Providers could have more options for bundled joint replacements under CMS proposal

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Crystal Yednak Senior Manager, Health Research Institute, PwC US February 28, 2020


Outpatient joint replacements would be added to CMS’ joint replacement model, which may be extended another three years under a proposal released recently by the agency. Started in 2016, the CMS value-based model aims to streamline care for the most common surgeries for Medicare beneficiaries, hip and knee replacements, as patients move from surgery through rehab. Providers can receive payments for savings they bring to the process by better coordinating care with post-acute care providers such as skilled nursing facilities and home health services.

The proposal aims to simplify the target price calculation by using the most recent year of claims data instead of the most recent three years. The rule would also remove the 50% cap on the payments that are distributed to the various physician and nonphysician partners participating in the bundled payment arrangement.

While CMS expressed concerns about creating new incentives for physicians to shift care to the setting where they can reap the largest payments, the proposal includes an episode-specific risk adjustment to try to address that site neutrality issue.

Comments are due April 24. The agency is also seeking comments on a bundling proposal for knee and hip replacements in ambulatory surgical centers.

HRI impact analysis

Roughly 25% of knee replacements for Medicare beneficiaries were performed in an outpatient setting in 2018, the first year it was offered. Given this early shift in where care is provided, the proposal would offer providers and consumers some flexibility in where the care is delivered. It also may offer incentives to improve coordination of care with other partners now that the caps have been lifted from the various payments that may be shared.

Early reviews of the impact of the program have shown that it dampened spending on these surgeries, with CMS pointing to the average payment per episode declining $997 for patients in the comprehensive joint replacement model in the first two performance years, eliciting more savings than those in a control group.

Research from Harvard Medical School suggests the program may reduce skilled nursing care. A 2019 study found a 3.1% reduction in costs under the new bundled payment model, with the coordinated efforts decreasing the need for skilled nursing care after surgery without affecting complication rates. 

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Crystal Yednak

Senior Manager, Health Research Institute, PwC US

Erin McCallister

Senior Manager, Health Research Institute, PwC US

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