Federal regulators are expanding a payment strategy that rewards or penalizes hospitals to improve include hip and knee replacement surgery outcomes.
The Centers for Medicare and Medicaid Services proposed new rules on Thursday to hold hospitals accountable for the quality of care they deliver to Medicare fee-for-service beneficiaries. The hospitals would be measured from surgery through 90 days after discharge.
Medicare is proposing a five-year payment model proposal in 75 metropolitan statistical areas, including Asheville, Charlotte-Concord-Gastonia, Durham-Chapel Hill and Greenville in North Carolina. The MSA were randomly selected.
Medicare said there were more than 400,000 inpatient primary procedures in 2013, costing Medicare more than $7 billion for hospitalization alone. About 25 percent of potential patients nationwide are affected by the initiative.
“The average Medicare expenditure for surgery, hospitalization and recovery ranges from $16,500 to $33,000 across geographic areas,” Medicare said.
Medicare said the initiative gives selected hospitals “an incentive to work with physicians, home health agencies and nursing facilities to make sure beneficiaries get the coordinated care they need, with the goal of reducing avoidable hospitalizations and complications.”
Medicare is conducting a 60-day public comment period. More information can be found at http://ift.tt/1NWTxNU. If approved, the project would begin Jan. 1.
“By focusing on episodes of care, rather than a piecemeal system, hospitals and physicians have an incentive to work together to deliver more effective and efficient care,” Sylvia Burwell, secretary for the U.S. Department of Health and Human Services, said in a statement.
“This model will incentivize providing patients with the right care the first time and finding better ways to help them recover successfully. It will reward providers and doctors for helping patients get and stay healthy.”
Health care providers in the selected MSAs would continue to be paid under existing Medicare payment systems.
Depending on the hospital’s quality and cost performance during and after treatment, the hospital may receive an additional payment or be required to repay Medicare for a portion of the costs for treating avoidable complications. The shift in payments would take effect in year two.
Regulators want 30 percent of traditional Medicare payments linked to quality or value through what it calls “alternative payment models” by the end of 2016. The payment rate would increase to 50 percent by the end of 2018. Another requirement is 85 percent of traditional Medicare payments by 2016 being linked to quality or value though programs such as those that reduce the need for readmissions. That goal increases to 90 percent in 2018.
“While some incentives exist for hospitals to avoid post-surgery complications that can result in pain, readmissions to the hospital or protracted rehabilitative care, the quality and cost of care for these hip and knee replacement surgeries still vary greatly among providers,” Medicare said. “For instance, the rate of complications, such as infections or implant failures after surgery, can be more than three times higher at some facilities than others, increasing the chances that the patient may be readmitted to the hospital.”
David Meyer, a senior partner with Keystone Planning Group of Durham, said the Medicare proposal represents “the wave of the future” in terms of performance-based incentives.
“It is really low-hanging fruit in terms of obtaining cost savings and improving coordination of care for better outcomes,” Meyer said. “It is the right approach, and I believe that providers are or will be supportive of this. If providers coordinate with the best partners and focus on integration of care, the result will be healthier and happier patients; and the providers can derive financial benefit.”
Dr. Kevin High, executive vice president of health system affairs for Wake Forest Baptist Health, said the center already has in place much of what Medicare has proposed.
“As a result, we have seen improved patient outcomes due to decreases in infection, and lower readmission rates and surgical revisions,” High said. “Importantly, a primary area of focus in our academic mission, through the J. Paul Sticht Center for Aging, is to track functional outcomes for patients with these surgeries and other mobility problems to ensure that hips and knees aren’t just replaced, but work well and promote overall health.”
“The only element in the Medicare model that remains to be implemented at Wake Forest Baptist is single bundled payment options that have been developed,” High said.
In May, a U.S. News & World Report hospital ranking for five common inpatient procedures and chronic conditions listed Moses Cone Hospital of Greensboro as a high performer for hip and knee replacement.
Forsyth Medical Center was ranked as average for hip and knee replacement, while Wake Forest Baptist Medical Center and High Point Regional ranked average in hip replacement and below average in knee replacement.
Only 10 percent of hospitals nationally received a high-performance ranking in any of the five categories, while 80 percent received average and 10 percent below average. The magazine said that any below-average rating was associated with a mortality rate twice the national average, though death is rare for knee replacements.
The ratings rely on Medicare data for patients 65 and older, as well as data from the American Hospital Association annual survey and clinical registry data from the Society of Thoracic Surgeons.
Wake Forest Baptist said in a statement at that time that “it is important to note that the majority of the data used to determine the ratings, while the most current available, is three to six years old.”
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