Bundled Payments Yielding Good Results

bundled-paymentsIn a previous newsletter, we discussed bundling introduced by Medicare which focuses on orthopedic and cardiac procedures. Through the mandatory initiative for comprehensive care for joint replacements (CJR), which became policy in 2016, some 800 hospitals are participating in the program.

While some sources report the results of bundling as mixed, Medicare reports that joint replacement payments increased by approximately 5% nationally, but decreased 8% for BPCI participants. One large health system achieved a 20.8% episode decrease and another reported a significantly shorter prolonged length of stay – a sign of fewer complications resulting from surgery.

Providers, both acute and post-acute, shared in the savings and indications are that post-acute savings were achieved because their care was bundled, placing these providers at risk. Even though efforts to repeal and replace or modify the Affordable Care Act are on hold, more healthcare providers and payers can be expected to embrace bundling going forward.

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Will Bundled Payments Lower Costs?

medical-moneyThe Centers for Medicare and Medicaid Services (CMS) began their initiative to tie payments to quality or value earlier this year by implementing their Comprehensive Care Joint Replacement Model (CJR). The mandatory program holds hospitals accountable for all costs, processes and outcomes associated with hip and knee replacements performed on Medicare patients. Since hip and knee replacements are the most common inpatient surgeries for seniors, the CJR model is expected to serve as a critical test to determine whether bundles can help control costs and increase quality.

The quality of treatment and aggregate spending for a 90-day period, including surgery, recovery and rehabilitation will determine whether the hospital owes money or will receive additional payment from Medicare. CMS is establishing specific bundled pricing for each provider, then using data to determine regional pricing after five years.

Looking Outside the Walls

This model is forcing hospitals to evaluate overall care for joint replacements since clinical and financial success requires coordination between hospitals and post-acute care providers such as skilled nursing facilities. While joint replacements may represent only a portion of a hospital’s revenue, the Medicare Star Rating System tied to CJR will make provider performance public. Low performance will make it difficult to compete for Medicare-funded joint replacements in the future and many think that if bundling shows positive results, CMS will likely look to other areas of care.

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