CMS Issues Final Rule on Bundling

The idea of bundling payments for joint replacement has come a long way since a few innovative practices, such as Twin City Orthopaedics, of Minneapolis, Minnesota, initiated the process in the upper Midwest region.

After submitting several draft rules, the Centers for Medicare and Medicaid Services (CMS) has issued a final rule governing payment for hip and knee replacements for Medicare patients. The rule includes several concessions to stakeholders, such as delaying implementation from early 2016 to April 2016, according to Shannon Firth, writing for MedPage Today.

The new regulation requires bundled payments for hip or knee joint replacements over a 90-day “episode of care” in 67 metropolitan areas (reduced from 75). The regulation is known as the Comprehensive Care for Joint Replacement rule (CCJR).

According to Firth, hip and knee replacements are the most common surgical procedures undergone by Medicare patients. They cost between $16, 500 and $33, 000 per procedure. As the surgery became more and more popular, CMS officials noticed a broad variation, not only in cost, but also in the rate of complications such as infections and implant failures. Some hospitals had rates that were three times higher than others. This difference in hospital outcomes is what initiated the CMS action. Agency officials hope the regulation will help reduce the number of adverse patient outcomes.

As defined by the CMS, the episode of care begins with an admission of a patient to a hospital who the hospital later discharges after major joint replacement, without major complications. The episode of care ends 90 days post-discharge.

“Today, we are embarking on one of the most important steps we will take to improve the quality and value of care for hundreds of thousands of Americans who have hip and knee replacements through Medicare every year, ” said Sylvia Burwell, secretary of Health and Human Services.

The premise under which CMS developed the rule was that bundling payments for episodes of care would force different sites and providers to better function as a team. Better care coordination, CMS officials argued, would mean fewer complications and in turn, overall improved patient outcomes as well as lower costs. Under the new rule, CMS will assess a hospital’s performance and either pay it additional monies for favorable patient outcomes or exact a financial penalty.