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CMS Speeds Drive to Quality-Based Payments with Hip, Knee Program

By Kerry Young, CQ Roll Call

July 10, 2015 -- The Centers for Medicare and Medicaid Services (CMS) took two major steps this week to push health care sectors into pilot programs that link federal payments to quality of care delivered.

The agency intends to require hospitals in 75 regional markets to participate in a five-year program involving reimbursement for hip and knee replacement surgery. Hospitals would continue to be paid through Medicare's traditional fee-for-service model, but there would be a later assessment of how well patients had from the time of surgery through 90 days after discharge. Hospitals judged to have performed poorly could owe Medicare money, while others seen as doing well could collect an additional payment. 

CMS earlier this month released a plan for another test of quality-linked payments in which participating organizations would be effectively auto-enrolled. In this program, home health agencies operating in nine states would face reductions or increases in payments based of assessments of how well their patients fare and how the organizations carried out certain tasks dictated by CMS.

These two proposals represent a shift away from CMS' past emphasis on voluntary participation on such test programs, said Ellen Lukens, a senior vice president at the consultant Avalere Health.

"It's a big step for CMS," said Lukens, who earlier in her career was a policy analyst at the agency's Office of Legislation, in an interview.

The two announcements also are in keeping with a goal set by Health and Human Services Secretary Sylvia Mathews Burwell of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality-based payment models by the end of 2016, and 50 percent by the end of 2018. 

There was immediate pushback about the proposed hip and knee replacement demonstration program, which CMS expects to save $153 million over five years.

"On initial review, we have some concerns about what appears to be the conversion of an evolving demonstration project to a mandatory, hospital-driven payment framework," said David D. Teuscher, president of the American Academy of Orthopaedic Surgeons, said in a statement.

Premier Inc., which works with about 3,400 U.S. hospitals, described the approach taken in the hip-and-knee demonstration program as CMS requiring "too much, too fast." 

"A voluntary, national program would ensure that only providers who are ready to take on this challenge enter the program, avoiding unintended consequence, said Blair Childs, Premier's senior vice president of public affairs, in a statement.

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