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  • CMS Mandatory Bundled Payment System for TKA, THA Set to Begin April 1, 2016

    The Centers for Medicare and Medicaid Services' (CMS) plan to implement a mandatory bundled care system for total hip and knee replacements in 2016 is not quite as extensive as originally planned and won't start on January 1—but it's still a big change, and it hasn't been delayed for that long.

    The basic idea is that in 67 metropolitan statistical areas, CMS will impose a bundled payment system—called the Comprehensive Care for Joint Replacement (CJR) model—for total knee and total hip replacements, comparing what hospitals spend in total on care, from admission to 90 days postdischarge, with what Medicare thinks they should be spending. If the total spending is less than the Medicare target, the hospitals may be eligible to receive additional payment from Medicare—but if they spend more than the Medicare target, they could be required to pay back Medicare for some portion of the difference.

    In a final ruled issue this week, CMS reduced the number of areas that will be affected by the CJR from 75 to 67, and postponed startup of the project until April 1, 2016, instead of January 1. One element that remains unchanged: the hospitals included in the 67 metropolitan areas (a list of those areas can be found here) won't have a choice when it comes to participation.

    APTA regulatory affairs staff members are reviewing the final rule and will provide a detailed summary in the coming weeks. In the meantime, here are a few highlights from the rule:

    • The CJR will apply to patients discharged under MS-DRG 469 (major joint replacement or reattachment of lower extremity with major complications or comorbidities) or 470 (major joint replacement or reattachment of lower extremity without major complications or comorbidities) and ends 90 days postdischarge. The episode includes all related items and services paid under Medicare Part A and Part B for all Medicare fee-for-service beneficiaries, with certain exclusions.
    • Designed as a 5-year test, the CJR model begins April 1, 2016, and ends December 31, 2020. Participating hospitals bear the financial risk of the episode of care, which include the procedure, inpatient stay, hospital care, postacute care, and provider services.
    • Providers and suppliers will be paid for episode services under existing systems, but at the end of the model performance year, Medicare will compare a hospital's total episode spending (including postacute care and provider services) against its "target episode prices" for that hospital. If a hospital's spending is below the Medicare target, it may receive an additional "reconciliation" payment. If, starting in the second year of the program, the hospital's spending exceeds the target, the hospital may need to repay Medicare for "a portion of the episode spending," according to a frequently-asked-questions publication from CMS. The requirement for hospital repayment won't begin until year 2 of the program.
    • A hospital that spends lower than the Medicare target will be eligible for the "reconciliation payment" only if it has met quality requirements for complication rates, readmission rates, and consumer assessments.
    • The "stop loss" limits—the percentages that hospitals will be required to repay should their costs exceed Medicare targets—have been delayed and reduced from the proposed rule. Under the final rule, the repayment requirements won't be imposed at all during the first year of the model, and will be set at 5% in the second year, 10% in the third year, and 20% in years 4 and 5 of the program.
    • Hospitals are permitted to partner with third-party providers and suppliers such as skilled nursing facilities, long-term care hospitals, home health agencies, and outpatient therapy providers. Those partnerships allow the hospitals to share any reconciliation payments from Medicare—but also permit the hospitals to share responsibility for repayment to Medicare should total costs exceed Medicare spending targets.
    • Hospitals and other providers already participating in CMS’s voluntary Bundled Payments for Care Improvement (BCPI) initiative programs 1, 2, or 4 are not required to participate in the CJR (a map of the BCPI facilities can be found here).

    According to CMS, hip and knee surgeries were chosen because they are the most common inpatient surgery for Medicare patients, and they tend to be high-cost, high-utilization procedures with a wide variance in spending—from $16,500 to $33,000, according to a CMS press release. The initiative comes from CMS's Center for Medicare and Medicaid Innovation.

    Stay tuned: APTA will be providing a full analysis and summary of the new rule in the coming weeks.


