CMS proposes mandatory bundled payment to hospitals for joint replacement
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The Centers for Medicare & Medicaid Services (CMS) on July 9 released a proposed rule to establish a bundled payment model for acute care hospitals for joint replacement procedures. CMS proposes making the program mandatory for most hospitals in 75 geographic areas across the country. The new payment model--the Comprehensive Care for Joint Replacement (CCJR) Model--is designed to promote quality and financial accountability for episodes of care surrounding a lower-extremity joint replacement (LEJR) or reattachment of a lower extremity procedure (MS-DRG 469/470). CMS proposes to test the CCJR Model for a five-year performance period, beginning January 1, 2016, and ending December 31, 2020.

CMS is accepting comments on the proposed rule until September 8, 2015.

Payment methodology: Under the model, the acute care hospital in which a planned or urgent hip or knee replacement (MS-DRG 469/470) is performed would be responsible for the cost and quality of the care from the time of the hospitalization for the surgery through 90 days after. Depending on the hospital's performance during the episode, the hospital would either earn a financial reward or be required to repay Medicare for the portion of the costs. While providers would continue to be paid Medicare fee-for-service, ultimately actual payments would be reconciled against a target. The hospital would take the risk for all Medicare Part A and Part B spending during this time period starting year 2, with the first year being upside only. CMS incorporates a proposed outlier policy to cap spending for high cost outlier episodes.

Quality performance in the payment methodology: CMS proposes quality performance standards that must be met in order for a hospital to receive a reconciliation payment. That is, participant hospitals that achieve actual episode payment below the specified target price for a given performance period would be eligible for a reconciliation payment if the participant hospital also meets performance thresholds on outcomes-based quality measures during the performance period. CMS proposes to adopt three measures for the first performance year:

  • Hospital-Level Risk-Standardized Complication Rate following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA)
  • Hospital-Level 30-day, All-Cause Risk-Standardized Readmission Rate Following Elective Primary THA/TKA
  • Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey

The proposed performance threshold is at or above 30th percentile of the national results calculated for the Hospital Inpatient Quality Reporting Program, increasing to the 40th percentile in years 4 and 5. Failure to achieve the threshold on even one of the three measures would result in the participant hospital not receiving a reconciliation payment.

Additionally, CMS proposes voluntary submission of data to support the development of a hospital-level patient-reported outcomes measure for THA/TKA. For all hospitals that successfully report voluntary data for this measure, CMS proposes to adjust the episode payment methodology by reducing the discount percentage used to set the target price from 2.0 percent to 1.7 percent of expected episode spending.

 Excluded hospitals: CMS grants exclusions for critical access hospitals and hospitals already participating in the Bundled Payment for Care Improvement (BPCI) initiative. Specifically, CMS proposes to exclude from the model those geographic areas where 50 percent or more of episodes are initiated at acute care hospitals participating in BPCI Models 1, 2 or 4 as of July 1, 2015. When selecting the geographic areas, CMS indicated that it tried to target areas where there were not already high BPCI penetration.

Legal waivers: CMS is considering waivers of certain Medicare program rules for providers and suppliers furnishing services to CCJR beneficiaries. CMS specifically mentions the following waivers, but invites comments on possible waivers beyond these:

  • The three-day inpatient hospital stay requirement prior to a covered SNF stay for beneficiaries who could appropriately be discharged to a SNF after less than a 3-day inpatient hospital stay
  • Requirement for a beneficiary to be determined "home-bound" for Medicare to pay for home health services
  • Billing and payment requirements for telehealth services
  • Gainsharing restrictions on all Medicare Part A and Part B payment systems, but only to the extent necessary to make reconciliation payments or receive repayments under the proposed payment model for CCJR participant hospitals

The CCJR Model is the first Medicare alternative payment model that is not voluntary, which is a strong indication of the administration's intent to aggressively transition Medicare to a value-based system.

Premier's Senior vice president of Public Affairs, Blair Childs, released the following statement in response to the proposed rule:

While members of the Premier healthcare alliance are strong supporters of bundled payments that include hospitals, we believe CMS's proposed rule requiring hospitals in 75 different regional markets to take the risk associated with a 90-day joint replacement episode is too much, too fast.  A voluntary, national program would ensure that only providers who are ready to take on this challenge enter the program, avoiding unintended consequences. As we have seen with the proliferation of Medicare Shared Savings Programs nationally, using carrots to enter a program can be just as, if not more, effective than using sticks.  We look forward to commenting on the proposal and working with CMS to create a viable bundled payment program.

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Create Date July 9, 2015
Last Updated July 10, 2015