthExec. “Today’s proposed rule is an important step in the right direction, and we look forward to providing CMS with our comments.”