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CMS Finalizes New Bundled Payment Initiative for Hip/Knee Replacements BY ANDREW VAHRADIAN, NOVEMBER 19, 2015

The Centers for Medicare & Medicaid Services (CMS) finalized its Comprehensive Care for Joint Replacement (CJR) payment model which will hold hospitals accountable for the quality of care they deliver to Medicare fee-for-service beneficiaries for hip and knee replacements and/or other major leg procedures from surgery through recovery.

Through this payment model, hospitals in 67 metropolitan statistical areas (MSAs) will receive additional payments if quality and spending performance are strong or, if not, potentially have to repay Medicare for a portion of the spending for care surrounding a lower extremity joint replacement (LEJR) procedure.

With this new system, CMS aims to build upon on measurable goals and timeframes to pay providers based on quality metrics, rather than the quantity of care they give patients. CMS will try to help hospitals improve care delivery and care coordination by providing spending and utilization data to facilitate the sharing of best practices. In turn, CMS hopes this model will give hospitals a financial incentive to work with physicians, home health agencies, skilled nursing facilities and other providers to make sure beneficiaries received the coordinated care required in an efficient manner. The model that is in place today can lead to confusion and conflicting recovery plans for beneficiaries who may receive care from multiple providers and suppliers, which can cause re-hospitalizations and other such complications.

CMS has targeted hip/knee replacement procedures due to the surgeries' large volume, but high variance in quality and cost metrics among providers. For instance, the average total Medicare expenditure for surgery, hospitalization, and recovery ranges from $16,500 to $33,000 across geographic areas, and the rate of complications, like infections or implant failures, after surgery can be more than 3x higher for procedures performed at some hospitals than others.

CMS is presently finalizing an alternative, composite quality score methodology, rather than the threshold methodology that the agency initially proposed. The first performance period for the program is set to begin on April 1, 2016.

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