Healthcare News & Insights

Bundled payments coming for joint replacement surgery

Bundled payments for common surgeries are coming sooner than you may think. In fact, for many hospitals, they’ll be starting for two routine joint replacement surgeries as early as next year – according to a new proposed rule from the Centers for Medicare & Medicaid Services (CMS). 

Pen stethoscope glasses and dollar on blank Patient information - this is not the most hygienic place to put your stethoscopeIn the rule, published on the Federal Register, CMS announced that it’ll require hundreds of hospitals to participate in a new form of payment for hip and knee replacements called the Comprehensive Care for Joint Replacement (CCJR) Model.

Previously, CMS allowed hospitals to participate in a bundled care model for joint replacement surgery on a voluntary basis.

But soon hospitals in several regions across the country will have to participate. Regions range from large metropolitan areas such as New York City, Las Vegas and San Francisco to smaller areas such as Naples, FL; New Haven, CT; Reading, PA; and Tuscaloosa, AL.

Only critical access hospitals are excluded from the new CCJR model.

Trial run

The CCJR model will be tested for five years. During each year, hospitals will be paid for joint replacement surgery under the normal Medicare fee schedule, but they’ll face paybacks at the end of the year if CMS finds the care they administered to patients is more expensive than the targeted bundled payment price.

However, if a hospital provides high-quality care at a lower cost than the bundled payment price, CMS will pay the hospital a bonus equal to the difference. And for paybacks, the amount a hospital owes CMS can be adjusted based on how well the facility meets the agency’s quality benchmarks.

As time goes on, hospitals will assume more risk depending on patient outcomes. That means they could receive even steeper pay cuts down the line for failing to provide quality care.

If the model’s successful, CMS is likely to expand it to more hospitals.

Bundling rationale

One of the biggest reasons why CMS is making this move is to lower healthcare spending. As written in an article from Modern Healthcare, after years of declining, spending is increasing again. The agency thinks that bundled payments for joint replacement surgeries may help curb that trend, while encouraing hospitals to think of ways to avoid complications after surgery, including postoperative infections.

CMS hopes the CCJR model will not only cut costs and improve quality, but also boost care coordination for patients between hospitals and other providers. Hospitals will be expected to help patients avoid complications that could cause additional hospital stays by working closely with primary care physicians and various specialists to provide the appropriate follow-up care.

Future for hospitals

This news comes on the heels of a study from U.S. News and World Report showing that hospitals across the country vary widely in how well they perform common surgeries – including joint replacement surgeries. Facilities who perform these procedures often have better patient outcomes than hospitals that don’t.

If the CCJR model expands to all hospitals, low-volume facilities with poorer patient outcomes may have trouble staying afloat. Even middle-of-the-road hospitals could see their bottom lines suffer.

Since the new model is still it its pilot phase, hospitals have time to take a closer look at their joint replacement surgeries to see what areas they need to work on to provide higher quality care through the whole process, from the initial surgery to the patient’s discharge and recovery.

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