According to the Centers for Medicare and Medicaid Services (CMS), hip and knee replacements are the most common inpatient surgeries, with 400,000 procedures being performed in 2014 alone. .Not only do they require long recovery and rehabilitation periods, but they can be very expensive. And their actual quality, in and out of the hospital, can vary, depending on the area and facility. Much of this flexibility stems from how Medicare pays for these surgeries.
However, the government is taking steps to address this, issuing new legislation calling for a mandatory bundled payment system. This initiative seeks to reward quality over quantity in healthcare. Those hospitals performing well will be financially rewarded, while poorer performers will have to pay the government. Ideally, Medicare providers and suppliers will cooperate to improve these procedures’ quality and reduce patients’ financial obligations.
Costs and quality vary nationwide
The Centers for Medicare and Medicaid Services (CMS) estimates that lower extremity joint replacement (LEJR) procedures cost more than $7 billion in hospitalizations alone. The average cost to Medicare can vary widely under the current system, with different geographic areas ranging from $16,500 to $33,000. However, patients aren’t assured of the same level of quality, both inside the hospital and outside, following the procedure.
This can depend on specific geographical regions and facilities, due to Medicare’s payment methods. In most cases, Medicare distributes the cost among multiple providers, so that no single company is 100 percent responsible. The end result is that patients may receive fragmented care, with negative outcomes occurring.
As such, the CMS revealed the Comprehensive Care for Joint Replacement (CJR) model. This new mandatory bundled payment system is designed for lower extremity joint replacement (LEJR) services, in 67 nationwide geographic areas. Essentially, it will save money by incentivizing hospitals to reduce the number of avoidable surgery-related complications.
A “carrot and stick” situation
The idea is to move away from what is viewed as an inefficient system of paying individually for each service a hospital provides. Rather, the government wants to reward coordination and quality. Facilities performing well, in terms of quality and cost measures, would be financially compensated. But those not found to perform well would have to pay some money back. “By focusing on episodes of care, rather than a piecemeal system, we provide hospitals and physicians an incentive to work together to deliver the best care possible to patients,” stated Secretary Sylvia Burwell of the Dept. of Health and Human (HHS), which oversees the CMS.
In January 2016, Burwell announced the goal of basing 30 percent of Medicare payments off this new payment system by 2016, and 50 percent by 2018. But to ensure that hospitals are well-prepared, the CMS has given them more time. The agency also set limits on how much hospitals could have to pay the government back in the program’s early years.
Under the CJR model, the acute care hospital where the LEJR procedure occurs is responsible for total Medicare expenditures, as well as the overall quality of related care. The hospital is held accountable from the time of the surgery through 90 days after hospital discharge. Therefore, they must ensure that patients get their necessary coordinated care. This includes working with post-acute care providers, such as home health agencies and skilled nursing facilities.
The CJR model will encourage hospitals to carefully consider individual patients’ needs. This should encourage providers to ensure quality improvements, like better care coordination and improved transitions between medical settings. And, these measures will help the HHS to meet its goals of better care, smarter spending and healthier people in the American healthcare system.