In November, CMS finalized its first mandatory bundled payment initiative: the Comprehensive Care for Joint Replacement model. The CCJR model's start date — delayed to April 1 as part of CMS' final rule — marks a new era for the hospitals and health systems in the regions in which it will apply, and with it a new set of implications for key stakeholders.
The CCJR model is designed to incentivize hospitals to work more closely with physicians to reduce variation in how they perform lower extremity joint replacement surgeries. The LEJR procedure is one of the most common and expensive inpatient surgeries for Medicare beneficiaries, with more than 400,000 procedures done in 2014 and costing more than $7 billion, according to a recent report from Leavitt Partners.
The model, which is intended to encourage buy-in among providers by increasing accountability for cost, quality and coordination of care, includes a 90-day episode bundle, is mandatory for approximately 800 hospitals in 67 markets and is projected to save Medicare $153 million, according to Leavitt Partners.
CCJR uses a retrospective bundled payment, in which the submitted Medicare claims payments for LEJR surgeries will be aggregated to form the episode payment at the end of each performance year. This amount will be compared to the pre-episode target price and adjusted for pay-for-performance quality metrics to determine whether the hospital is eligible for repayment or reconciliation payments.
Here is how the CCJR model will impact eight key stakeholders, according to Leavitt Partners.
1. Hospitals. Because hospitals will be required to assume accountability of risk under the CCJR model, they will need to enhance their ability to manage patient care, both inside and outside the hospital walls. Care coordination will become an increasingly important priority, as will discharge planning, medication management and post-acute care management, according to the report. The development of protocols and best practices to guide these processes will be a central element of improving efficiency, quality and cost savings.
Hospitals will also need to enhance their relationships with post-acute care facilities, with many likely considering partnerships, mergers or a reduction of their post-acute care network, according to the report.
2. Rehabilitation facilities. Leavitt Partners predicts independent rehabilitation facilities could see some rehab patients migrate toward skilled nursing facilities and home health agencies as a means of reducing the cost of care. However, the CCJR model will probably not influence patients with complex conditions — such as end-stage renal disease, dialysis or chronic obstructive pulmonary disease — to move to other sites of care.
3. Physicians. Hospitals will have a greater incentive to work with physicians who participate in the CCJR model, as physicians will be responsible for coordination and managing many aspects of patient care during surgery and recovery.
Physicians will prioritize the development of best practices based on evidence-based care for LEJR surgeries to increase standardization and reduce variation and unnecessary care, according to the report. They will likely pick up the responsibility of ensuring their patients receive appropriate care throughout the post-acute care stage of the episode.
4. Post-acute care providers. The CCJR model could effectively create "winners" and "losers" among post-acute care providers if they do not proactively plan how to manage care under this program, according to the report. Post-acute care providers will likely aim to develop networks, care pathways and delivery patterns with hospitals.
5. Skilled nursing facilities. Historically, skilled nursing facilities were incentivized to create long lengths of stay for Medicare rehab patients. However, this practice has added significantly to the total cost of the surgical episode. The CCJR model will instead drive hospitals to find SNF partners that can deliver high quality outcomes at the lowest possible costs.
6. Home health agencies. Home health agencies will be critical to hospitals' ability to reach bundled savings, according to the report. Because the episode of care lasts 90 days, independent hospitals will need to contract with care managers and other providers within the community to help support patients after they are discharged and have passed through rehab and/or skilled nursing facilities.
7. Payers. Leavitt Partners expects some private carriers may be better positioned to adopt bundled payments than others. The carriers that work closely with providers will benefit from lessons learned under the CCJR model.
The CCJR model will likely affect private reimbursement strategies. If providers have positive experiences with CCJR, they will be more likely to encourage private payers to create a similar arrangement. If providers have unfavorable experiences, carriers may seek to prolong current reimbursement models, according to the report.
8. Pharmacy. Hospitals will seek increased integration and coordination with pharmacists to develop practical approaches to support the safe and effective use of medications. Because Medicare Part D will not be included in the CCJR model, enhanced medication therapy management will be more important.