Payment Reform: What does it actually mean?

Payment reform is back on center stage. And after several voluntary pilot programs, it has taken a big step forward with a new initiative mandated by CMS. This program goes into effect April 1, 2016 and signals a seismic shift toward value-based-payments. But first, some quick context: The Comprehensive Care for Joint Replacement (CJR) program…

Payment reform is back on center stage.

And after several voluntary pilot programs, it has taken a big step forward with a new initiative mandated by CMS. This program goes into effect April 1, 2016 and signals a seismic shift toward value-based-payments.

 

But first, some quick context:
The Comprehensive Care for Joint Replacement (CJR) program is the first mandatory bundled payment program introduced by the Centers for Medicare and Medicaid Services (CMS) aimed to reduce cost and enhance quality across hip and knee replacement procedures.

This is what an overview of the program looks like:

CJR

 

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How does it work?
Acute care hospitals across 67 markets will be held accountable for all expenditures related to a lower extremity joint replacement from admission through ninety-days post-discharge.

 

CMS will measure total spend as compared to a target price established based on hospital-specific and regional historical data. Under CJR, reimbursement will also be linked to quality of care and overall patient satisfaction.

 

For a hospital to be successful in a bundled payment model, alignment with physicians, post-acute care providers, and other collaborators is key. CMS and the Office of of the Inspector General (OIG) have issued fraud and abuse waivers to open the door for gainsharing between hospitals and CJR collaborators to facilitate this alignment.

 

Before it goes live on April 1, 2016, hospitals should take steps to understand current cost and quality performance, strengthen physician relationships, and explore tools and technologies to aid in care coordination – all of which will be critical for success under CJR and bundled payment programs to come.