CMS Proposes to Broadly Test Bundled Payments for Certain Elective Surgical Procedures in the Hospital

The new bundled payment model, called the Comprehensive Care for Joint Replacement (“CCJR”) Model, would require hospitals in 75 randomly selected Metropolitan Statistical Areas (“MSAs”) (referred to as “participant hospitals”) to be accountable for all costs for Medicare Part A and Part B services related to LEJR surgeries for a 90-day period, starting with the inpatient hospital admission through 90 days after the beneficiary's discharge from the hospital. Depending on the participant hospital's quality and cost performance relative to a target price for the 90-day episode, the participant hospital would either earn a financial reward or be required to repay Medicare for a portion of the costs incurred for the care episode. This calculation is based upon a comparison of the participant hospital's target price for a performance year and a retrospective review of the original Medicare Part A and Part B fee for service (“FFS”) payments made for each care episode. This bundled payment model is expected to give participant hospitals an incentive to work with other providers and suppliers involved in the care episode, including physicians, home health agencies, nursing facilities, as well as drug and device manufacturers and suppliers, to improve the quality and coordination of care with the goal of reducing avoidable hospitalizations and complications. This is the first CMS pilot that is requiring certain hospitals to accept a bundled payment for an episode of care, and this effort is likely to inform future Medicare bundled payment initiatives, so stakeholders with interests in applications that are broader than LEJR procedures alone should review and consider commenting on this proposed rule.