Hospitals see 'modest' 3% savings using Medicare joint replacement model, study finds
The first two years of the mandatory Comprehensive Care for Joint Replacement bundled payment model for hip or knee replacement saw a "modest reduction" of 3% in spending for those two procedures, according to a new study in the New England Journal of Medicine.
Hospitals in the CJR model saw a larger decrease in spending per joint replacement episode than those in the control group. That reduction was caused by a nearly 6% drop in the percentage of episodes in which patients were discharged to post-acute care facilities.
The CJR facilities didn't see a significant difference in complications or percentage of joint replacement procedures for high-risk patients.
CMS launched CJR in 2016 in an effort to hold hospitals accountable for episode-of-care spending, including up to 90 days post-discharge. Hospitals that reduce spending without sacrificing quality receive financial incentives.
The agency randomly selected hospitals to take part in the bundled payment program at the time, which was during President Barack Obama's administration. The current CMS prefers voluntary bundled payment programs to mandatory initiatives. Though supporters say this gives more flexibility to providers, critics of voluntary programs say it leads to self-selection. Also, they charge that CMS doesn't learn from the programs since it doesn't involve a larger cross-section of facilities.
NEJM researchers analyzed Medicare claims from 2015 through 2017, reviewing more than 280,000 hip or knee replacement procedures in 803 hospitals. They compared that to more than 377,000 procedures in 962 in control areas.
Overall, institution spending on hip or knee replacement episodes dropped from nearly $26,000 to less than $24,000 in the treatment group. The control group's per-episode spending fell from about $24,600 to $23,238. The average net reduction in total Medicare spending per episode after Medicare reconciliation payment was $212 per episode.
The researchers said changing the use of post-acute care services was the key to the savings.
"Post-acute care services may be the easiest target for hospitals to decrease episode-level spending because it is often unclear when these services are beneficial or what intensity of post-acute care is most appropriate," they wrote.
The first two years of the CJR saw modestly reduced payments per episode, but the decrease grew over an 18-month period. Researchers wondered whether this shows that CJR could "lead to greater reductions in payments as hospitals adapt to the new payment model."
The 3% reduction in payments "was significantly offset by bonuses paid by Medicare to hospitals with spending below their CJR benchmark, although even after these payments, there was a small net savings," according to the report.
The researchers also found CJR didn't have a significant negative effect on the use of hospitals after discharge or on mortality.
Though CMS has pushed for more voluntary bundled payment programs, the long-term future of bundled payments remains a question, especially given the limitations of voluntary programs.
CMS is already nudging providers to take on more risk in the Medicare Shared Savings Program, recently announcing its "Pathways to Success" plan, which encourages accountable care organizations to take on risk more quickly. If CMS wants to push more hospitals to try value-based payment models, the agency may need to create a similar movement for mandatory bundles and demand providers take on more risk.
- New England Journal of Medicine Two-Year Evaluation of Mandatory Bundled Payments for Joint Replacement