Medicare Bundled-Payment Model Cuts Joint Replacement Costs

Marcia Frellick

January 02, 2019

A Medicare bundled-payment model for hip and knee replacements showed modest savings on individual episodes without increased complication rates at 2 years. The savings mostly came from reductions in the percentage of patients discharged to post-acute care.

The national program, started in 2016, is known as the Comprehensive Care for Joint Replacement (CJR), a mandatory bundled-payment model for hip or knee replacements in randomly chosen metropolitan treatment areas.

The study, which was conducted by Michael L. Barnett, MD, from the Department of Health Policy and Management at Harvard T. H. Chan School of Public Health in Boston, Massachusetts, and colleagues, was published online January 2 in the New England Journal of Medicine.

The investigators compared Medicare claims in 75 treatment regions from 2015 to 2017 (the first 2 years of bundled payments in the CJR program) with claims in 121 control areas before and after implementation of CJR. There were 280,161 hip or knee replacements in 803 hospitals in treatment areas and 377,278 procedures in 962 hospitals in control areas.

After implementing the CJR model, there were greater decreases in spending per joint replacement episode in treatment areas than in control areas.

Institutional spending on episodes decreased from $25,903 to $23,915 in the treatment areas and from $24,596 to $23,238 in the control areas (adjusted differential change between the treatment group and the control group, −$812; P < .001), or a 3.1% differential decrease relative to average spending in treatment areas before CJR started.

The researchers defined episodes as the hospitalization plus 90 days after discharge. They adjusted the analyses for differences in procedures and hospital and patient characteristics.

The greater decreases in spending were largely a result of a 5.9% relative decrease in the percentage of episodes in which patients were discharged to post-acute care facilities, the authors note. "[I]t appears that hospitals may have successfully identified patients who are at the margin of needing post-acute care services who could instead be safely discharged home with home health services," the researchers explain.

Differences between groups in the rate of complications (P = .67) or in the rate of joint replacements performed in high-risk patients (P = .81) were not significant.

The idea with CJR was to give hospitals an incentive to reduce spending on joint replacements without sacrificing results. When spending across hospitals, outpatient care, and skilled nursing facilities together came in below a benchmark amount, hospitals shared the savings with Medicare. Starting in 2017, hospitals were penalized when spending was above the benchmark. Savings were adjusted on the basis of outcomes such as complication rates.

The savings increased over 18 months, which may indicate that the benefit increases as hospitals get used to the payment model.

"CJR is an important advance because it features both a randomized design and mandatory participation," the authors write. The mandatory aspect has been controversial. In March 2018, the Trump administration switched the program so that it was partially voluntary.

Testing the mandatory program helped address whether savings seen in the voluntary programs were caused by the characteristics of the hospitals that volunteered.

The authors write, "As CJR matures, it is unclear whether these savings will become larger and whether negative unintended consequences, such as hospitals declining to treat sicker patients whose care could potentially be more costly, will become evident."

The study was supported by grants from the Commonwealth Fund and the National Institute on Aging of the National Institutes of Health. A complete list of the authors' relevant financial relationships is available on the journal's website.

New Engl J Med. Published online January 2, 2019. Abstract

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