Skip to main content

Providers Mostly Bullish on CMS Hip and Knee Bundles

 |  By Christopher Cheney  
   November 30, 2015

Medicare's final rule on its mandatory hip and knee replacement bundled-payment program includes several concessions to hospitals and orthopedic surgeons.

With this month's release of the final rule for the Comprehensive Care for Joint Replacement program, a pair of hospital associations is cautiously optimistic about the mandatory bundled-payment program for hip and knee replacement procedures.


Joanna Hiatt Kim

The changes made by the Centers for Medicare & Medicaid Services "will better enable hospitals to be successful in the program," says Joanna Hiatt Kim, vice president of payment policy at the Chicago-based American Hospital Association.

Jessica Walradt, senior payment reform specialist at the Washington, DC-based Association of American Medical Colleges, says CMS's decision to delay implementation of the mandatory program from Jan. 1 until April 1 "was definitely something we were happy to see."

In addition to the implementation delay, the federal agency made several substantive changes to CJR, [the acronym for the bundled-payment program has been switched from CCJR to CJR] which sweeten the program from the provider perspective. They include:

  • Risk stratifying hip reconstruction episodes of care for cases involving a hip fracture
  • Reducing the number of regions set for mandatory participation in the CJR program from 75 to 67
  • Slowing the pace of change from local-based to regional-based benchmark pricing
  • Reducing the level of downside risk in Year Two and Year Three of the program to 5% and 10%, respectively

Hiatt Kim praises CMS for exempting CJR from two Medicare fraud laws, the Anti-Kickback Statute and the Stark Law. "It protects hospitals that form alliances [and those that] share accountability for shared spending with those collaborators. The program would not have been successful without those waivers," she says.

Risk stratifying CJR for hip fractures will increase the reimbursement level for those procedures because they tend to be complex and prone to complications. This is a crucial change to the bundled-payment program's Final Rule, Hiatt Kim says. "They're breaking out hip fracture patients. That will make sure hospitals that treat a high [volume] of hip fractures are not penalized."

'CMS and Hospitals are in This Together'
CMS should have gone further she says, noting that hospitals that serve the most fragile patients, such as frail seniors, will be challenged to hold the line on episode-of-care spending. "We are fearful that lack of risk adjustment is going to penalize hospitals with more complex patients, and reduce participation in the program," Hiatt Kim says. "We will continue to look at ways for CMS to risk adjust this program more comprehensively."

While CMS has made several steps in the right direction to improve CJR, more improvements are necessary, she says. "The biggest concern is that hospitals are at different points in this process. Some are ready, and they are going to do very well. Others are not ready, and it will absolutely be a challenge for them."
 
The number of conciliatory changes CMS made to the proposed version of CJR indicates that federal officials are willing to adjust their most ambitious bundled-payment initiative, Hiatt Kim says. "CMS did realize this is different from their other payment systems, and they obviously need hospitals to be successful."

"At this point," she says, "CMS and hospitals are in this together."

Bullish on Bundles
Donna Cameron, FACHE, managing director at Chicago-based Navigant Healthcare, a consultancy, says CJR is a new and improved version of Medicare's first foray into bundled payments, the Bundled Payments for Care Improvement (BPCI) initiative.

"We see BPCI as a framework for how bundled payments are going to play out in 67 markets," she says and adds that that CMS limiting risk stratification in the bundled-payment program is unlikely to be a fatal flaw. "Data that CMS is gathering from BPCI shows increased quality, decreased length of stay, and lower post-acute care costs. Even though the methodology may not be a perfect payment model initially, we are typically seeing reductions in post-acute care costs and hospital readmissions."

An essential element of BPCI and CJR is data, Cameron says.

BPCI and CJR participants gain access to a wealth of Medicare claims data across multiple settings, including acute care, post-acute care, and home care, which generates comprehensive patient service-utilization data for hospitals and surgeons, she says. "The claims data informs them not only about what is happening in the hospital but also what's happening in the post-acute care setting."

Accessing and analyzing extensive claims data is one of five items on a "short list of key success factors" for CJR, Cameron says. "Use the data. We now have data for the 90 days we are serving the patients. The data gives us information that, historically, hospitals have not had to across the care continuum. The data shows where there are opportunities to improve care."

The other items on Cameron's short list of CJR bundled-payment success strategies:

  • Engaging physician leaders as pivotal participants in the design of 90-day episodes of care for hip and knee replacement, which includes pre-operative care, surgery and acute-hospital stay, post-acute care, and home care
  • Establishing post-acute care networks based on quality and cost-control standards
  • Enhancing care coordination and care navigation to boost transitions across the care continuum
  • Embracing a "leading practices" care philosophy over adoption of best practices "because best practices continue to change"

Hospitals will adapt and engage at differing paces.  "We're really encouraging clients to get started right away so they can gain some momentum," Cameron says. "We are encouraging our clients to get going. There is no downside risk in the first year. A lot of learnings have already occurred in the BPCI program."

When CMS launches its first mandatory bundled-payment program in the spring, CJR appears poised to accelerate the pace of the federal agency's efforts to link payment to value.

Christopher Cheney is the CMO editor at HealthLeaders.

Tagged Under:


Get the latest on healthcare leadership in your inbox.