CMS launches joint replacement payment initiative

The Centers for Medicare & Medicaid Services (CMS) has launched its initiative to cut the costs of joint replacement surgeries.

The program, which includes some 800 hospitals in 67 major metropolitan areas throughout the United States, took effect on April 1 and places the financial responsibility for the success of a joint replacement surgery in the hands of each hospital, up to 90 days post-discharge. Each hospital will receive a single payment to perform the surgery, as opposed to the old fee-for-service model.

CMS officials said the intent of the program was to control costs and improve quality. Medicare spends $7 billion a year on joint replacements, but costs can vary widely by provider by as much as two-fold, according to a CMS fact sheet. At some hospitals, the rate of complications is triple that of other facilities. And some facilities that are not well-equipped to perform joint replacements, such as critical access hospitals, had mortality rates more than a third higher than the average.

"The model aligns with what matters to beneficiaries--better outcomes for a whole episode of care. The model includes patient-reported outcomes after surgery and incentivizes better care coordination," said Patrick Conway, M.D., CMS' chief medical officer, in a blog post on the CMS website.

The American Hospital Association has supported the initiative, although asked for a waiver of some self-referral laws due to "the close integration of a variety of healthcare providers" required to make a bundled payment scenario work.

However, some questions remain as to whether the initiative will address the zooming upward rate of joint replacement surgeries being performed in the United States. The number of joint replacement surgeries has increased by 50 percent in less than a decade.

To learn more:
- read the CMS blog post 
- check out the CMS fact sheet

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