In a bold new test of value-based reimbursement, the Centers for Medicare and Medicaid Services on April 1, 2016, put into effect the first phase of its Comprehensive Care for Joint Replacement (CJR) model. In this initial period, all hospitals in 67 metropolitan areas, including New York and Los Angeles, are required to participate.
Under the CJR model, Medicare is changing the way it reimburses for hip and knee replacements — also known as lower extremity joint replacements — in an effort to increase the quality of care and reduce costs. According to CMS, the CJR model will test “bundled payment and quality measurement for an episode of care associated with hip and knee replacements to encourage hospitals, physicians, and post-acute care providers to work together to improve the quality and coordination of care from the initial hospitalization through recovery.”
Greater Accountability Is Goal
This trial of the CJR model is part of a broader effort under the Affordable Care Act to align traditional Medicare with changes pushing the overall American health care system toward greater accountability. Under the first phase of this program, hospitals and surgeons performing CJR procedures will be accountable for not only the quality of care but also its cost from the date of surgery until 90 days after each patient is discharged from its facility. Each such period will be considered an “episode of care” under the new reimbursement scheme.
If knee and hip replacement patients recover quickly and go home, hospitals could realize savings. If, however, patients develop complications or require lengthy stays in a rehab facility, hospitals could end up owing CMS instead.
According to CMS, knee and hip replacements are the most common inpatient surgery for Medicare beneficiaries. Such procedures often involve lengthy periods of recovery and rehabilitation. In 2014, more than 400,000 such procedures were billed to CMS. The price tag of the hospitalizations alone for these procedures was more than $7 billion. The agency points out that the quality and cost of care for these lower extremity joint replacements vary sharply from one provider to another.
Rate of Complications Varies Widely
As an example, CMS notes that the rate of complications, such as post-surgical implant failures or infections, can be three times higher at some facilities than it is at others. In such cases, patients experience extended stays in the hospital after surgery or in other cases may need to be rehospitalized when such complications develop. The average Medicare expenditure for joint replacement surgery, hospitalization, and recovery ranges from $16,500 to $33,000 across geographic areas, says CMS.
This wide variation in the cost of care is due in part, says CMS, to the way in which Medicare beneficiaries currently receive care. Under the current system, incentives to coordinate an entire episode of care — from surgery to recovery — are not strong enough, and as a result, patient health sometimes suffers. In the view of CMS officials, this failure to take a broader view of the entire spectrum of care can result in missing critical information or a failure to coordinate across multiple care settings. This lack of coordination across each episode of care “leads to more complications after surgery, higher readmission rates, protracted rehabilitative care, and variable costs. These are not the health outcomes patients want.”
Alternative Payment Models
The new value-based approach to reimbursement for knee and hip replacement surgeries will be a step toward the Obama administration’s goal of having 30 percent of all Medicare fee-for-service payments made via alternative payment models by the end of 2016. The ultimate goal is to move 50 percent of Medicare’s fee-for-service payments to alternative payment methods by the end of 2018.
In its online description of the CJR model, CMS notes that effective implementation of the model “will improve the quality and efficiency of care for Medicare beneficiaries, which is essential to creating a healthcare system that delivers better care, spends our dollars more wisely, and leads to healthier Americans.”
As previously noted, the first phase of the CJR model implementation is limited to hospitals within the 67 metropolitan areas. Together, these hospitals perform about one-third of the hip and knee replacements that Medicare covers each year. According to CMS, the new reimbursement scheme is expected to save $343 million over the next five years.
Benefits for Medicare Beneficiaries
For Medicare beneficiaries, CMS says that the closer coordination of care required under the CJR model should lead to better overall patient experiences, fewer complications, and better outcomes. Another added protection for beneficiaries will be closer monitoring of claims to confirm that hospitals have provided all essential services.
In its explanation of the CJR model and how it will affect Medicare beneficiaries, CMS emphasizes that patients will still be able to select the physician, hospital, skilled nursing facility, home health agency, and other provider of their choice. But under the new reimbursement program, all these providers will have a greater incentive to coordinate care across these multiple settings. “From surgery to recovery, patients can receive more comprehensive, coordinated care from their providers focusing on the most appropriate options for their recovery and rehabilitative care.”
In an article posted at WSJ.com, Wall Street Journal columnist Melinda Becker notes that a handful of the nation’s top hospital systems have been offering fixed-price packages for joint replacement and cardiac surgeries for years. However, many other hospitals have not yet been able to get a sufficient grip on their costs to follow suit.
Oakland, California, orthopedic surgeon Thomas Barber, M.D., is chairman of the American Academy of Orthopaedic Surgeons Council on Advocacy. He expressed concerns about the impact that Medicare’s new CJR model will have on many hospitals. “We’re concerned that very few hospitals and physicians have developed the infrastructure necessary to meet this deadline,” Dr. Barber told the Wall Street Journal.
In an interview with Associated Press, San Diego-based orthopedic surgeon Alexandra Page, M.D., also a member of AAOS, acknowledged that Medicare’s goal is a good one — “they want to see where you can cut the waste out.” However, she expressed concern that the new program may lead to “cherry-picking . . . hospitals are only going to want to have the patients who are going to do well.”
CMS Doubts That Will Happen
Of Dr. Page’s concerns about cherry-picking, a CMS spokesman said such a development is unlikely because the CJR model was designed so that hospitals can continue to treat a wide variety of patients.
Joe Baker, president of the Medicare Rights Center, an advocacy group based in New York City, told AP that his organization is generally supportive of the new initiative “because we think it can increase quality and decrease costs.” He said, however, that to work well, it will be critically important that providers be closely monitored.
If you’d like to read additional articles on topics of interest to health consumers, check out our blog.
We specialize in providing our over 1,000,000 customers with relevant product and condition information created by our professional editorial staff which includes our team of medical writers, medical practitioners, and health educators. eDrugStore.com Staff on Facebook