Recent research shows that capping payments for elective joint replacements could reduce annual Medicare spending by billions of dollars.
The desire to stay active leads more and more people to undergo hip and knee replacements. Indeed, about 505,000 hip replacements and 723,000 knee replacements were performed in the United States in 2014 and they cost more than $20 billion, according to an article published the Journal of the American Medical Association. The prices for these procedures vary widely from city to city and hospital to hospital—from less than $17,000 to almost $60,000.
In 2014, Medicare paid an average of $17,223 and $16,292, respectively, for hip and knee replacements, according to the JAMA article. If those procedures cost the average Medicare rate of $13,000, the U.S. healthcare system would save $4.4 billion.
“With the U.S. currently spending nearly 18% of its gross domestic product on medical care, almost twice as much as other high-income countries, we need to look at every opportunity to reduce costs from services that may be overutilized. Elective joint replacements could represent an area for significant savings,” co-author Jonathan Fielding, M.D., founder and co-director of the Center for Health Advancement, said in a statement.
In addition to capping payments, Fielding and his colleagues recommend creating decisions aids to inform patients about alternatives and risks to help them avoid unnecessary hip and knee procedures.
The Medicare program experimented with bundled payment models for knee and hip replacements to control costs and maintain care quality. A recent study from the Perelman School of Medicine at the University of Pennsylvania looked at the Comprehensive Care for Joint Replacement (CJR) model and found larger, higher-volume care centers are more likely to earnings savings. Many participating nonprofit and major teaching hospitals received a bonus for exceeding federal quality and cost targets for the full "bundle" of care, which includes the joint replacement surgery, associated hospitalization costs and up to 90 days of postdischarge care.
Four Atlantic Health System hospitals are part of the CJR model. After the integrated health system streamlined its care process for patients who undergo hip and knee replacements, the average length of hospital/skilled nursing facility stays declined and it saved roughly $4,000 per patient episode. The system’s new model sends appropriate patients home to recover instead of to a rehabilitation or skilled nursing facility and uses nurse navigators.