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Top 10 Ways to Prepare for the Comprehensive Care for Joint Replacement Model and the Inevitable Bundled Payment Mandate

Posted by Matthew Smith on Jul 24, 2015 1:29:35 PM

By Barbara Letts, Senior Manager, GE Healthcare Camden Group

The time is now for health systems and post-acute providers to engage physicians, create actionable data, and plan for operational and financial changes in order to implement bundled payments for hip and knee replacements. On July 9, 2015, the Centers for Medicare & Medicaid Services (“CMS”) proposed the Comprehensive Care for Joint Replacement (“CCJR”) Model in order to encourage providers across the continuum of care to collaborate, promote price transparency, and drive a new level of cross-continuum accountability.  CMS was smart in their decision to extend the bundle to 90 days as it forces a level of collaboration and accountability that is unprecedented.

The CCJR mandate, a retrospective payment model, is proposed to begin on January 1, 2016, run for 5 years, span across 75 Metropolitan Statistical Areas (“MSA”) areas, and apply to current acute care hospitals in the selected MSAs not currently participating in the Bundled Payments for Care Improvement (“BPCI”) initiative. Given that the average Medicare expenditure for surgery, hospitalization, and recovery for a hip and knee replacement ranges from $16,500 to $33,000 across geographic regions, the CCJR attempts to standardize the cost variation across providers by setting an individual target price, and requires minimum quality reporting to be eligible for a positive reconciliation payment.

Whether providers are ready or not, the bundled payment mandate is coming, and with less than six months until January 1, 2016, there is no shortage of things to do to prepare.

The following represents the top 10 ways for providers to plan for bundled payments under CCJR:

1. Understand Geographic Variation

Medicare fee-for-service claims data made available to BPCI participants has made the healthcare industry acutely aware of the variation in average Medicare spend for high-volume surgeries – such as major joint replacements – especially as it relates to the 90-day post-acute period. While the national average in 2013 showed that 3 in 10 patients were discharged to a skilled nursing facility (“SNF”), and 1 in 10 was discharged to an inpatient rehabilitation facility (“IRF”), the average by geographic area varied greatly, with ranges between 1 and 6 for a SNF and less than 1 and 4 for an IRF. The following chart illustrates the variation in post-acute settings after a hip or knee replacement surgery for some of the specific geographic areas proposed in the CCJR program. While this illustrates the number of patients discharged to various post-acute settings, it does not reflect that number of patients who “bounce around” to other settings during the 90 days post-discharge – further demonstrating variation in managing post-acute care and cost. With a clear understanding of the drivers of variation in your market, including physician practice patterns, discharge planning decisions, and post-acute provider relationships, this data will provide the foundation for action.

2013 Medicare Claims and Variation in Discharge Disposition for Major Joint Replacements (DRGs 469, 470)


2. Know Your Post-Acute Spending

It is essential to analyze your organization’s joint replacement post-acute spending (both utilization and length-of-stay) by care setting and compared to national benchmarks, with a focus on inpatient rehab facility, SNF, and home health costs. Post-acute spending can represent the highest cost category for a bundled payment episode, and significant annualized savings opportunities can be achieved by shifting to lower-cost post-acute settings as clinically appropriate. According to the Medicare Payment Advisory Commission’s Fiscal Year 2011 Data, daily rates across the care continuum for Medicare FFS can vary significantly as noted:

  • Acute Hospital: $1,819/day
  • Inpatient Rehab Facility/Unit: $1,314/day
  • Skilled Nursing/Transitional Care Unit: $432/day
  • Home with Home Health: $190/day

3. Plan for the Impact on Post-Acute Bed Capacity

Providers are reviewing their future bed allocation and are projecting their post-acute bed needs given shifts in care patterns and the resource requirements in these units. It is projected that the number of inpatient rehab facility beds will decline over the next five years as patients are discharged into less acute care settings. With proposals outstanding from both CMS and MedPAC to reduce the payment differential across post-acute sites of care, orthopedic procedures are anticipated to be one of the early procedure targets to ensure the patient is discharged to the right care setting.

