Study: Medicare joint replacement program should be risk-adjusted

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Should Medicare's Comprehensive Care for Joint Replacement program be risk-adjusted for the patient's medical complexity?

That's the conclusion of clinicians and researchers from the University of Michigan and the Michigan Value Collaborative, who believe that not individually adjusting for the health of each patient undergoing a joint replacement surgery would cost hospitals money.

The Centers for Medicare & Medicaid Services announced the joint replacement bundled payment initiative last year as a way for controlling costs for the procedure, which has risen dramatically in volume as the U.S. population ages. CMS expects the initiative to save as much as $343 million over the next five years. However, a study published earlier this year by the Kaiser Family Foundation concluded that bundled payment initiatives would have doubtful cost savings.

Writing in the most recent issue of the journal Health Affairs, the researchers studied Medicare claims for joint replacement surgeries performed in Michigan between 2011 and 2013, including all payments made for 90 days immediately after the procedure was performed. Patient co-morbidities were also researched by reviewing all of their medical claims for the year prior to undergoing surgery. Joint replacement surgeries that had extremely high or extremely low costs were excluded. Altogether, 23,251 procedures were analyzed.

When the CMS-HCC risk model was applied to those patients, the researchers discovered that there was an $827 payment reduction for each standard deviation in CMS-HCC risk score. The estimate was unaffected after adjusting for such characteristics as number of beds, teaching status and proportion of Medicaid patients.

Altogether, the study concluded that “including CMS-HCC risk scores in the calculation of reconciliation payments would lead to reductions in annual payments by as much as $146,360 for hospitals with the least medically complex patients and increases as large as $114,184 for hospitals with the most medically complex patients.”