    • Can you say "OVER REGULATION"? This system is a runaway bus - the lawmakers seem to have lost sight of what truly exceptional care patients have historically received and they apparently don't get the notion of increasing expenses. Where is the revolt?

      Posted by Babz Moffatt on 11/19/2015 10:06 AM

    • So this is yet another way that insurers and our government are trying to encourage use of hospitals and destroy anybody's ability to run a private medical practice, even if the results from that private practice outshine the results from the hospital.

      Posted by Scott Kelley on 11/19/2015 10:15 AM

    • This effects hospitals and Part B, any effect on out patient (non-hospital) PT services?

      Posted by Lori Schwanz on 11/19/2015 1:28 PM

    • Yes, I'd like to know the effect on private practice clinics near the chosen metro areas. Please inform us.

      Posted by Dave Bacani on 11/23/2015 9:08 AM

    • What is our beloved association, APTA doing for this. I haven't heard any attempt by APTA yet. It's just throwing small percentage of private practice owner under the bus.

      Posted by Sudhir Tawalare on 12/1/2015 8:43 AM

    • Who is checking that the patient is OK and not just hobbling around while the hospital is supposed to be SAVING $$$$ in order to get even more money because they SAVED $$$. Is this what you want for yourself, your parents, brothers, sisters and other relatives. Five year Test! YIKES. What if there are complications, who does the patient turn to to get proper help?

      Posted by Kathryn Hammer -> CMP_= on 1/9/2016 11:09 PM

    • Are there any guidelines or advice from the APTA (or anyone) on how outpatient private practices can approach a hospital to "partner" with them in this CJR model? Also, does this CJR model apply to joint replacements performed by independent orthopedic surgeons (not employed by the hospital) within the OR of a participating hospital?

      Posted by Tony Friedrichs on 1/22/2016 4:25 PM

    • I may be over 50 but OMG applies...as those above have stated...but is there any way for them to code the plan of care with the tax ID# or NPI of the outpatient clinic that did the early PT? can you say accountability? hello, APTA board?

      Posted by Anthony Cuoco on 1/23/2016 12:33 AM

    • It's not just the private providers who will be impacted by this...hospital-based outpatient rehab services may suffer as well. Surgeons that run/own their own outpatient therapy services are sort of encouraged by this rule to keep everything in-house to minimize risk of repayment by overseeing all aspects of care and to not utilize their own health system's rehab services or those of a private provider. There a some major flaws in this rule that the APTA will hopefully address immediately.

      Posted by Sean Marshall on 1/23/2016 11:29 AM

    • I think this means that all but the healthiest patients will be rejected for the procedure due to high risk of exceeding the allowed payment. So, lots of elderly who would be best off with joint replacement will just have to be in pain. Medicare says 'no surgery for you!' but the orthopods will be the ones who get blamed. I'm a pathologist, on the downstream side of the trickle down medical payments, and I know that when bundled payments happen, there is often nothing left over for the less-visible providers.

      Posted by Karen Reeves on 2/5/2016 11:40 AM

    • The major areas of 'saving' is through decreasing utilization of TCUs. If outpatient therapy groups partner with the physicians and hospitals, and demonstrate that they are partners in bringing the cost of total joint replacement down, it could be very good for PTs. Data is pointing to the fact that more rehab (both in TCU and outpatient clinics) does not necessarily lead to greater functional outcomes. For instance, if you see that TKA in a TCU for 20 days vs 6 days, they still do well either way. More falls and infection occur in the TCU setting than at home. I didn't' make this data up, it's true. Also, doing 20 Outpatient visits of therapy for a TKA or 10 lead to the same functional outcome (LEFS scores in the mid 50s). As a profession, I think it's important that we look at how to continue to show our value by partnering with hospitals and physicians to demonstrate our value in the process. Early outpatient rehab, excellent patient selection and optimization, and virtual monitoring of HEP seems to be the direction CMS is taking us.

      Posted by chris bailey on 2/8/2016 9:05 AM

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