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Hospitals Eye Continued Red Ink for CJR Bundles

By Christopher Cheney  
   August 09, 2017

Hospital expectations remain low for financial performance in the first year of the mandatory bundled-payments program for hip and knee replacements.

Last year, a majority of hospitals expected to lose money in Medicare's mandatory bundled-payment program for hip and knee replacement procedures. The outlook appears to have brightened—slightly.

"We are hearing from many of the hospitals with which we work that the first two-to-three quarters have been challenging, and most opportunities for episode savings are in post-acute costs: rehab and skilled nursing facility (SNF) utilization," Christopher Stanley, MD, MBA, a director at Chicago-based Navigant Consulting said this week.

"It's a bit too early to generate a broad view of how hospitals are performing in 2017 when downside penalties kick in, though we expect many hospitals will incur a penalty under the program in 2017."

On April 1, 2016, the Centers for Medicare & Medicaid Services imposed mandatory participation in bundled payments for hip and knee replacement procedures for about 800 hospitals under Medicare's Comprehensive Care for Joint Replacement reimbursement model.

In two hospital surveys last year, the majority of hospitals polled reported they were not ready for CJR. A FORCE-TJR survey found 56% of hospital orthopedics programs reported being unprepared for CJR.

Avalere Health, a consulting firm, released survey results indicating that 60% of the hospitals required to participate in CJR could lose money in the bundled-payment model when downside risk began in January.

Last year, Fred Bentley, vice president of Avalere's Center for Payment & Delivery Innovation, said he was not surprised over widespread lack of preparedness for CJR.

"[Providers] have really been focused on the care of patients in the four walls of the hospital and not really on the post-discharge side. They have been focused on growing their orthopedics volume and their referrals, and now they're going to be focused on the entire episode. And that's a big shift."

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.


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