CMS Unveils New Proposal on Bundled Payments for Hip and Knee Surgeries

Article Courtesy of AHCA/NCAL.org

CMS unveiled a 500+ page document detailing plans to implement a new Medicare Part A and B bundled payment model for hip and knee replacement surgeries. In this memo I will quickly walk you through some of the highlights of the proposed rule, the sections of the country where the new rule would go into effect, and finally what AHCA will do to collect member input for sharing with CMS before the September 8 deadline.

Specifically, the program would begin January 1 and run for five years. The bundle would include episodes starting with admission to the hospital, and end 90 days following discharge. Hospitals would control the bundle and bear the financial risk for the inpatient stay as well as all care related to the patient’s recovery, which would include stays in IRFs, SNFs, and even home health care. CMS estimates that approximately 25% of all hip and knee replacements that Medicare pays for would be subject to the new bundled payment. 

Medicare’s fee-for-service system would continue paying providers. However, at the end of the calendar year, one of two things will occur, depending on the hospital’s patient outcomes and ability to control costs: 1) hospitals will receive an additional payment based on the net savings to the program; or 2) be required to repay Medicare for a portion of the costs for the episode of care. The rule states that CMS will not hold hospitals at risk in the first year of the program, but will force the providers to absorb costs beginning in year two and beyond.

In terms of the potential impact on you and your centers, CMS has identified 75 areas of the country where participation is mandatory. More than 800 hospitals from markets ranging in size from New York City to rural counties in southern Nevada would be included.

For details go to https://www.federalregister.gov/public­inspection and can be viewed at https://www.federalregister.gov.

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