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Majority of Hospitals Eye Losses in CJR

Analysis  |  By Christopher Cheney  
   April 04, 2016

Hundreds of hospitals are apparently unprepared for Medicare's Comprehensive Care for Joint Replacement reimbursement model, survey data shows, but proponents say there is still time to get on the bundled payments bandwagon.

Federal officials are not fooling around when it comes to bundled payments.

On April 1, the Centers for Medicare and 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 (CJR) reimbursement model.

In two hospital surveys released last month, the majority of hospitals polled report they are not ready for CJR. A FORCE-TJR survey found 56% of hospital orthopedics programs report being unprepared for CJR. Last week, the Washington, DC-based consultancy Avalere Health 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 begins in January 2017.

Despite these dire survey results, Christopher Stanley, MD, vice president of Englewood, CO-based Catholic Health Initiatives, says bundled payment late-adopters can catch up with the early-adopters such as hospitals and orthopedic surgeons who have been participating in Medicare's Bundled Payment for Care Improvement (BPCI) initiative. "Take advantage of these first three quarters. Look at this as an opportunity," he suggests.

CHI, which operates more than 100 hospitals in 19 states, is prepared for CJR mainly because the health system has a couple years of experience with BPCI, Stanley says. But the sprawling nonprofit healthcare provider is far from complacent. "Even though we are very advanced in this and have been doing it for two-and-a-half years, we are constantly re-evaluating and changing our programs. This is not a short-term project. This is a fundamental shift in how healthcare is provided and how it is paid for," he says.

Fred Bentley, vice president of Avalere's Center for Payment & Delivery Innovation, is not surprised at the 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."

Under the CJR bundled payment model, each participating hospital will be given a target price for hip and knee replacement procedure episodes, which include the cost of post-acute care. The cost of hip and knee replacement procedure episodes for Medicare patients varies widely across the country, from $16,500 to $33,000, according to CMS.

Keys to Unlocking CJR Success

"What happens in the post-acute space is critical to success," Stanley says.

As CHI has ramped up its involvement in bundled payments for hip and knee replacement procedures, garnering a deep understanding of post-acute care and working closely with skilled nursing facilities (SNFs) have been major challenges for the health system. "There was high variability in the discharge destination," he says, noting 10% of joint replacement patients were being discharged to SNFs in one CHI market compared to 50% of patients being sent to SNFs in another market. "We rarely had any insight into it. Now, we're really aligning all of the incentives."

Pre-operative preparations also play a major role in achieving financial success in bundled payments for joint replacement, Stanley says. "It's not just as simple as saying, 'Where are we discharging patients to?' We make sure the patients are tuned up on the front end."


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

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