4. Develop a Targeted Post-Acute Provider Network

Given that participants in CCJR will be at risk for a 90-day episode post-discharge, acute care providers should carefully assess their post-acute provider networks to ensure their partners are aligned clinically, financially, and strategically by evaluating the following key factors:

  • Vision, goals, and leadership
  • Quality metrics and protocols (e.g., star rating, average length-of-stay, readmission rates, discharge rates)
  • Facility characteristics and offerings (e.g. size, room distribution, capacity, specialties)
  • Staffing and resources (e.g., RN coverage, primary care coverage, electronic health records use)

5. Involve Your Physician and Clinical Leadership Now

Engaging both physician and clinical leadership can make or break your joint replacement bundled payment program. Physicians, nurses, social workers, case managers, physical therapists, and service line leaders will be implementing and tracking the changes required for CCJR, and it is vital to involve them early in the planning process. Convening the right team at the right time will ensure they are contributing to and aligned with the development of the pathways, quality metrics, dashboards, and the process for continual monitoring and improvement.

6. Standardize your care pathways and protocols

Transitioning to one episode pathway pre-, during, and post-joint replacement may be challenging, but it is important to standardize care protocols for joint patients to reduce variability in physician practice patterns. An evidence-based protocol may not apply to each patient depending on age, support system for post-procedure, and other co-morbidities, but encouraging physicians to discuss best practices leads to more effective, more predictable, and more collaborative care across the continuum.

7. Analyze Potential Variation in Supply Cost

To mitigate any potential losses in the CCJR program, organizations need to evaluate opportunities to reduce internal costs. Given that hip and knee implants are high-cost devices, device standardization and other supply chain management strategies should be considered. Focus on the high-cost devices in the near-term, and then evaluate lower cost supplies and product variation in items such as blood products and pharmacy.

8. Reduce Duplicative Services and Testing

In addition to supply costs, organizations should evaluate diagnostic services and tests by analyzing charges and average utilization by physician. Be transparent with physicians and work jointly on attainable reduction targets. Be mindful of any charge capture issues that may skew findings.

9. Assess Current Resources and Infrastructure

To effectively identify and manage bundled payment patients, including outliers, the right resources must be in place as soon as possible. Providers that are successful managing episode-based care utilize nurse navigators (RNs or social workers) to track, manage, and monitor the patient across the episode, with a focus on preventing costly readmissions and assisting patients through clinical and psycho-social follow-up and logistics.  Navigators and analysts have access to clinical information and share outcomes data internally and with post-acute care partners. The right infrastructure must be in place, including patient tracker tools, monthly dashboards, and care processes to effectively and efficiently standardize care delivery.

10. Track Your Clinical Outcomes

This does not have to be an overly complicated process. Keep your measures simple and leverage what is already being measured. Readmissions, mortality rates, complications, infections, mobility post-surgery, and patient experience should be enough to gauge and continue to improve your organization’s performance.

With so many competing initiatives and resources, it is essential to prioritize given the anticipated date of January 1, 2016 for the proposed CCJR mandate to begin. Collaborate with your physicians, understand and track your data in the acute and post-acute setting, allocate resources efficiently, and know this is only the first step in mandated bundled payment programs to come.


New Webinar: The CMS Mandatory 90-Day Bundle—Orthopedic Experts Weigh in on the Clinical, Operational, and Economic Impact

Join The Camden Group on Wednesday, July 29 from 11:15 a.m.-12:15 p.m. (Eastern) for a webinar featuring an exclusive panel discussion with nationally renowned orthopedic experts. 

Joint Episode Webinar, The Camden Group


Ms. Letts is a senior manager with GE Healthcare Camden Group and specializes in financial advisory services for the healthcare industry. She has developed complex financial models for various types of healthcare entities including children’s hospitals, large public hospitals, academic medical centers, community providers, medical foundations, clinically-integrated networks, and hospitals in turnaround situations.

 

Topics: Bundled Payments, Orthopedics, Joint Episode, Joint Replacement, Medicare Bundled Payments, Barbara Letts

The Bundled Payment Imperative: CMS Moves Closer to a Mandate

Posted by Matthew Smith on Jul 13, 2015 6:41:46 PM

Rapidly following on the heels of its oncology bundles announcement, the Centers for Medicare and Medicaid (“CMS”) announced on July 9 a new proposed mandate for a 90-day retrospective bundled payment model. This model impacts Medicare beneficiaries receiving lower extremity joint replacement or reattachment of lower extremity procedures, in the 75 designated geographic areas. Modeled after the Bundled Payments for Care Improvement (“BPCI”) program and evidenced by the Acute Care Episode (“ACE”) demonstration project, CMS puts forth that the Comprehensive Care for Joint Replacement (“CCJR”) model aims to improve cost efficiencies, patient outcomes, and collaboration among various types of providers for an episode of care.

