Bundled Payments for Hip and Knee Replacement: Working as Planned?
When Medicare’s Comprehensive Care for Joint Replacement (CJR) program was implemented in 2016, the health care community—especially orthopaedic surgeons— had 2 major concerns. First, would the program actually demonstrate the ability to decrease the costs of total joint replacements while maintaining the same, or improved, outcomes? Second, would CJR promote the unintended consequence of participating hospitals and surgeons ”cherry picking” lower-risk patients and steering clear of higher-risk (and presumably higher cost) patients? Both of these questions were at the heart of the study by Barnett et al. in a recent issue of the New England Journal of Medicine.
The authors evaluated hip and knee replacements at 75 metropolitan centers that were mandated to participate in the CJR program and compared the costs, complication rates, and patient demographics to similar procedures at 121 control centers that did not participate in CJR. The authors found significantly greater decreases in institutional spending per joint-replacement episode in institutions participating in the CJR compared to those that did not. Most of these savings appeared to come from CJR-participating institutions sending fewer patients to post-acute care facilities after surgery. Furthermore, the authors did not find differences between centers participating in the CJR and control centers in terms of composite complication rate or the percentage of procedures that were performed on high-risk patients.
While this 2-year evaluation does not provide the level of detail necessary to make far-reaching conclusions, it does address two of the biggest concerns related to CJR implementation from a health-systems perspective. There may be individual CJR-participating centers that are not saving Medicare money or that are cherry picking lower-risk patients, but overall the program appears to be doing what it set out to do—successfully motivating participating hospitals and healthcare facilities to look critically at what they can do to decrease the costs of a joint-replacement episode while simultaneously maintaining a high level of patient care. The Trump administration shifted CJR to a partly voluntary model in March 2018, and I hope policymakers consider these findings if further changes to the CJR model are planned.
Chad A. Krueger, MD
JBJS Deputy Editor for Social Media
Could Bundled Payments Work with Cervical Fusion?
The answer to that question depends largely on how much the 90-day episode of care actually costs. Virk et al., in the August 17, 2016 edition of JBJS, provide benchmark data that could help policymakers design bundled payments for cervical fusions that are economically viable for providers.
The authors analyzed the Medicare 5% National Sample Administrative Database and found that 4,506 patients in that cohort underwent a one to two-level anterior cervical discectomy and fusion (ACDF) for cervical radiculopathy from 2005 to 2012. The mean cost per patient of the procedure plus the 90-day postoperative period was $15,417. The physician reimbursement represented 20.4% of that total, with the surgeon receiving 18% of the total. Reimbursements for hospitals for inpatient care represented nearly 73% of the total reimbursement. The study did not account for reimbursements from “Medigap” plans or private payers.
The authors also analyzed data from the same database for 90-day episodes of care related to total knee arthroplasty (TKA). The mean per-patient reimbursement for TKA patients was $17,451. The authors noted significant regional variation in reimbursement for ACDF, with the lowest rates in the Northeast and Midwest and the highest rates in the West.
Among the conclusions made by Virk et al. is the following: “Although payments to physicians have been implicated in the rise of health-care costs, the data suggest that the greater opportunity for reducing expenses involves hospital-related reimbursement.”
Click here for more OrthoBuzz coverage of bundled payments in orthopaedics.
Insight into Bundled Payments for Orthopaedics
“Alternative payment models are here to stay,” according to an AOA Critical Issues article by Greenwald et al. in the June 1, 2016 issue of The Journal of Bone & Joint Surgery. The article identifies successful implementation strategies related to the Bundled Payments for Care Improvement (BPCI) initiative launched by the Centers for Medicare and Medicaid Services (CMS) in 2013.
Alternative payment models represent an opportunity to reduce costs by eliminating waste and unwarranted variation in care by finding efficiencies within the system. One way to achieve this is through gainsharing incentives that align hospitals, physicians, and post-acute care providers in the redesign of care. But participants also assume financial risk.
Orthopaedics plays a big role in the BPCI risk-reward initiative. Sixteen of the 48 clinical “episodes of care” included in BPCI are orthopaedic-related. Moreover, three episodes (major lower-extremity joint replacement, femur/hip/pelvis fractures, and “medical non-infectious orthopaedic”) account for 40% of the 16 orthopaedic episodes being evaluated.
The nuts and bolts—and risks and rewards— of the initiative are well-described in the article, but here are several pearls extracted therefrom:
“Care improvement activities and care redesign…are the necessary prerequisites before entering into bundled payment arrangements.”
“The financial risk is real [because] outliers, those patients whose cost is substantially higher than the mean patient cost, cannot be controlled.”
“It is important that the physician or surgeon responsible for the patient is involved in all stages of the episode of care and interacts with all of the parties involved.”
“Specific to orthopaedics, there are substantial opportunities for cost savings by integrating preoperative and intraoperative processes, reviewing implant purchasing options, and negotiating post-acute care costs.”
“Changes in care delivery often require … managing patient expectations.”
CMS Delays Start of Joint-Replacement Bundled Payments til April 1, 2016
The final rule from the Centers for Medicare & Medicaid Services (CMS) regulating “episode-of-care” Medicare payments to hospitals for hip and knee replacements includes a postponed start date of April 1, 2016. The originally proposed implementation date was January 1, 2016.
Approximately 800 hospitals nationwide are subject to the new payment model, which makes hospitals eligible for bonuses or penalties, depending on their quality and cost performance from the day of patient admission to 90 days post-discharge. Based on comments about the initial rule by 400 key stakeholders, CMS also agreed to eliminate penalty payments during the first year of implementation.
Because the CMS model—dubbed Comprehensive Care for Joint Replacement, or CJR—permits gainsharing, individual orthopaedic surgeons could benefit financially if hospitals they are affiliated with receive bonuses. The AAOS commended CMS for revising the methodology for calculating the composite quality score and said that the delayed implementation “adds some flexibility,” but the group is still calling for CMS to “postpose the mandatory implementation feature of the program until at least 85 percent of providers have attained meaningful use [of EHRs] or another metric of infrastructure readiness.”
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