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Bundled payments: Touting risk adjustment in knee, hip replacements


X-ray of a total knee replacement.

If Medicare risk-adjusts for medical complexity in bundled-payment models for hip and knee replacements, it could—and should—mitigate  penalties for hospitals with sicker than average patients, suggests a new report.

In the study, researchers from the University of Michigan calculated hypothetical rewards and penalties for hospitals in Michigan, along the lines of what Medicare would do in its Comprehensive Joint Replacement Program. They found that as the complexity of a hospital’s patient population rose, so did the penalties under the new bundled-payment model.

“This is obviously a simulation, but I think the policy implications are that the program as is—and with future programs—can create a financial incentive for hospitals to reduce access to medically complex patients,” said Chad Ellimoottil, M.D., the lead researcher and an assistant professor in the Department of Urology and the Institute for Healthcare Policy and Innovation at the University of Michigan in Ann Arbor, told Modern Healthcare.

{P}atient {within hospitals} complexity  stays the same year after year, for the most part,” Dr. Ellimoottil said.  “When you go to the broader price, then you start to see that hospitals that are treating more complex patients end up losing more in this program than the ones that are treating healthier patients.”

Modern Healthcare reported: “Dr. Ellimoottil described himself as excited about CMS’s value-based purchasing initiatives and as a fan of regional pricing in general. But as his research showed, even minimal risk-adjusting—for co-morbidities, a patient’s age, dual eligibility status—was worthwhile in CMS’s bundled-payment program.”

“Is there a way we can make the program more equitable for all hospitals?” Dr. Ellimoottil asked. ”That’s the goal.”

To read the study, please hit this link.

To read the Modern Healthcare article, please hit this link.

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