Tuesday, 12 April 2016 04:53

The Comprehensive Care for Joint Replacement Bundled Payment Model: Advancing Value-Based Care Goals

Written by Michael McMillan

m mcmillanWith healthcare spending in this country at an all-time high, value-based reimbursement initiatives are continuing to gather momentum across the industry due to their ability to lower costs and improve quality measures. Bundled payments, value-based care strategies that feature payment of a flat price for care associated with a medical condition or event, is one approach that is quickly gaining ground in today’s quality-over-quantity healthcare environment.

In 2014, after more than 400,000 hip and knee replacement surgeries were performed, totaling upwards of $7 billion in hospitalization costs, the Centers for Medicare & Medicaid Services (CMS) recognized an opportunity to bundle these procedures in its efforts to improve patient care, and ultimately, to lower the overall portion of the nation’s healthcare budget spent on patients 65 and older.

And on April 1, 2016, CMS launched its long-awaited Comprehensive Care for Joint Replacement (CJR) model, specifically designed for Medicare beneficiaries to better support their transition from surgery to recovery for hip and knee replacement and other major leg surgeries. As part of the initial five-year test period, 800 participating hospitals and health systems across 67 geographic areas will be held financially accountable for the quality and cost of care during joint replacement procedures, beginning with hospital admission and ending 90 days after discharge.

What is the Intent Behind Creation of the CJR?

Hip and knee replacement surgeries are the most common inpatient procedures performed on the Medicare population today, and often they require an extended recovery period. But even though these surgeries are performed in high volumes, the quality and cost vary drastically from provider to provider, with hospitalization and recovery costs differing by more than $40,000 in some cases. With a number of different care plans featuring their own unique and sometimes conflicting instructions, patients and their caregivers often are left feeling confused about what to do, which can lead to high-cost re-hospitalizations and other undue complications.

Under the new CJR model, CMS is encouraging all involved providers– hospitals, specialists, and post-acute care providers such as rehabilitation and nursing facilities – to work together to provide coordinated, quality care at a reduced, transparent price over the course of the care experience.And even though the CJR model allows beneficiaries the freedom to choose their preferred providers and services, by eradicating cost discrepancies, the federal agency will be better positioned to determine whether or not bundled payments actually reduce Medicare’s overall spending on these procedures while preserving a high quality of care.

Why CJR is Set Up to Succeed

While the CJR pilot may be the newest addition in a widening sea of value-based Medicare reimbursement initiatives, it is built for success. The universe of conditions that will be impacted is clearly defined and somewhat finite. Providers will be incentivized financially to deliver better outcomes and lower costs by coordinating care in a way that best meets patients’ needs, using technology and other strategies to enhance patient engagement. CMS also will share best practices and assist hospitals and health systems in improving care coordination and delivery by providing relevant utilization and spending data.

At yearly checkpoints over the course of the initial five-year program, participating hospitals will be evaluated based on a publicly known risk stratification methodology. Their actual spending for these episodes of care also will be compared to Medicare’s target price. And depending on how well participating hospitals perform against cost and quality measures during each episode of care, they may be eligible for additional payment through Medicare. Conversely, if these provider organizations do not meet the fundamental performance measures laid out in the CJR program, they may be forced to pay back a portion of each episode’s overall cost.

Also, with CJR bundled payments, hospitals are more likely to take preventative measures to ensure cost savings, such as reducing hospital readmissions and extended post-surgery hospital stays, as well as improving care transitions between medical settings.

How CJR Contributes to Value-Based Care

By the end of 2016, CMS aims to move 30 percent of all Medicare fee-for-service payments to alternative value-based payment models such as bundled payments. To meet this goal, hospitals will be required to assume greater accountability for the care they provide: a key tenet of performance-based payment models. Of course, those organizations that are currently participating in shared-risk contracts will have a modest advantage over competing hospitals, but the development of best practices will, in theory, lead to greater efficiencies, improved quality, and cost savings across all of the CJR program’s associated providers of care. For those parts of the country and those institutions that are not part of the first CJR wave, the likely downstream pressures will come from having to achieve similar quality benchmarks and price points set by their peers.

If effective, the complete and successful implementation of the CJR model will enhance and improve the quality and efficacy of care delivered to Medicare beneficiaries. By building on measureable benchmarks set out along a clearly defined timeline, the healthcare system will continue to move toward becoming an industry that continuously delivers high-quality, consistent care at reasonable, transparent prices while also promoting healthier living for the American public as a whole.

About the Author

Michael McMillan is senior vice president for strategic solutions for Valence Health, working with clients to refine approaches to implementing value-based payment and population health solutions.

Contact the Author

This email address is being protected from spambots. You need JavaScript enabled to view it.

Comment on this Article

This email address is being protected from spambots. You need JavaScript enabled to view it.

Last modified on Thursday, 14 April 2016 10:22