Providers want overhaul of Medicare hip, knee payment test

Providers say a CMS model to have 800 U.S hospitals participate in a test of bundled payments for hip and knee replacements would have to be changed significantly in order to succeed.

The five-year program would begin Jan. 1. Nearly 300 comments on the proposal were received before the deadline last week. A recurring comment was that it was mandatory, which the Federation of American Hospitals opposed. Some said it would prevent providers from tailoring care to their patient population and could result in less accurate payments.

The average Medicare payment for hip and knee procedures, which are the most common received by Medicare beneficiaries, ranges from $16,500 to $33,000, according to the CMS. In 2014, lower-extremity joint replacements cost Medicare more than $7 billion for hospitalizations alone.

Most comments asked to delay implementation of the model until Jan. 1, 2017.

The Mayo Clinic pointed out that more time is needed to fully understand and implement the rule requirements and educate staff and beneficiaries.

Providers also questioned the CMS' decision to appoint each hospital the sole bearer of risk in an effort to study how they handle the financial consequences and gains. Spreading the risk among physicians and post-acute care and skilled-nursing facilities would empower them to dictate patient care and allow them to reap any financial rewards should they meet metrics under the program, the comments said.

Providers argue that the decision to exclude those providers could hurt the initiative.

Another key to the model's success is granting hospitals waivers to allow them to operate outside of federal kickback and physician self-referral laws.

The laws prohibit physicians from making referrals for services covered by government programs to entities in which they have financial interests unless they meet certain exceptions.

Waivers to the laws offer providers flexibility to enter into coordinated-care partnerships.

A similar permission has already been granted to Medicare accountable care organizations.

The CMS likely will grant these protections because it wants this model to succeed, said Seth Lundy, a partner in the Washington, D.C., office of King & Spalding.

A final rule is expected by November.