A new analysis by Avalere Health discussed in MedPage Today warns that most hospitals involved in Medicare’s new hip- and knee-replacement model would suffer financial penalties if they failed to cut care costs.
“Historically, hospitals focused on what’s happening within the four walls of their institution,” said Josh Seidman of Avalere Health, but much of patients’ costs occur after a procedure is completed and the Centers for Medicare & Medicaid Services (CMS) recognizes this.
In July, 2015, CMS announced the Comprehensive Care for Joint Replacement (CJR) model, which orders 800 hospitals in 67 metropolitan areas to bundle payments for joint replacements in the lower extremities over a 90-day “episode of care.” Avalere estimates that 60 percent of hospitals would face penalties under the new model. The new rule is a “wake up call” for hospitals who had adopted a wait-and-see approach to payment reform, Seidman said.
Unlike past demonstrations, which were voluntary, hospitals in these randomly chosen regions must adhere to the new program and its rules.
Using the CMS Public Use File, Mr. Seidman compared hospitals’ current costs across the full spectrum of care and projected where hospitals would rank using the benchmarks set by the new rule.
MedPage reported that “Some hospitals have prepared for changes in payment by developing new or deeper relationships with post-acute care providers, by focusing on both patient and information flow across the care continuum and by creating new ways to improve care management, Seidman noted.”