Joint Replacement Bundles – Good, Can Be Made Comprehensively Better

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Earlier this month, CMS proposed to pay for joint replacements as an episodic bundled payment. This time, it is not optional. Instead, it is intended for hospitals in 75 MSAs to be compensated for hip & knee replacements on a retrospective bundled payment basis . Some salient features are:

Five year program with downside risk waived in the first year
Annual reconciliations
Applies to hospital based episodes
Gains and losses will be attributed to the hospital
Starts with pegging hospital to its own performance and transitions into pegging hospital to regional performance

Some 100,000 procedures are expected to be impacted nationwide.

What opportunities do we see for improvement?

Could incentivize hospitals to avoid the procedure in the first place?
Could incentivize hospitals to perform some portion of these cases (that are deemed clinically appropriate) in an ambulatory setting?
Could we allow the episode initiator leeway in choosing services that are currently not covered by Medicare? E.g., home based rehab, custodial care.
Retrospective bundles mean participants could bill indiscriminately. Over time, could we make this prospective and therefore allow the risk holder the opportunity to authorize / control disbursements? Could we allow them to then shop for the best providers in the care continuum?

What makes this difficult for episode initiators?

Patients could choose to visit any post acute provider including those that the hospital has no collaborative efforts with.
Post acute providers have little skin in the game (certainly no downside risk). This is especially difficult in markets where there are PAC oligopolies.
As risk sharing agreements are designed and implemented, there is a significant credit risk aspect to all this. In other words, an individual PAC participant signing up for downside risk doesn’t mean they might be financially able to service a claim on a timely basis.

Notwithstanding the criticism and the drawbacks, this is a well-intentioned step in crafting a bold future. Let us send our comments in and be a part of influencing the foundational elements of payment reform.

PS: Oh, and we can brace ourselves for this to be applied to the next care lines.


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Anita Pramoda
Truth catcher - not important that I am right, important that I find the right answer. Focus as a noun? Obsess with my customer's needs as waking thought and resting reflection. Focus as a verb? Enough to intensely iterate, but not to produce motion sickness instead of momentum.
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