Why Bundled Payments for Joint Replacement May Be Risky for Patients?

By Michael Wong, JD, Co-authored with Lynn Razzano, RN, MSN, ONCC, November 18,2016

According to the Centers for Medicare & Medicaid Services (CMS), hip and knee replacements are the most common inpatient surgery for Medicare beneficiaries. In 2014, there were more than 400,000 procedures, costing more than $7 billion for the hospitalizations. CMS says that there is little consistency across providers in terms of the quality and cost of care for these procedures.

With an aim to improve the consistency of the quality and cost of care among providers,  CMS has introduced a new payment model, Comprehensive Care for Joint Replacement (CJR), in April 2016, using a concept known as bundled payments.

A significant aspect of this new model is that it contains exceptions to what will be reimbursed—exceptions that could prove potentially harmful to patients recovering from hip and knee replacements. Reconsidering these exceptions could go a long way in improving patient safety, reducing the number of readmissions, and reducing the cost of care for patients undergoing hip and knee replacement.

Comprehensive care for joint replacement (CJR): How it works

To understand how CJR works and its implications on patient care, it is helpful to understand how the system currently operates.

Consider a scenario:

A patient is admitted to a hospital and the doctor recommends undergoing surgery for major joint replacement (the example would also hold true in the event of the reattachment of a lower extremity). The patient goes into surgery, is then hospitalized after the operation, gets discharged, and continues her recovery from home.

The quality and cost of this episode of care—surgery, hospitalization, and recovery—varies considerably from hospital to hospital. For instance, according to the CMS, the rate of complications (e.g., infections, implant failures) can be three times as high at some hospitals, putting those patients cared for at increased risk. Simultaneously, the cost could range anywhere from $16,500 to $33,000 under the current fee-for-service model.

Under the CJR model, CMS provides bundled payments to hospitals for these kinds of surgeries. Bundled payment is the reimbursement of healthcare providers based on the expected costs of a clinically-defined episode of care like the one described above. It has been estimated that one-third of healthcare costs recovered by hospitals are through bundled payments, and that figure is increasing.

With CJR, CMS reimbursement includes all related items and services paid under Medicare Part A (e.g., inpatient hospital care, skilled nursing facility, hospice, lab tests, surgery, and home health care) and under Medicare Part B (e.g. outpatient care, durable medical equipment, home health care, and some preventive services), with certain exceptions.





Josh Sandberg

Josh Sandberg is the President and CEO of Ortho Spine Partners and sits on several company and industry related Boards. He also is the Creator and Editor of OrthoSpineNews.

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