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Bundled payments to overhaul lucrative total joint replacement surgery sector

by John W. Mitchell , Senior Correspondent
CMS has issued a final rule that will drastically change payment and treatment for many of the hundreds of thousands of patients who receive lower extremity total joint replacement (TJR) every year.

“This final rule is going to change the incentive structure with more efficiency and quality for patients,” Dr. Ezekiel J. Emanuel, chair of Medical Ethics and Health Policy at the University of Pennsylvania, told HCB News. “I’m pleased that CMS didn’t water the final rule down. This a huge step forward.”

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The final rule, called the Comprehensive Care for Joint Replacement model, will create one bundled payment for TJR to the lower extremities over a 90-day “episode of care". The new rule will be initially rolled out in 67 metropolitan areas in April of 2016. The episode of care will commence once the patient is admitted to the hospital for their TJR surgery.

“It’s basically a 90-day guarantee,” said Emanuel, adding that the attending orthopedic surgeons and hospitals will need to carefully assess the way they prevent infections and provide rehabilitation to the patient. They will not be reimbursed beyond the bundled payment for any complications and/or readmissions in the course of the time period.

Hospitals and surgeons will also need to more carefully consider the cost of the artificial joints they use in these surgeries. A 2012 study published in the Journal of Bone & Joint Surgery identified a wide range of costs for TJR implants, from under $2,000 to more than $12,000.

“I think we’ll see the number of choices of implants be reduced in hospitals,” said Emanuel. “I also think we’ll see this final rule roll out to all hospitals in two to four years."

In a press release, the American Association of Orthopedic Surgeons (AAOS) said it supported the concept of “structured alternative payments". The AAOS did acknowledge that changes were made from the preliminary draft and the final rule in response to their suggestions. However, the AAEOS remained “concerned about unintended consequences for Medicare beneficiaries and physicians.”

The AAOS did not respond to specific questions about the final rule.

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