Comprehensive Care for Joint Replacement: A Bundled-Payment Primer

In a push to support more efficient care for beneficiaries, the Centers for Medicare & Medicaid Services (CMS) is implementing bundled payments and quality metrics for numerous clinical episodes, including hip and knee replacement surgeries.

At the Interdisciplinary Conference on Orthopedic Value-Based Care, Kelly C. Price outlined the fundamentals of the Comprehensive Care for Joint Replacement (CJR) model, which holds participating hospitals financially accountable for the cost and quality of a joint replacement “episode of care.”

“The rules of this bundle can dramatically affect the financial performance of your program, which is why it’s important to have policy reflection on your team,” said Ms. Price, vice president and chief of health care data analytics at DataGen, a HANYS Solutions Company, in Rensselaer, N.Y. “Hopefully, these new regulations will incentivize increased coordination of care from the initial hospitalization through recovery.”

As Ms. Price reported, despite the high volume of hip and knee replacement surgeries, quality and cost vary considerably among providers in the United States. In order to encourage hospitals, physicians and post-acute care providers to improve quality and coordination of care, CMS implemented the CJR model in 67 metropolitan statistical areas (MSAs). Except for those participating in Bundled Payments for Care Improvement (BPCI) for particular diagnosis-related groups (DRGs), all hospitals in these areas are required to participate in the CJR pilot program, which will run for approximately five years (i.e., April 2016 to Dec. 31, 2020).

“CMS is looking at the total costs for different types of services provided to patients during the entire episode of care—from anchor stay to all post-acute care, and physician visits that are provided up to 90 days post-discharge,” Ms. Price said.

An episode of care begins with admission to a participating hospital for lower-extremity joint replacement (discharge under MS-DRG 469 or 470) and ends 90 days post-discharge. While so-called “unrelated services,” like trauma and heart attack, are excluded from the episode, Ms. Price noted, exacerbations of chronic conditions in patients are considered related.

“That’s why pre-optimization is important here,” she observed.

Nevertheless, CMS is providing a stop-loss for episode outliers—i.e., exceptionally complicated cases.

“For purposes of calculating the target and performance period, any spend higher than 2 standard deviations above the average will be removed,” she said. “CMS wants providers to manage these patients, but won’t hold those runaway costs against you.”

Prospective Targets

With the CJR program, Ms. Price said, hospitals “own” the bundles: They are at risk for Medicare spending in excess of target prices and are rewarded for Medicare spending below these amounts. Moreover, these target prices are prospectively set, which is “very different” from BPCI.

“CMS heard many complaints about this literally moving target, which creates a level of uncertainty and distrust. Thus, with the CJR model, hospitals will know their targets ahead of time and these will not change,” said Ms. Price, who emphasized, however, that this is not a shared-savings program.

“Depending on the program, CMS is going to take off 2% to 3% from the start, which will serve as the basis for your target for each patient,” she said. “If business proceeds as usual, that means you’re already 2% behind.”

Although initially based on an individual hospital’s experience (a three-year historical average), these targets increasingly will reflect regional experience. By the fourth year of the model, Ms. Price noted, targets will be based entirely on regional experience (one of nine U.S. census regions) and neutralized for wage index, indirect medical education and disproportionate hospital adjustments. “It’s much more important to be focused on regional performance in the long term.”

According to Ms. Price, performance on quality metrics in the CJR program also influences the discount factor—the amount of money that is returned to providers or owed to CMS.

The two mandated quality measures in the CJR model are complications of elective total hip/knee arthroplasty and the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) patient satisfaction survey.

“Your performance on quality measures is going to impact your target,” Ms. Price explained. “Even if you saved CMS money, if you perform below a certain level of quality, you won’t benefit from those savings. However, if you perform exceptionally well on these quality measures, the discount factor that CMS applies goes down.”

Zeev N. Kain, MD, MBA, FAAP, president of the American College of Perioperative Medicine; Chancellor’s Professor of Anesthesiology & Pediatrics & Psychiatry; and chair of the Department of Anesthesiology & Perioperative Care at University of California Irvine Health, highlighted geographic differences in patient admissions to skilled nursing facilities (SNFs) following hip and knee replacement surgeries.

“There is a huge variability around the country in the number of patients being sent home,” Dr. Kain observed. “This may have something to do with the availability of SNFs, but I also believe that culture plays a role.”

Ms. Price agreed that bypassing SNFs is a concern, but noted that post-acute care providers are beginning to develop new models of care, too.

“The more forw ard-thinking skilled nursing providers are trying to figure out how to transition their own businesses so that they can offer other levels of service as well.”