Blog | Bundled Payment

Analysis: Results from Medicare’s mandatory joint replacement bundle

Blog | Bundled Payment

Analysis: Results from Medicare’s mandatory joint replacement bundle

  • CMMI released its latest evaluation of the Medicare Comprehensive Care for Joint Replacement (CJR) program.
  • Hospitals saved Medicare an estimated $17.4 million through the program, according to a contractor’s report on the second year results the CJR model, as reported in a July 3 HFMA news article.
  • Much of the savings came from reductions in utilization of institutional post-acute care settings.

Last week, CMMI released its latest evaluation of the Medicare Comprehensive Care for Joint Replacement (CJR) program.

A July 3 news article by HFMA’s Rich Daly reports “Hospitals saved Medicare an estimated $17.4 million through the program, according to a contractor’s report on the second-year results for the Comprehensive Care for Joint Replacement (CJR) model. Hospital spending decreased by an average of $997, or 3.7%, more for CJR episodes compared with episodes in a comparison group.”

Not surprisingly, much of the savings came from reductions in utilization of institutional post-acute care (PAC) settings. The report notes that:

  • CJR hospitals saw a 27.4% decrease in discharges to inpatient rehabilitation hospitals (IRFs) resulting in a $357 decrease in CJR episodes.
  • Payments to skilled nursing facilities (SNFs) for CJR episodes also decreased $508 driven by a 2.3-day reduction in SNF length of stay.
  • The number of patients discharged to SNF as a first PAC setting only decreased by 2.4%. However, overall the number of discharges to home with home health as a first-PAC setting increased by 10.6%.

The HFMA article notes that, “most CJR hospitals received bonus payments under the model in at least one of the first two years, about one-quarter received none in either year. The share receiving bonus payments increased from 52% in the first year to 69% in the second.”

Hospitals that received bonus payments have common characteristics such as higher CJR episode volumes, having initial episode costs below their quality-adjusted target price for the model, having higher quality scores and treating lower-complexity patients.

Takeaway

At first glance, the savings to the Medicare program looks paltry given the period covers the first two performance years of the program. However, it’s important to remember that the first performance year of CJR was risk free meaning that organizations whose actual episode spending was higher than the target price were not required to repay CMS. With this in mind, the evaluation report builds on the evidence that lower-joint replacement episodes result in savings to the Medicare program increasing the likelihood that they will be made mandatory in the near future.

Most of the savings came from making sure the patient received care in the right first post-acute setting. This isn’t surprising given that’s where much of the variability in Medicare spending occurs and has been a common theme in the BPCI evaluation reports.

3 keys to implementing a successful PAC program

There are three keys to implementing a successful PAC management program, ensuring patients get the right care in the right first PAC setting. They are: 

  1. First, educating both patients and providers to set expectations about where the patient will be discharged. As part of this, care teams need tools and data to help facilitate a conversation with patients and their families/informal caregivers about which setting is right for the patient based on their specific clinical situation.
  2. Second is screening patients to identify those who would benefit from pre-habilitation. And then providing pre-hab for those who need to build the strength necessary to begin physical therapy as soon as possible post-surgery and be discharged home.
  3. Third, when a patient’s clinical situation dictates discharge to an institutional setting, making sure they go to a high-value provider in the correct setting where they only stay as long as necessary.

Look for my two-part series, published in the July and in the upcoming August editions of hfm, profiling best practices from organizations that have successfully executed strategies to ensure that patients are discharged to the most appropriate first PAC setting. 

About the Authors

Chad Mulvany, FHFMA

is director, healthcare finance policy, strategy and development, HFMA’s Washington, D.C., office, and a member of HFMA’s Virginia-Washington, D.C., Chapter.

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