Key Program Components

  • Only hospitals and health systems are eligible to “own” the bundle. Physicians and physician groups are not eligible to “own” the bundle. Financial liability for the 90-day episode is assigned to the hospital.
  • 90-day retrospective bundle
  • Joint replacements only
  • Gainshare waiver is available
  • No downside risk in year one
  • Five-year term (as compared with a three-year term for BPCI)
  • No lengthy or costly application process (relative to CMS bundled payments pilots)
  • BPCI participants are excluded from mandatory participation
  • Similar to the Medicare Shared Savings Program, there are minimum quality performance measures that must be achieved in order to be eligible for payment reconciliation.

Defining the Impact on Providers

The overall impact of bundled payments will be demand destruction related to unnecessary testing and treatments. Providers should expect to see:

  • reduced inpatient diagnostic testing
  • shorter lengths of stay
  • reduced avoidable readmissions
  • significant decline in inpatient rehab and SNF utilization
  • closer scrutiny related to supply cost and physician preference items

Bundled payments motivate a new set of behaviors for physicians aimed at giving patients exactly what they need in the most cost effective setting and nothing more.

This is a retrospective bundle so the impact on day-to-day claims processing operations will be minimal. All hospitals participating in the CCJR program will continue to be paid Medicare fee-for-service payments under the Inpatient Prospective Payment System, and subject to yearly reconciliation against a set target price. The proposed rule states that hospitals that perform better than the target price will only be eligible for a positive reconciliation payment if the mandatory quality metrics are achieved, such as complications, readmissions, and patient experience measures. Similarly to BPCI, in the first year of CCJR, participating hospitals will not face any downside risk.

Other features of the CCJR model are similar to BPCI in terms of permissible waivers and the alignment of care redesign with potential gainshare payments to physicians. The 439-page proposed rule is open for public comment, which closes September 8, 2015.

Determining the 75 Markets

The selected markets were chosen because they represent a high density of Medicare recipients. CMS excluded regions that did not have sufficient volume of DRGs 469 and 470, as well as regions with very high BPCI penetration. CMS was left with just under 200 regions, from which they selected 75 of those 200. In addition, CMS differentially selected higher cost regions more often than lower cost regions (in terms of the average hip replacement episode cost). The 75 markets represent approximately 800 hospital providers.

Start Date and Eligible Providers for Mandatory Joint Replacement Bundles

The initiative is proposed to begin January 1, 2016, and would be in place for 5 years. The CCJR model will target lower-extremity joint replacement (“LEJR”) episodes for Medicare Severity-Diagnosis Related Groups 469 and 470. Similar to Model 2 in the BPCI program, the episodes of care will be initiated upon inpatient admission to an acute care hospital and include all related post-acute care for 90 days post-discharge. Only acute care hospitals will be eligible to be episode initiators under the CCJR program, as compared with other types of entities participating in BPCI such as physician group practices and post-acute providers. Given that this is a proposed mandate, there will be no enrollment or application process involved for eligible hospitals to participate. CMS has stated in the proposed rule that the CCJR is not an extension of BPCI itself, and will not impact hospitals that are currently live with LEJR episodes in the BPCI program.

Required Minimum Quality Reporting to be Eligible for Savings Pay Out

There are two quality aspects that are important to payment under this initiative:

  1. Hospitals must meet a certain threshold on three specific quality measures (30th percentile in years 1-3 and 40th percentile in years 4-5) in order to qualify for a reconciliation payment. If they do not meet the threshold, they are not eligible to receive a reconciliation payment. The National Quality Forum (“NQF”) measures are as follows:
    • NQF 1551: Hospital-level 30-day, all-cause risk-standardized readmission rate following elective primary total hip arthroplasty (“THA”) and/or total knee arthroplasty (“TKA”)
    • NQF 1550: hospital-level risk-standardized complication rate following elective primary THA and/or TKA
    • NQF 0166: HCAHPS survey
  2. If hospitals elect to submit THA/TKA voluntary data (a patient-reported outcome-based measure) as requested by CMS, the discount percentage applied to calculate their target will be reduced by 0.3%

For acute care hospitals within the 75 MSAs, especially those not currently participating in a payment reform initiative of this kind, this proposed rule represents a clear signal regarding CMS’s commitment to using bundled payments as an alternative to fee-for-service reimbursement.  Very consistent with CMS’s approach to policy change—carrot first and then the stick—all prior bundled payments pilots were voluntary whereas this initiative is mandatory. Last week’s announcement will press providers to accelerate their efforts to lock into a post-acute network.

Topics: Bundled Payments, BPCI, Medicare Bundled Payments, CCJR

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