How to maximize orthopedic bundled payments: Key thoughts for CJR hospitals

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Alternative payment models and bundled payments are becoming more common for orthopedic procedures, especially after Medicare launched CJR last month. Some hospitals are ahead of the curve while others are scrambling to fit into value-based care.

An executive roundtable discussion at the Becker's Hospital Review 7th Annual Meeting in Chicago addressed the common misconceptions, anxieties, challenges and opportunities for CJR hospitals and where bundled payments are headed in the future. Syncera, powered by Smith & Nephew, sponsored the roundtable.

In his opening remarks, Senior Vice President of Business Development at Signature Medical Group Jim Gera addressed many misconceptions about CJR, including:

1. The program's duration: CJR began April 1 and the first year ends sometime in the end of September/beginning of October. The performance years depend on when the episode ends, not when it begins so hospitals will begin entering the “risk” period in late September/October.

2. The stop loss in year 1 is 5 percent; however that 5 percent is based on the aggregate episode of care spend, not just the amount of the loss. For example a hospital with 500 annual episodes at an average cost of $20,000 would have a total episode spend of $10 million with a stop loss in year 1 of $500,000.

3. While CJR includes joint replacements, the focus goes far beyond just the orthopedic surgery to include non-clinical specialists and care managers. An effective episode care management program for bundled payments is comprised of a comprehensive biopsychosocial care model.

“We realized we had to add new resources to the care team, including certified case managers and social workers who are working with our patients to deliver a complete biopsychosocial care model,” said Mr. Gera. The providers, including the surgeons, hospital, and other physicians must be on the same page to realize the quality improvement and cost savings.

For example, total hip replacement surgeons doing the anterior technique should realize cost savings on the entire episode of care because their patients require less physical therapy and rehabilitation. But when Mr. Gera and his team assessed episode costs for total hip replacement patients, they didn’t see any difference; the therapists and post-acute providers treated anterior and posterior hip replacement patients the same post-discharge. Mr. Gera indicated surgical technique choices and physician recommendations alone are not enough to improve quality and reduce cost. It is vital to have case managers engage and manage patients throughout the 90+ day episode.

But there are ample opportunities to improve quality and reduce cost by eliminating waste and variation while improving communication across the continuum of care. Hospital executives can work with physicians and specialists to reduce readmissions, discharge patients home, and lower costs per case through gain-sharing. But each facility needs to review their own data.

“If you haven’t gotten your CMS data, you need it. Don’t rely on the CMS summary data. It might not be accurate enough. You need to crunch the numbers yourself,” said Mr. Gera. “You need to know where you are at now and where you are going. It’s not going to be the same for everyone.”

Physician engagement will also be key. Within CJR there is the opportunity for risk-sharing and gain-sharing. “In our experience, when there is financial risk-sharing and financial upside on top of providing better outcomes for physicians, physicians will be highly engaged,” said Mr. Gera.


Syncera is a comprehensive solution designed to reduce total joint replacement costs and improve care delivery across multiple cost centers. The solution is particularly helpful for facilities participating in bundled payments and CJR. Syncera integrates clinically proven primary hip and primary knee implants with OR and supply chain efficiencies driven by easy to implement technology.

“Everything you see in Syncera is technology-driven. We interface with any EMR or ERP and the idea was to take out the cost of service and supply of implants and pass the savings on to the customer,” said Stuart Morris-Hipkins, senior vice president and general manager of Syncera. The company also delivers new tools to speed up OR staff training on surgeon procedure preferences, and helps teams improve efficiency. The key areas making the biggest difference for episode of care cost savings and efficiency include:

• Clinically proven implants at value pricing
• Online interactive training and competency scores for OR staff on surgeon specific procedure preferences reducing the need for manufacturer reps
• Only the instruments needed for each procedure are pulled to the OR. Significant savings in sterilization costs.
• Point of Care scanning technology reduces “near misses” and can eliminate 85% of implant waste
• Automatic resupply of implants based on scanned products used for each case
• Performance dashboard to track metrics and savings

Their software works for any service line and procedure. “The idea was to create agnostic technology that drives value,” said Mr. Morris-Hipkins.

A pilot study at Johns Hopkins evaluated the impact Syncera's technology had on episodes of care. They found 60 percent of instruments made available during cases were never used across spine, neuro, GI and orthopedics. Syncera technology easily identifies those instruments that are unused, and the savings can be significant – even for just one streamlined tray. “It’s a dramatic reduction,” said Mr. Morris.
. “We are able to transform the way surgery is supported and change the way instruments are prioritized and sterilized. The savings range from $73 to $153 per case just for sterilization,” said Mr. Morris.

If you’re doing 700 total joint replacements per year, savings with Syncera could be $4 million over three years.

David Glaser, an attorney at Fredrikson & Byron, explained that in CJR, the hospital is financially responsible for a broad range care provided to a patient in the 90 days after the joint replacement. The hospital is subject to the new reimbursement model, but physicians, skilled nursing and therapists still get fee-for-service. Additionally, the hospital is responsible for a number of costs that most observers would not consider “related” to a joint replacement— including substance abuse treatment, hospice and mental health.

Patients with a lot of comorbidities will drive up costs but hospitals can’t “pick and choose” which patients participate in the bundle, or which patients they will accept. Mr. Glaser discussed three other odd "quirks" in CJR:

1. Hospitals can’t require patients to use preferred providers.
2. Hospitals can’t require physicians or therapists to become” collaborators,” the term the rule uses to describe organizations that partner with a hospital to lower costs.
3. The collaborator can share gain without the downside risk.

“In a traditional gain sharing, it’s common, but not necessary, to have quality metrics; here it’s required. The total distribution payment going to the doctor can’t be more than 50 percent of what the physician receives under fee-for-service payment. The payments from the hospital to the physician group can be any combination of sharing the amount paid from the CJR program…or if there are internal savings, you can share those savings. But the total amount the physician receives cannot exceed that cap of 50 percent of the fee-for-service payment,” said Mr. Glaser. He outlined additional rules in the program:

1. Only physicians who participate in the episode of care can receive the gain-sharing payments. Physicians who are part of a multispecialty group but don’t directly participate in an episode of care can’t benefit from the savings within the gain-sharing agreement.

2. A hospital can’t take money back from the collaborator unless the hospital is required to pay money back to CMS. If hospitals recoup money from collaborators, they are not permitted to recover more than 25% of the total amount paid to CMS from any one collaborator, and the aggregate amount recouped from all collaborators may not exceed 50 percent, of the amount paid to CMS. .

3. When a physician group allocates money to its members, those payments need not be equal. In fact, since CMS suggests that payments be based on physician involvement in the process, there is some suggestion CMS may have a preference for unequal splits.

4. There are quality metrics in CJR and if you don’t meet them, gain-sharing isn't permitted. Some of the measures aren’t under the physician’s control. For example, the speed with which nurses respond to a call button may torpedo the ability to have a gain sharing payment. Under the model, hospitals at the bottom 30 percent of quality measures won’t receive payments. The grading is on a curve, so a significant percentage of hospitals in the model won’t be able to make any gain sharing payments. And the model is designed so 30 percent of the market will fall into that category, Glaser explained.

“You want to drive cost reductions; that’s going to be a big deal in the episodes of care. But a lot of the costs are outside of the hospital’s control. Implants and procedure efficiency are an exception,” said Mr. Morris. “Syncera is a unique way to lower costs without having an impact on quality.”

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