Wednesday, September 09, 2015

Bundling Better – How Medicare Should Pay for Joint Replacement and Many Other Types of Care

The Center for Healthcare Quality and Payment Reform has issued a detailed alternative to the problematic payment changes for hip and knee replacement surgeries that were proposed in July by the Centers for Medicare and Medicaid Services (CMS).  CHQPR’s report Bundling Better: How Medicare Should Pay for Comprehensive Care (for Hip and Knee Surgery and Other Healthcare Needs) describes in detail how a properly designed payment system for hip and knee replacement could enable physicians, hospitals, and other providers to improve care for patients and reduce costs for the Medicare program without the need for those providers to accept excessive or inappropriate financial risk, and without requiring or encouraging greater consolidation of providers.  A copy of the report can be downloaded here.
Making sure CMS implements the right kinds of changes in Medicare payment for hip and knee surgery is not just important for orthopedic surgeons and the hospitals and post-acute care providers that care for hip and knee surgery patients.  The way CMS pays for this procedure will likely be the template for the alternative payment models Medicare uses to pay for many other procedures and conditions, so getting it right should be everyone’s concern.  The same payment approach described in Bundling Better could be used to support better care for a broad range of patients and health conditions, not just hip and knee problems.  Moreover, the same payment model could also be used by private employers, state Medicaid agencies, Medicare Advantage plans, and commercial health insurance plans to enable providers to improve care and reduce costs for their employees and members.  The payment changes proposed in Bundling Better would also improve the ability of Accountable Care Organizations to successfully manage the overall costs and quality for a population of patients.
The problems with the way CMS has proposed to change payment for joint surgery were described in detail in CHQPR’s report Bundling Badly: The Problems With Medicare’s Proposal for Comprehensive Care for Joint Replacement.  For example:
  • The CMS proposal does not change any of the underlying fee for service payment structures that create the current problems.  Instead, it tries to impose an overall budget on the total cost of care after the care has already been delivered.
  • The CMS proposal would set the same budget for an episode of care regardless of differences in patient need, which could lead higher-need patients to be underserved or be denied access to surgery.
  • The CMS proposal would put hospitals at risk for all of the costs of post-acute care services, even though hospitals do not have direct control over those services today and would not be given any greater control under the proposal.  Hospitals would also be held accountable for the management of patients’ chronic conditions after discharge, regardless of whether the physicians who had been managing those conditions prior to the hospital admission were even affiliated with the hospital.
  • The CMS proposal would reduce the overall budget for services if fewer services eligible for current payments were delivered, with no consideration for the costs providers had incurred in delivering new or improved services that are not reimbursed under current payment systems.
  • Under the CMS proposal, providers who deliver better outcomes would not be rewarded for doing so unless they were able to reduce spending.  Conversely, providers who deliver poor outcomes would not be penalized as long as spending remained within target levels.
  • The CMS proposal would mandate participation by providers in randomly-selected regions while precluding participation by providers in other regions, which would limit the choices of Medicare beneficiaries in every community.
  • The CMS proposal would preclude the ability to implement better approaches to payment for joint replacements in any region for a five year period.
The revised approach to Comprehensive Care for Joint Replacement (CCJR) developed by CHQPR and described in Bundling Better would have the following significant advantages over both the current payment system and the proposal that CMS issued in July:
  • All of the care associated with hip or knee replacements would be delivered by a physician-led team of providers chosen in advance by the patient receiving surgery.
  • This CCJR Team would have the ability to deliver the most appropriate services to meet patients’ needs, and the providers on the Team would not be restricted to delivering only those services for which payments are made under current Medicare payment systems.
  • The CCJR Team would receive an episode payment designed to cover the costs of all of the services their patients need related to the hip or knee surgery, including all post-acute care services and any complications experienced for a 90-day period.  This payment would be established based on what providers agreed that evidence and experience indicated was necessary to support good care for patients.  The amount of the payment would be known long before care was delivered and it would be stable over time, so that providers could establish and sustain high-quality patient care services.
  • CCJR Teams who treat patients with greater needs would receive larger episode payments to adequately support the larger amount of care those patients need.
  • CCJR Teams who deliver better outcomes for their patients would receive higher episode payments.
  • Payments to CCJR Teams would flow through provider-owned CCJR Management Organizations, and limits on financial risk would be established to enable physician practices and provider organizations of all sizes to participate in the program.
  • Participation in the CCJR program would be voluntary and open to interested providers in all parts of the country, so that all Medicare beneficiaries would have the opportunity to benefit from better care under the program, and also so that no beneficiary would be forced to receive care paid through the program if their physicians did not believe it would enable them to deliver improved care.
  • The CCJR program would not preclude providers or CMS from implementing other payment models if better options became available.
Although there is an urgent need to reform payment systems and to control health care costs, it is simply not feasible to implement a well-designed CCJR payment model by January 1, 2016 as CMS has proposed.  Moreover, rushing to implement a problematic payment model and then requiring that it be used for five years in some communities while precluding any other changes in order to “test” that model will create a major barrier to true innovations in care and payment for joint replacement and it will likely have a chilling effect on innovations in other areas.
Instead, CHQPR has proposed that CCJR should be redesigned and implemented through a collaborative effort of CMS and the physicians, hospitals, and post-acute care providers who want to create a truly well-designed payment model.  Bundling Better includes a detailed timetable for implementation that could enable improved care for Medicare beneficiaries and savings for the Medicare program beginning in 2017.
 

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