Comprehensive Care for Joint Replacement

Eric Knox

Overview

Bundled Payments Episode of Care Bundled Payments for Care Improvement Comprehensive Care for Joint Replacement

Bundle Payments

The reimbursement of healthcare providers, such as hospitals and physicians, on the basis of expected costs for clinically-defined episodes of care.

Episode of Care

All services provided to a patient with a medical problem within a specific period of time across a continuum of care in an integrated system.

Centers for Medicare & Medicaid Services (CMS) defines the episode of care from admission to a hospital to 90 days post-discharge.

Bundled Payments for Care Improvement (BPCI)

BPCI was initiated by the CMS Innovation Center in order to reduce expenditures while preserving or enhancing the quality of care for beneficiaries.

BPCI utilized four models; Model 2 was most similar to Comprehensive Care for Joint Replacement (CJR).

BPCI was CMS’ first program for bundled payments.

Beneficiaries retained full freedom to choose services and providers.

BPCI: Evaluation and Monitoring CMS intended to measure metrics including:

structural and organizational characteristicspatient case-mixclinical care and patient safetypatient experience

CMS’ monitoring efforts aimed to identify quality improvements, including process improvements, changes to outcomes, and reduction to expenditures.

CMS also monitored utilization and compliance within agreements, fraud and abuse waivers, and Medicare payment policy waivers. innovation.cms.go

v

BPCI: Payment Policy Reimbursement through current retrospective

fee-for-service payments. At the time of reconciliation, the total

expenditures for all related services during the beneficiary’s episode are compared to the target price determined by CMS.

BPCI has two Phases:Phase 1: Preparation period- No riskPhase 2: Risk bearing implementation period

Comprehensive Care for Joint Replacement (CJR)

The Basics: Hip and Knee replacements are the most common

inpatient surgery for Medicare beneficiaries. The MS-DRGs included are 469 and 470.

In 2014 there were more than 400,000 proceduresCosts for the hospitalizations alone were more

than $7 billion.

Comprehensive Care for Joint Replacement (Continued)

The average total Medicare expenditure for surgery, hospitalization, and recovery ranges from $16,500 and $33,000 across geographic area.Variation is due partly to the way beneficiaries receive care.Incentives to coordinate the whole episode of care are not

strong enough.Lack of coordination leads to more complications after

surgery, higher readmission rates, protracted rehabilitative care, and variable costs.

The CJR model addresses low quality and high costs that come from fragmented care, while making the patient’s successful surgery and recovery a top priority for the health care system.

Medicare Goals CJR model start date: April 1, 2016. Goals set by Medicare are to have 30 percent of

all fee-for-service payments via alternative payment models by 2016, and 50 percent by 2018.

Medicare wants to improve the quality and efficiency of care for its beneficiaries, “creating a system that delivers better care, spends our dollars more wisely, and leads to healthier Americans.”

Section 115A of the Social Security Act authorizes the Innovation Center to test innovative payment and service delivery models.

www.innovation.cms.gov/initiatives

Model Design

The CJR model holds participant hospitals financially accountable.

It incentivizes increased coordination of care among hospitals, physicians, and post-acute care providers.

Every year during the five performance years, CJR hospitals will receive separate episode target prices.

At the end of each performance year, actual spending for the episode will be compared to the Medicare target episode price.

Model Design (continued)

Depending on the hospital’s quality and episode spending performance, the hospital may receive an additional payment from Medicare or be required to repay Medicare for a portion of the episode spending.The first performance year has “no risk” if it

doesn’t meet the target price.Testing the model with a large number of

hospitals allows CMS to learn more about patterns of inefficient utilization of health care services.

Performance YearsPerformance year

Calendar Year

Episodes included in Performance Year

1 2016 Episodes that start on or after April 1, 2016, and end on or before December 31, 2016

2 2017 Episodes that end between January 1, 2017, and December 31, 2017, inclusive

3 2018 Episodes that end between January 1, 2018, and December 31, 2018, inclusive

4 2019 Episodes that end between January 1, 2019, and December 31, 2019, inclusive

5 2020 Episodes that end between January 1, 2020, and December 31, 2020, inclusive

Participants

Hospitals paid under the Inpatient Prospective Payment System, physically located in the selected metropolitan statistical areas (MSAs) and not currently participating in Models 1, 2, or 4 of the BPCI initiative are required to participate.Includes approximately 800 hospitals.

Implemented in 67 MSAs.

Quality Improvements

The model adopts a quality first principle where hospitals must achieve a minimum level of episode quality before receiving reconciliation payments when episode spending is below the target price.

The model incentivizes hospitals to avoid expensive and harmful events, which increase spending and decreases the opportunity for reconciliation payments.

Quality Improvements (continued)

CMS provides tools to improve the effectiveness of care coordination.Spending and utilization dataWaiving certain Medicare requirements to

encourage flexibility in the delivery of careFacilitating the sharing of best practices

between participant hospitals through a learning and diffusion program.

Payments Repayments

No repayment responsibility in performance year 1.

A stop-loss limit of 5 percent of their target price in performance year 2.

A stop-loss limit of 10 percent in performance year 3.

A stop-loss limit of 20 percent in performance years 4 and 5.

Payments (continued)

Reconciliation paymentsHospitals are eligible to earn up to 5 percent of

their target price for performance years 1 and 2.They can earn up to 10 percent for performance

year 3.They can earn up to 20 percent for performance

years 4 and 5.

Challenges

At the end of the year, the hospital - and only the hospital – would get a penalty or bonus based on the grand total of the payments for all of the services billed by all of those providers.

Unless there is a partnership agreement. There is no reward under CJR for helping a patient

address their knee or hip problem without surgery.

Challenges (continued)

CJR includes quality measures, but they’re only applicable if spending is lower, and they’re only used to give a hospital a smaller bonus than it would have otherwise received if quality is lower than the standards CMS establishes. If spending is the same but quality is higher,

there’s no bonus. CMS will base the episode spending target each

year on the amount it spent on services it was billed for in the prior year, not on the costs the providers incurred for the services they actually delivered.

Partnerships

The CJR model will allow participant hospitals to enter into financial arrangements with certain types of providers and suppliers who are engaged in care redesign with the hospital and also furnish care to Medicare beneficiaries.

The participant hospitals may share with these third-party providers the following: reconciliation payments, internal cost savings, and the responsibility for repayment to Medicare.

Reasons for CJR Lower extremity joint replacements are the

most commonly performed Medicare inpatient surgery, and utilization is predicted to continue to grow.

By including 67 different geographic areas across the country, this model drive significant movement towards new payment and care delivery models.

This model supports the US Health & Human Services Department in its efforts to transform the health care system towards one focused better on quality care, smarter spending, and healthier people through care transformation and payment reform.

Aims to support better and more efficient care. CJR tests bundled payment and quality

measurement. Encourages hospitals, physicians, and post-

acute care providers to work together to improve the quality and coordination of care from the initial hospitalization through recovery.

Summary