CMS Finalizes New Medicare Joint Replacement Payment Model
On Monday, CMS finalized a new Medicare payment model for hip and knee replacements that aims to encourage hospitals to improve quality and lower costs, the AP/Sacramento Bee reports (Alonso-Zaldivar, AP/Sacramento Bee, 11/16).
CMS proposed the revised payment model for hip and knee replacements earlier this year. Hip and knee replacements are the most commonly performed inpatient surgeries for Medicare beneficiaries. According to CMS, there were more than 400,000 inpatient knee and hip replacements covered by Medicare in 2013, accounting for $7 billion in hospitalization costs.
Joint replacement care -- including hospitalization, surgery and recovery -- can cost $16,500 to $33,000, depending on the region. In addition, the quality of the procedures varies significantly, with complication rates that can be more than three times higher at some hospitals than at others.
Providers currently are reimbursed for hip and knee replacements based on a fee-for-service basis.
Final Rule Details
Under the new payment model, providers will receive one flat fee for the procedures instead of multiple payments for each individual service they provide related to the replacements (California Healthline, 7/10). Hospitals that meet certain benchmarks for quality and cost measures will receive a bonus payment. Starting in year two of the program, hospitals can be penalized for a portion of their spending above a set target (CMS fact sheet, 11/16).
HHS Secretary Sylvia Mathews Burwell in a statement said, "By focusing on episodes of care, rather than a piecemeal system, we provide hospitals and physicians an incentive to work together to deliver the best care possible to patients."
According to The Hill, CMS said it incorporated some stakeholder feedback to allow providers more flexibility while adjusting to the new payment model (Sullivan, The Hill, 11/16).
For example, the final rule:
- Delays the new payment model's start date from Jan. 1, 2016, to April 1, 2016 (AP/Sacramento Bee, 11/16); and
- Reduces the number of metropolitan areas to which the model will apply from 75 locations to 67.
However, despite stakeholders' concerns, the final rule keeps the program mandatory for providers located in the 67 regions (Dickson, Modern Healthcare, 11/16).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.