Hips don't lie: A look inside CMS' joint replacement bundled payment rule

Dive Brief:

  • HHS and the Centers for Medicare & Medicaid Services’ Innovation Center have finalized the Comprehensive Care for Joint Replacement Model. The model will test bundled payment and quality measurement for hip and knee replacements and/or major leg procedures. 
  • The model is to encourage hospitals, physicians, and post-acute care providers to work together to improve quality and coordination of care throughout an entire episode of care. The model is set to go live April 1, 2016, unless the federal agencies have a cruel sense of humor.
  • This model is being tested in 67 geographic areas throughout the country, and nearly all hospitals in those geographic areas are required to participate.

Dive Insight:

Hip and knee replacements are the most common inpatient surgery for Medicare beneficiaries. In 2014, there were more than 400,000 procedures, costing more than $7 billion for the hospitalizations alone. However, the quality and cost of care for these hip and knee replacement surgeries still varies greatly. The average total Medicare expenditure for surgery, hospitalization, and recovery ranges from $16,500 to $33,000 across geographic areas.

Under this model, the hospital in which the hip or knee replacement and/or other major leg procedure takes place will be accountable for the costs and quality of related care from the time of the surgery through 90 days after hospital discharge.

Depending on the hospital’s quality and cost performance during the episode, the hospital will either earn a financial reward or, beginning with the second performance year, be required to repay Medicare for a portion of the spending above an established target. According to CMS, this payment structure gives hospitals an incentive to work with physicians, home health agencies, skilled nursing facilities, and other providers to make sure beneficiaries receive the coordinated care they need with the goal of reducing avoidable hospitalizations and complications.

Hospitals in the model will be provided access to additional tools -- such as spending and utilization data and sharing of best practices -- to improve the effectiveness of care coordination. The model also gives providers additional flexibilities that are not otherwise available under Medicare so they can better manage the care of patients, including patients who are at home.

CMS state it anticipates providers will be motivated to engage in a number of quality improvements, such as better care coordination and improved care transitions between medical settings that result in better outcomes for Medicare beneficiaries.

“The agency scaled back the initiative from its original plan which included 800 hospitals in 75 locations through the U.S. It also delayed the start date of the model to April 1, 2016. It was supposed to start at the beginning of next year,” Modern Healthcare reported.

CMS and HHS Office of the Inspector General (OIG) will jointly issue waivers of certain fraud and abuse laws for purposes of testing this model.

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Filed Under: Payer
Top image credit: Pixabay / Kaz