Medicare keeps test of joint-replacement bundles mandatory

The CMS has finalized a rule (PDF) that will require hospitals in 67 geographic areas, including Los Angeles and New York City, to participate in a test of bundled payments for hip and knee replacements.

The procedures are among the most common that Medicare beneficiaries receive, and the price varies significantly. The average Medicare payment for surgery, hospitalization and recovery ranges from $16,500 to $33,000, the CMS said in a news release announcing the initiative, which would be administered by the CMS Innovation Center.

Originally the program, called the Comprehensive Care for Joint Replacement Payment Model, was going to require 800 hospitals in 75 regions to participate in the new model, but the agency decided to omit eight regions to exclude ones that have too few total joint-replacement cases that aren't already covered under the similar but voluntary Bundled Payments for Care Improvement (BPCI) initiative.

Regions that no longer have to participate in the new program include Colorado Springs, Colo., Richmond, Va., and Las Vegas.

Despite including fewer areas, the CMS actually expects to save more than twice as much money as before. It now expects to save $343 million over the five performance years of the model, compared with $153 million projected earlier.

The much higher estimate is attributed to technical changes to the model outlined in the final rule, as well as updates to the data used to determine the impact of the rule.

A leading concern among critics of the proposal was that making the model mandatory would prevent providers from tailoring care to their patient population and could result in less accurate payments.

“Nowhere does the law expressly state that CMS can make models mandatory,” the Federation of American Hospitals said. “There should be no mistake about what is happening here—(this model) represents a major change in Medicare payment policy.”

The CMS disagreed. “The statute does not require that models be voluntary, but rather gives the secretary broad discretion to design and test models that meet certain requirements as to spending and quality,” it says in the final rule.

It also noted that the CCJR isn't the only mandatory bundle pay initiative. The Home Health Value-Based Purchasing model outlined in the 2016 Home Health Prospective Payment System Final Rule will be mandatory for home health agencies starting Jan. 1, 2016.

Most organizations submitting comments on the proposed regulations asked the agency to wait until Jan. 1, 2017, to implement it.

The Mayo Clinic, for instance, argued that it needs more time to fully understand and implement the requirements and educate its staff and patients.

The CMS did postpone the program but pushed it back just three months, to April 1, 2016, saying that should give hospitals enough time to prepare.

The American Hospital Association said in a statement that it appreciates the delay but remains “concerned that hospitals will still be pressed to put in place the processes and procedures necessary for the program.”

The agency also said it would issue a notice along with HHS' Office of Inspector General

https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Downloads/2015-CJR-Model-Waivers.pdf">granting participants leeway under the federal kickback and physician self-referral law (PDF)

, known as the Stark law. Similar waivers were extended to accountable care organizations participating in the Medicare Shared Savings Program.

Providers argue the fraud and abuse laws would make it legally complicated for them to enter into the necessary coordinated-care agreements with one another. The laws generally prohibit physicians from making referrals for services covered by government programs to entities in which they have financial interests unless they meet certain exceptions.

In 2014, approximately 430,000 Medicare beneficiaries had discharges for lower-extremity joint replacements, costing Medicare more than $7 billion for the hospitalizations alone.

The CMS estimates that the new bundled-payment test will cover about 23% of the hip and knee replacements that Medicare pays for, which is down from 25% in the proposed rule.

The program would put about $1.2 billion in Medicare spending in the new bundles in 2016, and that figure would grow to $2.9 billion in episode spending in 2020.