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Finding Joy in Bundled Payments

 |  By Christopher Cheney  
   July 22, 2015

Long-term gains appear to outweigh short-term pains from adoption of bundled payments for hip and knee replacement procedures, a pair of healthcare payment experts says.

Healthcare providers experiencing high anxiety over Medicare's bundled payment initiative should calm their nerves with the sage advice of the Chinese philosopher Lao Tzu: "A journey of a thousand miles begins with a single step."

This month, the Centers for Medicare & Medicaid Services proposed mandatory bundled payments for hospital-based hip and knee replacement procedures. Mandatory is a scary word in nearly any healthcare reform scenario, and the proposed Comprehensive Care for Joint Replacement (CCJR) payment model has generated a significant measure of provider consternation, including fear over the financially punitive potential of assuming full risk for episodes of care for inpatient surgical procedures such as hip replacement.

On July 9, CMS officials released a fact sheet highlighting key features of the CCJR bundled payment model:

  • An episode of care for hip and knee replacements would begin at surgery and end 90 days later. Hospitals "would be accountable for the costs and quality of care."
  • Medicare would set quality metrics and pricing benchmarks for the joint-replacement episodes of care. "Depending on the hospital's quality and cost performance during the episode, the hospital would either earn a financial reward or be required to repay Medicare for a portion of the costs."
  • In addition to holding hospitals accountable for the cost and quality of care, the CCJR bundled payment model is designed to boost care coordination "with the goal of reducing avoidable hospitalizations and complications."

The public comment period for the CMS bundled payment proposal closes on Sept. 8.

T. Clifford Deveny, MD

Over the past week, I reached out to two healthcare payment experts for operational and theoretical perspectives on the CMS bundled payment model for hip and knee replacements. From their vantage points, there are no obvious alternate routes to the bundled payment course CMS is setting.

Orthopedics Bundled Payments Are a Classroom for Value-Based Care

No Obvious Alternatives
Bundled payments encourage providers to deliver services cost-effectively without compromising quality, according to T. Clifford Deveny, MD, senior vice president for physician services and clinical integration at Catholic Health Initiatives. The Englewood, CO-based nonprofit health system operates more than 100 hospitals in 19 states.
"It's high time we start to create realistic boundaries between our expectations for healthcare and our resources," Deveny told me last week. "There is enough data now from the [CMS] pilot programs to show that bundled payments work, and orthopedics is probably an area where 'spend' is going to explode in Medicare."

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

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