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Some Hospitals Face Risks in Medicare Hip-Knee Test, Study Says

By Kerry Young, CQ Roll Call

March 30, 2016 -- Many hospitals are not prepared for the start of a major Medicare effort to tie future payments to judgments about the quality and cost of care delivered in knee and hip replacements, a study indicates.

Avalere Health, a consulting group, on Wednesday released a paper in which it estimated that 60 percent of the hospitals drafted into Medicare's Comprehensive Care for Joint Replacement model may face penalties, based on an examination of how their costs now compare to other hospitals. This knee-and-hip program marks a departure from Medicare's past approach of recruiting volunteers for payment tests. Instead, Medicare has mandated that about 800 hospitals in 67 selected regions of the country participate in this test, which will dole out financial rewards and punishments based on how well people fare after surgery.

The rules by the Centers for Medicare and Medicaid Services (CMS) may skew the participants to include more hospitals that have been so far been timid about trying ways to better coordinate patient care after treatments. CMS spared from the hip-and-knee program certain hospitals that already participate in another of its payment tests, the Bundled Payments for Care Improvement model. This exempt group includes many early adopters and "poster children for accountable care" models in many cases, said Fred Bentley, a vice president of Avalere, in a Wednesday interview.

"It's the other hospitals that maybe have been waiting on the sidelines" that are being compelled to participate in the hip-and-knee program, Bentley said.

During the first year, which starts Friday, the program will not impose penalties, only potential rewards, based on judgments about performance. The program runs through the end of 2020.

Medicare spends about $7 billion a year on hip and knee replacements. CMS said last year that it anticipates saving Medicare a total of $343 million from the program, with some hospitals standing to gain and others to lose. The judgments will be based in part on how well patients fare from the time of their admission to 90 days following their discharge.

Rep. Tom Price, R-Ga., is seeking to delay the start of the hip-and-knee test. He on March 23 introduced a bill (HR 4848) that would hold off the implementation until 2018. He so far has drawn one cosponsor, Rep. David Scott, D-Ga.

The hip-and-knee test program represents an effort by CMS to jump start efforts to better coordinate the care of people on Medicare after many kinds of surgeries and major illnesses, Bentley said.

"They are very much trying to move away from traditional fee-for-service, where there are no strings attached" to payment, he said. "There is no accountability for cost and quality beyond the hospitals' four walls."

Treatment after an injury or illness, known as post-acute care, represents a roughly $60 billion annual expense for Medicare. Lawmakers have mulled for some years how to restructure the fragmented approach to post-hospital care, with different kinds of nursing centers often receiving higher pay for similar treatment. People on Medicare and their families often face stressful choices about where someone should go for post-hospital care, as there often is little information available to weight potential benefits and drawbacks of use treatments delivered at home compared with those provided in skilled nursing and specialty inpatient rehabilitation facilities.

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