Alternative Payment Models: Comprehensive Care for Joint Replacement and Benefits to Orthopaedic Surgeons

Traditionally, Medicare has reimbursed physicians providing care to its beneficiaries based on a fee-for-service (FFS) payment model. This model pays the providers for each individual service, rewarding doctors for the quantity as opposed to the quality of their services. Miller compares this inefficient payment model to purchasing a collection of independent parts for a product, without warranty or quality guarantee, rather than resourcefully buying a carefully assembled product for a single price.(1) The FFS payment strategy can lead to less than desirable results when it comes down to choosing which healthcare services to deliver to patients, but it also carries burdens to the physicians. Doctors are reimbursed less by Medicare when they deliver fewer or more cost-effective services, which can lead to decreased revenue.(2)

Recently, other payment models have been proposed to providers and hospitals in order to maximize the quality of care afforded to patients and the profits to those offering it. Movement toward value-based care has been the most popular topic of discussion for incentivized reimbursement. One such example is the application of bundled payment, which has been recommended and recently implemented in hospitals across the country, especially for joint replacement procedures. This payment model historically has been seen in the care of cancer patients and in private insurance plans, offered by over one-fifth of employers.(3) Hip and knee replacements account for a large proportion of Medicare spending, which can be decreased by executing a smarter plan to offer and pay for these services. Medicare profits account for more than one-third of the average hospital’s income, making a more efficient care management plan a significant step toward a more profitable care facility.(3)

Comprehensive Care for Joint Replacement Model

Medicare proposed the Comprehensive Care for Joint Replacement (CJR) model beginning April 1, 2016, and continuing until December 31, 2020.(4) This new model was created to ensure quality and coordination of care in the perioperative period, while reducing poor outcomes and overspending. Although joint replacement procedures entail similar processes, different surgeons may achieve varying results or standards of care. This model aims to alleviate those disparities and achieve the highest quality of care possible.

Each hospital receives a target budget for each operative episode, defined as the admission for the surgical procedure plus 90 days post-discharge with or without complications. The hospital is to report the amount that was required for the care involved in that episode, which dictates whether the hospital owes Medicare or if Medicare owes the hospital financial reimbursement. This budget is intended to cover procedure costs, wound care, post-acute care, follow-up services, and any other services required during the recovery period, which likely are provided by multiple physicians. These prices are developed based on each hospital’s previous spending in combination with the regional area’s average spending on the specific type of episode.(4) Target budgets also consider patient risk factors or other characteristics that may increase patients’ chance of complications and subsequent hospital admissions (Table 1).(2,4) Episode budgets will be higher for patients requiring more medical services to sustain their care and recovery.(1)

Provider Implications and Benefits

The CJR model offers an incentive for physicians to provide quality care in order to avoid post-discharge hospitalizations and complications. If the care provided totals less than the initial episode budget, a portion of the remaining savings will be distributed to participating providers. Alternatively, if the target budget is exceeded during the care given during one surgical episode due to acute complications, readmissions, or similar factors, payment from the providers back to the insurance payer may be required, usually capped at a certain amount to protect against outlying cases.(3) Physicians will also earn more for better outcomes for their patients.(1) Furthermore, hospitals or groups earning shared savings from care coordination teams are likely to reduce overall FFS payments. At first glance, physicians may view the lowered prices as a pay cut, but they should consider the insurers who are directing beneficiaries to their hospitals based on lower cost of care, increasing the patient volume as a result.(5)

Practice Changes and Model Improvements

The following suggestions from Becker’s Hospital Review author Megan Wood(6) on how to best implement the CJR model currently are being followed at NYU Langone Orthopaedic Hospital:

• Lead the team of clinical management to coordinate follow-ups, therapy, and pain management throughout the entire episode.

• Delay procedures in high-risk patients until they can modify or decrease their likelihood of difficulties. NYU Langone utilizes the Readmission Risk Assessment Tool to assess each patient’s risk of complications that would lead to subsequent readmission.

• Update and share information such as reported pain levels, medications, budget spending, and so forth on a regular basis.

• Measure the fraction of budget spent versus the quality of patient outcome: if cost of care went over budget, assess what went wrong. If cost of care went under budget, assess how to reproduce that result.

Possible improvements to the CJR model are offered by Miller’s(1) ways to enhance the bundled payment protocol:

• Focus on the care directly related to the hip or knee issues rather than managing each patient’s chronic diseases during the joint replacement episode.

• Offer patients physician-led teams to manage their episode of care rather than choosing each individual provider for each step of recovery (e.g., surgeon, rehab, home health).

• Expand the Medicare Severity–Diagnosis Related Group categories to cover functional status, home status (e.g., living alone or with others, living at home or assisted facility), and comorbid diseases.

Value-based care is a model of healthcare that keeps both the patient and the physician in mind. Providers will be able to deliver the services necessary for each patient, not just the services that will be covered by Medicare. The FFS model falls short, because although certain services are paid for, their necessity or their outcomes are not taken into consideration when they are reimbursed.(1) CJR and other bundled payment models do not limit the provider to a list of covered services but, instead, encourage the healthcare team to choose the best care plan that will allow for minimal hospital stay and maximum recovery outcomes. Pre-rehabilitation to prepare patients for surgery or home physical therapy following the joint replacement are services that traditionally are not covered by current payment plans but could directly reduce complications, thereby lowering episode costs.(1) This model aims to improve the quality of services provided to the patient, to ensure the consistency of provider reimbursement, and to reduce overall Medicare spending.

References

1. Miller HD. Bundling better: how Medicare should pay for comprehensive care (for hip and knee surgery and other healthcare needs). Center for Healthcare Quality & Payment Reform. September 2015. www.chqpr.org/downloads/BundlingBetter.pdf.

2. Miller HD. A guide to physician-focused alternative payment models. Center for Healthcare Quality & Payment Reform. www.chqpr.org/downloads/Physician-FocusedAlternativePaymentModels.pdf .

3. Douville S. The hospital board team’s guide to bundled payments strategy. Becker’s Hospital Review. November 12, 2018, www.beckershospitalreview.com/finance/the-hospital-board-team-s-guide-to-bundled-payments-strategy.html . www.beckershospitalreview.com/quality/7-clinical-pillars-providers-need-to-thrive-under-a-total-joint-arthroplasty-bundled-model.html .

4. Comprehensive care for joint replacement model. Centers for Medicare and Medicaid Services website. https://innovation.cms.gov/initiatives/cjr . Updated October 19, 2018. Accessed December 12, 2018.

5. Ryan J, Brown C. 7 considerations in the financial modeling of value-based payment arrangements: a forward-thinking financial model can help hospital leaders better predict and balance potential gains and losses from incentives, penalties, volume changes, and other factors related to value-based payment. Healthcare Financial Management. October 2018. https://go.galegroup.com/ps/i.do?p=AONE&sw=w&u=googlescholar&v=2.1&it=r&id=GALE%7CA559930660&sid=classroomWidget&asid=6a303b91

6. Wood M. 7 clinical pillars providers need to thrive under a total joint arthroplasty bundled model. Becker’s Hospital Review. November 20, 2017. https://www.beckershospitalreview.com/quality/7-clinical-pillars-providers-need-to-thrive-under-a-total-joint-arthroplasty-bundled-model.html .