Performance-Based payment and orthopedics: A focus for the Medicare program

On April 1, 2016 a new risk-based alternative payment model for Medicare beneficiaries undergoing hip and knee replacements (also called lower extremity joint replacements or LEJR) started.

This model, now mandatory in 67 metropolitan statistical areas (MSAs) will now automatically be applied to the payments for Medicare patients undergoing a hip or knee replacement at hospitals in these areas. In an article published on April 4, 2016 by Christopher Cheney in Health Leaders Media, the results of two surveys regarding hospital readiness to participate in this demonstration project were reviewed. A FORCE-TJR survey found 56% of hospital orthopedics programs reporting being unprepared for this April 1st start of the Comprehensive Care for Joint Replacement Model (CCJR). A survey released in late March 2016 by Avalere Health indicated that 60% of the hospitals required to participate in CJR could lose money in the bundled payment model when downside risk begins in January 2017.

One of the interesting elements of the proposed Comprehensive Care for Joint Replacement Model is that the "trigger" or starting point for the episode of care and the retrospective calculation of the patient's cost per episode is the day of the surgery and the start of the inpatient hospitalization. The episode of care begins with an admission to a participating hospital of a beneficiary who is ultimately discharged under MS-DRGs 469 (Major joint replacement or reattachment of lower extremity with major complications or comorbidities) or 470 (Major joint replacement or reattachment of lower extremity without major complications or comorbidities) and ends 90 days post-discharge in order to cover the complete period of recovery for beneficiaries. The episode includes all related items and services paid under Medicare Part A and Part B for all Medicare fee-for-service beneficiaries, with the exception of certain exclusions.

A reason that this is interesting is that many of the performance-based payment models that are being developed by various healthcare stakeholders are focusing on the area of the care episode dealing with the work-up or the diagnosis of the patient and then that patient having a disease with various choices of treatment options. These models are then analyzing variations in care versus an evidence-based "optimal," care pathway for a patient that presents with that set of symptoms. Savings targets or benchmarks are then set to incentivize the optimal care pathway.

With this Comprehensive Care for Joint Replacement Alternative Payment Model, at the end of a performance year, actual spending per episode (total expenditures for related services under Medicare Parts A and B) is compared to the Medicare target episode price for the hospital in one of the 67 MSAs where the patient was treated. Depending on the participant hospital's quality and their episode cost compared to the target, the hospital may receive an additional payment from Medicare or be required to repay Medicare for a portion of the episode spending.

To be successful in this alternative payment model, the hospital and healthcare providers that it works with will need to be focused on the costs to the healthcare system and the patient in the 90 days post-surgery. Therefore, areas that may need to be analyzed and then best practices or protocols identified are areas such as why a patient with hip or knee replacement surgery was not discharged in a timely manner, reasons that a patient is discharged to a rehabilitation center versus home, and what causes a patient to seek follow-up medical care and possibly be re-admitted and how can these various situations be addressed through better pre-planning prior to surgery.

One such area that may impede timely discharge and the start of physical therapy and rehabilitation for a patient undergoing total knee or hip replacement surgery is significant post-operative pain. In an article by Herb, et al in the Journal of Perioperative Outcomes and Orthopedic Surgery it was quoted that severe pain occurs in 60 percent of patients undergoing total knee arthroplasty and up to 30 percent report at least experiencing moderate pain. Wang, et al reported in the Journal of Regional Anesthesia and Pain Management that inadequate control of post-operative pain has been associated with poor functional recovery based on articles published by Williams-Russo in 1996 and Mahoney in 1990. So a question becomes regarding how can this pain be addressed?

In an interview with Edward R. Mariano, MD, MAS, a board-certified anesthesiologist, in the August 2015 issue of Clinical Pain Advisor, Dr. Mariano discusses the Perioperative Surgical Home (PSH) model of care supported by the American Society of Anesthesiologists. Dr. Mariano states that, "Key to the implementation of a PSH model is a strong pain medicine program, with an emphasis on providing high value acute pain management while patients are in the hospital and coordination with primary care providers and chronic pain medicine specialists during preoperative preparation and postoperative rehabilitation and recovery." He also speaks to the need for anesthesiologists to take the lead in developing multimodal perioperative pain management protocols. He states that for total joint arthroplasty, many of these protocols emphasize opioid-sparing regional anesthesia techniques such as peripheral nerve blocks and perineural catheters. More effective pain management can prevent inadvertent admissions or readmissions due to pain. Could this be an area where hospitals can institute best practices and become better prepared to meet their CCJR demonstration targets?

Mayo Clinic has also been studying the use of a Total Joint Regional Anesthesia protocol when undergoing a primary or a revision of a total hip or a total knee replacement. Herb et al published the results of a cohort of 100 patients who were studied against matched controls in the November-December 2008 edition of the Journal of Regional Anesthesia and Pain Medicine where the intervention was a comprehensive, pre-emptive, multimodal analgesic regimen emphasizing nerve blocks. The article reports that the 100 patients that received the intervention had significantly improved perioperative outcomes, including shorter hospital stays, and fewer adverse events versus patients receiving traditional intravenous opioids.

Given that this is a five year demonstration project with the first year not incurring two-side risk, there is still time for the approximately 800 hospitals involved to begin the process of identifying and implementing protocols to increase quality and lower the cost of an episode of care for a hip or knee replacement surgery. To learn more of the specifics regarding the 67 areas, the quality measures, and the stop-loss percentages by year, please visit the Centers for Medicare and Medicaid Innovation website's page for this program at

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.​

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