The results may fuel the Trump administration’s shift toward mandatory payment models, said one researcher.


Jan. 14—Medicare’s first mandatory bundled payment program succeeded in obtaining some savings in its first two years, according to new research.

The controversial Comprehensive Care for Joint Replacement (CJR) program, a Medicare bundled-payment model for hip or knee replacement, has been mandatory for most hospitals in randomly selected metropolitan statistical areas since its launch in 2016.

Providers in CJR garner bonuses or pay penalties based on their performance against their previously benchmarked results for Medicare spending per hip or knee replacement plus 90 days after discharge.

A studyrecently published in the New England Journal of Medicine compared 280,161 hip- or knee-replacement procedures in 803 hospitals with 377,278 procedures in 962 control-group hospitals, and found a spending decrease of $812, or 3.1 percent, per episode in CJR hospitals.

Michael L. Barnett, MD, an author of the study and assistant professor, Health Policy and Management, Harvard T. H. Chan School of Public Health, said the results help allay the concern that hospitals that are compelled to participate in mandatory models would be unable to obtain savings.

“Actually, we found there was an effect that was more or less consistent with what we have seen in” previous voluntary bundled payment models, Barnett said in an interview. “The fact that it so closely aligned with what we have seen in other settings was a bit of a surprise to us.”

The findings echoed a previous study of CJR’s first-year results that was commissioned by the Centers for Medicare & Medicaid Services. That study found participating hospitals’ average Medicare payments for the episodes decreased by 3.3 percent more than payments to hospitals in a control group. That reduction occurred over just the first nine months of the program, which launched April 1, 2016.

The new study differed from the first-year assessment in that it accounted for the bonus payments to high-performing hospitals—and still found a net savings.

The reduced spending found in the new study was driven largely by a 5.9 percent relative decrease in the percentage of episodes in which patients were discharged to post-acute care (PAC) facilities.

Focusing on PAC spending was a common approach in previous bundled payment models, such as Medicare’s recently concluded Bundled Payments for Care Improvement (BPCI) initiative.   

“Without these new payment models, there has been very little incentive for hospitals and [skilled nursing facilities, or SNFs] to explore different approaches to rehab and how you can care for the full span of patients recovering from an elective surgery like this,” Barnett said.

Medicare’s fee-for-service payment system has led many providers to default to 14 days of post-surgical care at a SNF or to send patients home if they have a strong support system, he said.

“There probably is a spectrum in there that there has been no incentive to explore, like how could we give patients the minimum necessary rehabilitation for them to have a high-quality outcome,” Barnett said.

The results could mean that after maxing out on PAC savings earlier in the program, hospitals, which bear the financial risk under CJR, will need to look for savings through reduced readmissions, he said. Or the early PAC savings could be followed by reimagining “how we deliver post-discharge rehabilitation in a way that uses inpatient care only as much as it is necessary.”

Do All Hospitals Benefit?

A key caveat of the findings is that it was not clear just how many participating hospitals were able to obtain the type of savings that the study identified.

“It’s certainly not evenly spread across every possible type of hospital, but it does seem like the savings were pretty evenly spread across a number of hospital and patient subgroups,” Barnett said.

Barnett and his colleagues are still sifting through their data to identify which types of hospitals are likely or unlikely to succeed under the model.

Future Implications

The current leadership of the U.S. Department of Health and Human Services (HHS) appears more supportive of mandatory payment models, like CJR, than was former Secretary Tom Price, MD, said Barnett.

“Based on these results, it seems like this could be a way forward for joint replacement—as long as with another year of the program, we don’t see any adverse outcomes,” Barnett said. 

The Trump administration amended the program for its third year, 2018, reducing the number of geographic areas where most hospitals must participate from 67 to just the 34 highest-payment areas. Hospital participation in the 33 other regions became voluntary for the final three years.

The new analysis found no significant effect of CJR on the composite rate of complications or the percentage of joint replacement procedures performed on high-risk patients.

“I’m not sure at this point if we would say we have strong enough evidence that it should be spread without question,” Barnett said.

Specifically, more time is needed to ensure no unintended consequences—like providers avoiding complicated patients—stem from the program.

Senior leaders in the Trump administration, including HHS Secretary Alex Azar, have indicated that additional mandatory Medicare payment models likely are needed—and coming.

The CJR results may not provide much indication of how hospitals will perform under the newest Medicare bundle, called BPCI Advanced, which launched in the fall. That’s because CJR was designed to be much less risky, Barnett said. For instance, CJR hospitals had a year in the program before penalties started, while hospitals in the voluntary BPCI-Advanced model will face penalties from their first day.

Despite that greater risk, Barnett noted that 832 hospitals volunteered to participate in BPCI-Advanced.

“Hospitals must be confident that they have plenty of ways of cutting down post-acute care and other types of post-hospital care, or else they wouldn’t be signing up for it,” Barnett said.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Email Rich at rdaly@hfma.org. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Tuesday, January 15, 2019