Healthcare News & Insights

Bundled payments effective for hip, knee surgery: Next steps

Recently, talk of bundled payments for certain procedures and episodes of care has taken a back seat to other healthcare news. But they’re still on the feds’ minds, and the results of recent research may push them to the forefront again. 

According to a review of the Medicare Comprehensive Care for Joint Replacement (CJR) payment model published in the New England Journal of Medicine, hospitals participating in the program reported lower costs for hip and knee replacements than facilities that didn’t participate.

Program specifics

The CJR payment model was first implemented in 2016. Medicare required hospitals in randomly selected areas to participate in the program. Facilities received bonuses or penalties depending on how well they met the program’s requirements and hit spending targets.

To evaluate CJR’s effectiveness in its first two years, researchers examined thousands of claims for knee and hip replacements from hospitals across the country. The data showed that hospitals in the CJR payment model spent an average of 3.1% less on each hip and knee replacement than other facilities, and despite having lower costs, complications for patients didn’t increase.

Per the study, fewer patients at hospitals in the CJR program were discharged to post-acute care facilities after their surgeries, which likely explains the difference in costs.

Future of bundled payments

Although the decrease in spending was relatively modest for the CJR program, the results are still significant, since many other federal bundled payment initiatives were implemented in hospitals on a voluntary basis. The CJR program was one of Medicare’s first mandatory, randomized bundled payment programs, and it still managed to help hospitals save costs.

This will likely encourage the feds to expand the program to different geographical areas – or to create similar bundled payment programs for other types of surgeries or episodes of care (e.g., maternity care).

The Trump administration did relax some of the rules for the CJR payment model, only making it mandatory in certain cases. However, that won’t necessarily stop payors from strongly encouraging hospitals to participate in similar initiatives down the line.

Because of the continued shift toward paying hospitals based on the quality of care they provide, not the quantity of care, bundled payments will only become the norm with Medicare and private payors as they attempt to reduce healthcare spending while improving patient outcomes.

To thrive in this environment, hospitals will want to examine the successes of their peers who are participating in bundled payment programs and other value-based initiatives and take a hard look at their own care protocols to see where improvements can be made.

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