CMS sets spring launch for knee and hip bundled payment initiative

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The Centers for Medicare and Medicaid Services on Monday finalized details of its bundled payment initiative for hip and knee replacements and pushed back the launch date into the spring of 2016.

The Comprehensive Care for Joint Replacement model, set to begin on April 1, 2016, will hold hospitals accountable for the quality of care they deliver to Medicare fee-for-service beneficiaries for hip and knee replacements and also for other major leg procedures from surgery through recovery, according to CMS.

Under the model, hospitals in 67 geographic areas will receive additional payments if quality and spending performance are strong, or if not, have to potentially repay Medicare for a portion of the spending for care for a lower extremity joint replacement procedure.

[Also: HHS announces mandated bundled payments for hip, knee replacement ]

CMS is finalizing a policy for no repayment responsibility in performance year 1; a stop-loss limit of 5 percent in performance year 2; a stop-loss limit of 10 percent in performance year 3; and a stop-loss limit of 20 percent in performance years 4 and 5 for participating hospitals other than rural hospitals, Medicare-dependent hospitals, rural referral centers and sole community hospitals.

CMS said it is also gradually phasing in repayment responsibility with a reduced discount percentage for repayment responsibility in years 2 and 3.

In 2014, more than 400,000 Medicare beneficiaries received a hip or knee replacement, costing more than $7 billion for hospitalizations alone, CMS said.

The average total Medicare expenditure for surgery, hospitalization and recovery ranges from $16,500 to $33,000.

Quality and cost vary greatly among providers depending on complications such as infections or implant failures that can increase the cost of the procedure three-fold, CMS said.

[Also: UnitedHealthCare expands bundled payment program for pricey cancer treatments]

The model's goal is to give hospitals a financial incentive to work with physicians, home health agencies, skilled nursing facilities and other providers for coordinated care.

Currently, beneficiaries receive care from many providers and suppliers, a situation that can lead to multiple care plans, conflicting instructions, re-hospitalizations and complications, CMS said.

CMS said it would help hospitals improve care delivery and care coordination by providing spending and utilization data and facilitating the sharing of best practices.

The proposed framework for the model was displayed in the Federal Register on July 9. After reviewing close to 400 comments, several major changes were made including: Changing the start date from Jan. 1 to April 1, 2016; implementing the model in 67 metropolitan statistical areas instead of the proposed 75; and finalizing an alternative, composite quality score methodology, rather than the proposed threshold methodology to provide stronger incentives.

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No waivers for fraud and abuse authorities are being issued in the final rule. Rather, CMS and the Office of the Inspector General will jointly issue a notice regarding the waiver of certain fraud and abuse laws for the purposes of testing this model, CMS said. The notice will be published on the CMS and OIG websites.

The model also reflects best practices from the private sector, where major employers and leading providers and care systems are moving towards bundled payments for orthopedic services, CMS said.

"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 Health and Human Services Secretary Sylvia M. Burwell.  "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."

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