Nearly 800 hospitals are beginning the mandatory Comprehensive Care for Joint Replacement (CJR) model next month. In this Centers for Medicare and Medicaid Services (CMS) model, lower extremity joint replacement (LEJR) procedures will be part of a bundled payment rather than fee-for-service payment model.
CJR hospitals will be financially responsible for the entire episode of care related to LEJR procedures performed in their hospitals on Medicare patients. CMS is launching CJR as part of its goal to move 50 percent of Medicare and Medicaid fee-for-service payments to alternative payment models, such as bundled payments, by 2018.
A Lot to Gain, A Lot at Risk
In the CJR model, hospitals have a large financial stake in what happens to patients during the entire episode of care: up to 90 days post-discharge after an LEJR procedure. Each hospital is given a bundle target price based on contributions from both their hospital-specific historical LEJR episode expenditures and regional (US Census regions) LEJR episode expenditures. If a hospital's average LEJR episode cost is below the target price, they can receive a reconciliation payment (upside gain) from CMS. If their average cost is above the target price, they will owe CMS the difference (downside risk), beginning after the first year of the program. Every service billed to Medicare during the episode reduces the possible reconciliation payment, so hospitals are looking for ways to minimize unnecessary expenditures while providing quality care.
While hospitals are the ones held accountable for the LEJR episode cost, they do not have to bear the risk alone. They can share both downside risk and upside gains with partners. Hospitals should not shy away from gainsharing and here are five reasons why.
1. Gainsharing Motivates All Care Partners
Gainsharing provides hospitals with the carrot to motivate their care partners to work with them to achieve the goals of the CJR model. Between the actual surgery and post-acute care, there are many possible gainsharing collaborators to consider. Possible collaborators include: orthopedic physicians who perform the surgery and prescribe discharge and recovery protocols, physician group practices, non-physician practitioners, skilled nursing facilities (SNFs), home health agencies, and inpatient and outpatient physical and occupational therapists. There are many providers and facilities who can bill Medicare during the episode of care and yet only the hospital is on the hook for any costs above the target price. Gainsharing can be a motivational tool giving care partners financial incentives to improve their protocols while providing the best care in the most cost efficient manner.
A hospital may initially view gainsharing as revenue lost, but this is the wrong view. Gainsharing helps to develop interest in the program and enact care redesign initiatives at the very start that can result in savings-based revenue. With effective gainsharing methodology in place, everyone is motivated to make changes so they can each have financial gain.
2. A Powerful Way to Engage Physicians
Physician engagement might be the most important key to redesigning patient-centered care and lowering the cost of LEJR episodes. This holds true regardless of whether the orthopedic physician is hospital employed or independent. Physicians have established relationships with patients before they walk in the hospital doors and their recommendations go a long way to influence patients' choices for their post-surgical care. Physicians prescribe post-acute care protocols, which can include the length of a SNF stay. As a result, physicians can have a huge impact on post-acute care spending. Physicians must be engaged in order for hospitals to be successful in the CJR model and gainsharing is a great way to encourage physician involvement in the care redesign process.
3. Gainsharing Could Incentivize Post-Acute Care Providers During Stay Reductions
Hospital DRG payments are essentially static for each procedure, while payments to post-acute care providers are variable depending on utilization and length of stay/service. Since CJR hospitals will be looking for areas to reduce costs, post-acute care (PAC) providers arguably have the most to lose when hospitals "trim the fat." Given the high cost of a stay in a skilled nursing or inpatient rehab facility, bundled payment episode initiators are beginning to question if stays in these types of facilities after LEJR procedures, especially elective procedures, are necessary. Studies show that sending an otherwise healthy patient home after surgery with home health services results in the same or better outcomes than sending them to a skilled facility. PAC providers will be the unfortunate losers with decreased utilization and shorter stays, but quality providers can be motivated to be active CJR collaborators when gainsharing is presented as a way to make up some of the lost revenue.
4. Sharing Gains Also Means Sharing Risk
The start of the mandatory CJR model can be a bit intimidating. Beginning with episodes initiated around October 1, 2016, a hospital will be financially responsible for an entire episode of care. But hospitals don't have to do this alone. Up to 50% of the total risk can be shared with many of the care providers during the episode. With many providers sharing risk and the possibility of gain, the entire care continuum can be aligned to communicate, share best practices, improve protocols, and maintain quality care. Ultimately, the alignment between providers through shared risk (and shared gains) aligns everyone to work together, an essential component of CJR success. In addition, hospitals can feel less isolated during the mandatory transition to these bundled payments by having the opportunity to unload some of the risk burden.
5. Gainsharing Physicians Can Be Rewarded for Excellent Care
Physicians may be wondering why they would want to gainshare. A physician performing LEJR surgeries at a CJR hospital can benefit from gainsharing by being financially rewarded for the quality care they are already providing, or for improvements they make to their protocols to enhance patient-centered care pathways. As physicians begin to implement protocol changes, gainsharing allows them to benefit from their efforts to reduce overutilization of services and unnecessary expenses. Many physicians are already providing great patient care, why not be rewarded for it through gainsharing? Along with gainsharing, physicians may also be asked to take on financial risk, which can be scary. Hospitals and physicians that arrive at a mutually agreed upon incentive/risk plan will be the best suited for CJR model success.
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Each hospital participating in the CJR model needs to evaluate the partners with whom they want to share financial risk as well as financial gains. Gainsharing/risk-sharing is a valuable strategy for hospitals to consider, which can distribute risk, incentivize partners, and provide the opportunity for higher financial gains with partners who are equally invested in care redesign.
Follow me on Twitter @jimgera, connect with me on LinkedIn, or contact me at SMGBundles@signaturehealth.net for more information, assistance in navigating gainsharing relationships, or in implementing the CJR model.
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