CMS Downsizes Bundled Payment Program for Joint Replacements

On Monday, CMS finalized a new Medicare payment model for hip and knee replacements that grants more flexibility in the use of telehealth services, AHA News reports (AHA News, 11/16). Hospitals can benefit in the form of incentive payments once the episode of care is over if the cost of care is below a benchmark price.

The Comprehensive Care for Joint Replacement (CJR) model, which will commence on April 1, 2015, will cover hospitals in 67 areas across the country.

In 2014, more than 400,000 Medicare beneficiaries received a hip or knee replacement, costing more than $7 billion for hospitalizations alone, CMS said.

Joint replacement care – including hospitalization, surgery and recovery – can cost $16,500 to $33,000, depending on the region.

The model also reflects best practices from the private sector, where major employers and leading providers and care systems are moving towards bundled payments for orthopedic services, CMS said.

Second, the model remains mandatory for hospitals in nearly 70 areas, which will allow CMS to evaluate the payment model across a wide variety of providers. Under the rule providers will receive one flat fee for the procedures instead of multiple payments for each individual service they provide related to the replacements. The aim of the company is to foster accountability among hospitals, doctors, nursing homes and home health agencies.

CMS is finalizing a policy for no repayment responsibility in performance year 1; a stop-loss limit of 5 percent in performance year 2; a stop-loss limit of 10 percent in performance year 3; and a stop-loss limit of 20 percent in performance years 4 and 5 for participating hospitals other than rural hospitals, Medicare-dependent hospitals, rural referral centers and sole community hospitals.

The final rule will have significant implications for Medicare payment to participating hospitals and the parameters for relationships between hospitals and other providers that may furnish care to beneficiaries under the model.

Hospital in major metropolitan areas like Southern California, the New York-New Jersey area and South Florida are now included in the new final scheme by Medicare.

Bundled payments hold organizations financial accountable for an episode of care, according to CMS, and push the health care system toward a more coordinated delivery of care model between hospitals and home health agencies. However, the quality and cost of care for these hip and knee replacement surgeries still varies greatly.

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

The Office of Inspector General (OIG) and CMS also jointly announced waivers of certain specified fraud and abuse laws for specified arrangements involving CJR model participants.