In July 2015 the Centers for Medicare & Medicaid Services (CMS) announced the proposed CCJR program, a five-year initiative for addressing bundled inpatient and outpatient payments for patients who have lower-extremity joint replacement surgeries.
Perhaps the most important aspect is the endpoint for the episode of care, which is 90 days after discharge. During this period CMS will pay all providers, inpatient and outpatient, using the current fee-for-service model. However, the proposed rules would hold the hospital accountable for the cost of services (both inpatient and outpatient) relating to the patient’s procedure and post-surgical care.
This new risk/reward arrangement presents significant financial implications for the hospital. If a hospital can control costs and demonstrate quality during both the hospitalization and post discharge, then it can receive a bonus payment. Conversely, if the aggregate cost of care during the 90-day window exceeds the targeted amount, then the hospital must pay the difference back to CMS.
The rationale behind CCJR
According to recent reports, hip and knee replacement surgeries account for more than 400,000 procedures annually and total costs exceed $7 billion. CMS reports the average Medicare expenditure for hip and knee surgery, hospitalization and recovery ranges from $16,500 to $33,000 across geographic areas. Equally disconcerting are reports that complication rates for equipment failure and infection can vary by as much 300% across facilities.
It is understandable that in an age of “pay for outcomes,” a hospital that can control costs and at the same time demonstrate better quality than the competition should be rewarded.
To adjust for regional variables, CMS is developing a target reimbursement price for each of the 75 Metropolitan Statistical Areas (MSAs) for knee and hip replacement procedures. This mandatory, bundled payment concept is a major step in CMS’s goal to move to a 50% value-based payment model by 2018. Looking forward, the industry should anticipate more bundled payment initiatives that hold hospitals accountable for total cost and quality of care.
What CCJR means for hospitals
The 90-day comment period for CCJR closed September 8. CMS will now review feedback and deliver the final framework of the proposal. However, it is likely that CCJR will begin as scheduled in January 2016. Over the fourth quarter of 2015, hospitals must define new levels of business relationships across their provider networks that encompass both risk and potential gain sharing initiatives, and develop innovative ways to maximize quality while minimizing cost.
In my next blog, we will discuss the best practices hospitals need to implement to prepare for CCJR. Until then, if you have questions about CCJR or how Allscripts can help you develop a solution tailored to you, contact us.
Editor’s Note: Matt Fusan, Allscripts Strategic Sales Consultant, contributed to the content of this blog post.