Making Medicare's Hip and Knee Replacement Bundles Work

Laird Harrison

Disclosures

April 28, 2016

In This Article

A Move From Fee-for-Service to Bundling

Public and private health plans are starting to bundle together payments for all care provided in connection with various orthopedic procedures—rocking the boats of many orthopedic surgeons.

"It's a huge change," says Tom Barber, MD, an orthopedic surgeon in Oakland, California, and chair of the American Academy of Orthopaedic Surgeons Council on Advocacy.

Bundled payment systems are cropping up in Medicaid and commercial insurance plans. Bundles have been crafted for dozens of medical conditions. But the first big wave to hit orthopedic surgery is coming in the form of a mandatory reimbursement system for hip and knee replacements under Medicare.

Starting in 67 metropolitan areas[1] on April 1, the Centers for Medicare & Medicaid Services (CMS) began lumping together payment for "episodes of care," encompassing any service provided from admission to a hospital until 90 days after discharge.

Orthopedists who want to protect their income under the new system will need to reach agreements on best practices with hospitals, skilled nursing facilities, physical therapists, and others involved in caring for patients with hip and knee replacements, Dr Barber says.

The new program, Comprehensive Care for Joint Replacement (CJR), is one a series of initiatives that CMS has launched to move away from a traditional fee-for-service payment model.

CMS hopes that bundling payments will provide incentives for practitioners from different specialties to coordinate care, improving patients' health while avoiding unnecessary treatments.

As evidence that not all providers are following best practices, CMS points out that rates of complications at some facilities are three times higher than they are at other facilities. And the average Medicare expenditure for surgery, hospitalization, and recovery ranges from $16,500 to $33,000 across geographic areas.

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