The Growth Channel

4 must-dos for preparing for mandatory bundled payment

by Sebastian Beckmann

Two weeks ago, CMS finalized the Comprehensive Care for Joint Replacement (CJR), which mandates bundled payments for hip and knee replacements for hospitals across 67 metropolitan statistical areas (MSAs).

Starting in April 2016, strategic planners and orthopedic service line leaders at nearly 800 hospitals will be accountable for the costs and quality of the joint replacement care episode, beginning at admission through 90 days after discharge.

Key changes in the CJR rule

Below, we’ve highlighted the most noteworthy changes from the proposed rule that was released earlier this summer.

  • Scope: CMS scaled back the program, reducing the number of included MSAs from 75 to 67 and delaying kick-off from January to April 2016. CMS is also giving hospitals more time before exposing them to full downside risk in years 4-5.

  • Quality methodology: Readmissions have been dropped from the quality requirements. The final rule creates a composite quality score based on complications and HCAHPS scores. Organizations can also receive a bonus for voluntarily sharing patient-reported clinical outcomes. Hospitals with a higher quality score will be eligible for a lower discount rate and downside risk.

  • Discount targets: Baseline discount targets increased from 2% to a more aggressive 3%.

Start preparing for CJR now

The finalized CJR should push episodic care management to the top of your priorities. For participating hospitals, bundled payment represents an immediate challenge, elevating the familiar imperatives of cost and quality to the episodic level. For others, CJR is a signal of broader changes to come. As the April 1 start date inches closer, hospitals will need to start preparing and reframe their orthopedic strategy around episodic care.

We’ve recently completed research on the strategies that programs have used to achieve success with joint replacement bundles. To effectively prepare for navigating the CJR, you should meet four imperatives:

1. Establish leadership and staff buy-in. For many CJR participants, the joint replacement bundle will be a new experience, which will require leadership infrastructure to establish goals and enact change. Likewise, it will be necessary to enfranchise staff in this culture shift to manage a longer episode of care.

2. Redesign clinical processes. The inclusion of quality as well as cost targets in the bundle will require providers to reevaluate clinical protocols to address unwarranted care variation and negotiate device prices to help achieve internal savings.

3. Formalize care pathway management. While coordinating seamlessly across the joint replacement care pathway has always been the hallmark of a robust orthopedic program, managing patient transitions will take on outsized importance under bundles due to new quality and patient satisfaction metrics, cost management goals, and an expanded episode length that spans multiple sites and providers.

4. Coordinate post-acute care. With cost and quality incentives extending across a longer care episode, hospitals will need to navigate the relatively unfamiliar post-acute space. Coordinating with post-acute providers for discharge planning will be essential to ensure patients receive cost-effective, clinically-appropriate care.

Achieving these four imperatives is easier said than done, but we have identified the 10 tactics that will help get you there.

Here's where to start with bundled payments

Learn three lessons on physician partnerships—the starting point for any new bundled payment program.