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CMS Finalizes Rule for Joint Replacement Bundled Payments

Posted in Health Reform Watch | Nov 2015 | Comments (0)

Tags: Editor's Choicehip replacementmedicaremedicaidhealthcare in americakneehipCMSbundled payment

The Centers for Medicare & Medicaid Services (CMS) finalized its rule for joint replacement bundled payments and in so doing, pushed the program’s start date three months into the future and decreased the number of participating hospitals. Hospitals in 67 metropolitan areas—a decrease from the proposed 75—will need to comply with the Comprehensive Care for Joint Replacement (CJR) model beginning April 1, 2016. CJR, the new acronym named in the final rule, is a mandatory initiative rolled out by CMS as it seeks to hit its value-based payment goals.

Through the model, CMS is promoting the ability of hospitals, surgeons and post-acute care providers to work together to improve quality of care, while simultaneously decreasing expenditures for DRG 469 and 470. Each bundle will include the time of surgery through 90 days after hospital discharge. CMS set geographically-based prices for a total hip and total knee replacement, and starting in the second year, hospitals will be asked to reduce their costs. If a hospital is able to create savings of more than two percent, the difference in savings is returned to the hospital. If hospitals do not meet the two percent reduction rate, they must pay back the difference between the two percent and their actual costs. The rule includes a quality component, whereby hospitals will need to demonstrate that they hit certain metrics in order to reap the savings. Hospitals will be incentivized with a target of 1.7 percent instead of two percent if they submit patient-reported outcomes as inclusion in quality metrics.

What does this mean for you, the surgeon? CJR includes gain sharing. Hospitals are able to share internal cost savings or CJR reconciliation payments for up to 50 percent above the Physician Fee Schedule payments. An effective bundled payment program involves surgeon leaders; hospital administrators understand that. It’s imperative that surgeons make their ideas heard and are fairly compensated for their ability to drive quality and savings.

CJR is a five-year model that runs from April 1, 2016 to December 31, 2020. During that period, CMS expects savings of $343 million. Hip and knee replacement was chosen because of the wide variation in expenditures: from $16,500 to $33,000 for surgery, hospitalization and recovery. More than 400,000 procedures were completed in 2014, at a cost of more than $7 billion for the hospitalization alone.

The rule is set for publication in the Federal Register on November 24. 

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