2. Overview
Bundled Payments
Episode of Care
Bundled Payments for Care Improvement
Comprehensive Care for Joint Replacement
3. Bundle Payments
The reimbursement of healthcare providers, such as
hospitals and physicians, on the basis of expected
costs for clinically-defined episodes of care.
4. Episode of Care
All services provided to a patient with a medical
problem within a specific period of time across a
continuum of care in an integrated system.
Centers for Medicare & Medicaid Services (CMS)
defines the episode of care from admission to a
hospital to 90 days post-discharge.
5. Bundled Payments for Care Improvement
(BPCI)
BPCI was initiated by the CMS Innovation Center in order
to reduce expenditures while preserving or enhancing
the quality of care for beneficiaries.
BPCI utilized four models; Model 2 was most similar to
Comprehensive Care for Joint Replacement (CJR).
BPCI was CMS’ first program for bundled payments.
Beneficiaries retained full freedom to choose services
and providers.
6. BPCI: Evaluation and Monitoring
CMS intended to measure metrics including:
structural and organizational characteristics
patient case-mix
clinical care and patient safety
patient experience
CMS’ monitoring efforts aimed to identify quality
improvements, including process improvements,
changes to outcomes, and reduction to expenditures.
CMS also monitored utilization and compliance within
agreements, fraud and abuse waivers, and Medicare
payment policy waivers.
innovation.cms.gov
7. BPCI: Payment Policy
Reimbursement through current retrospective fee-
for-service payments.
At the time of reconciliation, the total expenditures
for all related services during the beneficiary’s
episode are compared to the target price determined
by CMS.
BPCI has two Phases:
Phase 1: Preparation period- No risk
Phase 2: Risk bearing implementation period
8. Comprehensive Care for Joint Replacement (CJR)
The Basics:
Hip and Knee replacements are the most common
inpatient surgery for Medicare beneficiaries. The MS-
DRGs included are 469 and 470.
In 2014 there were more than 400,000 procedures
Costs for the hospitalizations alone were more than
$7 billion.
9. Comprehensive Care for Joint Replacement (Continued)
The average total Medicare expenditure for surgery,
hospitalization, and recovery ranges from $16,500 and
$33,000 across geographic area.
Variation is due partly to the way beneficiaries receive
care.
Incentives to coordinate the whole episode of care are
not strong enough.
Lack of coordination leads to more complications after
surgery, higher readmission rates, protracted rehabilitative
care, and variable costs.
The CJR model addresses low quality and high costs that
come from fragmented care, while making the patient’s
successful surgery and recovery a top priority for the health
care system.
10. Medicare Goals
CJR model start date: April 1, 2016.
Goals set by Medicare are to have 30 percent of all
fee-for-service payments via alternative payment
models by 2016, and 50 percent by 2018.
Medicare wants to improve the quality and efficiency
of care for its beneficiaries, “creating a system that
delivers better care, spends our dollars more wisely,
and leads to healthier Americans.”
Section 115A of the Social Security Act authorizes the
Innovation Center to test innovative payment and
service delivery models.
www.innovation.cms.gov/initiatives
11. Model Design
The CJR model holds participant hospitals financially
accountable.
It incentivizes increased coordination of care among
hospitals, physicians, and post-acute care providers.
Every year during the five performance years, CJR
hospitals will receive separate episode target prices.
At the end of each performance year, actual spending for
the episode will be compared to the Medicare target
episode price.
12. Model Design (continued)
Depending on the hospital’s quality and episode
spending performance, the hospital may receive an
additional payment from Medicare or be required to
repay Medicare for a portion of the episode spending.
The first performance year has “no risk” if it doesn’t
meet the target price.
Testing the model with a large number of hospitals
allows CMS to learn more about patterns of inefficient
utilization of health care services.
13. Performance Years
Performance
year
Calendar Year Episodes included in Performance Year
1 2016 Episodes that start on or after April 1, 2016,
and end on or before December 31, 2016
2 2017 Episodes that end between January 1, 2017,
and December 31, 2017, inclusive
3 2018 Episodes that end between January 1, 2018,
and December 31, 2018, inclusive
4 2019 Episodes that end between January 1, 2019,
and December 31, 2019, inclusive
5 2020 Episodes that end between January 1, 2020,
and December 31, 2020, inclusive
14. Participants
Hospitals paid under the Inpatient Prospective
Payment System, physically located in the
selected metropolitan statistical areas (MSAs) and
not currently participating in Models 1, 2, or 4 of
the BPCI initiative are required to participate.
Includes approximately 800 hospitals.
Implemented in 67 MSAs.
15. Quality Improvements
The model adopts a quality first principle where
hospitals must achieve a minimum level of episode
quality before receiving reconciliation payments
when episode spending is below the target price.
The model incentivizes hospitals to avoid expensive
and harmful events, which increase spending and
decreases the opportunity for reconciliation
payments.
16. Quality Improvements (continued)
CMS provides tools to improve the effectiveness of
care coordination.
Spending and utilization data
Waiving certain Medicare requirements to
encourage flexibility in the delivery of care
Facilitating the sharing of best practices between
participant hospitals through a learning and
diffusion program.
17. Payments
Repayments
No repayment responsibility in performance year 1.
A stop-loss limit of 5 percent of their target price in
performance year 2.
A stop-loss limit of 10 percent in performance year 3.
A stop-loss limit of 20 percent in performance years 4
and 5.
18. Payments (continued)
Reconciliation payments
Hospitals are eligible to earn up to 5 percent of their
target price for performance years 1 and 2.
They can earn up to 10 percent for performance year 3.
They can earn up to 20 percent for performance years 4
and 5.
19. Challenges
At the end of the year, the hospital - and only the
hospital – would get a penalty or bonus based on the
grand total of the payments for all of the services
billed by all of those providers.
Unless there is a partnership agreement.
There is no reward under CJR for helping a patient
address their knee or hip problem without surgery.
20. Challenges (continued)
CJR includes quality measures, but they’re only
applicable if spending is lower, and they’re only used
to give a hospital a smaller bonus than it would have
otherwise received if quality is lower than the
standards CMS establishes.
If spending is the same but quality is higher,
there’s no bonus.
CMS will base the episode spending target each year
on the amount it spent on services it was billed for in
the prior year, not on the costs the providers incurred
for the services they actually delivered.
21. Partnerships
The CJR model will allow participant hospitals to
enter into financial arrangements with certain
types of providers and suppliers who are engaged in
care redesign with the hospital and also furnish
care to Medicare beneficiaries.
The participant hospitals may share with these
third-party providers the following: reconciliation
payments, internal cost savings, and the
responsibility for repayment to Medicare.
22. Reasons for CJR
Lower extremity joint replacements are the most
commonly performed Medicare inpatient surgery, and
utilization is predicted to continue to grow.
By including 67 different geographic areas across the
country, this model drive significant movement
towards new payment and care delivery models.
This model supports the US Health & Human Services
Department in its efforts to transform the health care
system towards one focused better on quality care,
smarter spending, and healthier people through care
transformation and payment reform.
23. Aims to support better and more efficient care.
CJR tests bundled payment and quality
measurement.
Encourages hospitals, physicians, and post-acute
care providers to work together to improve the
quality and coordination of care from the initial
hospitalization through recovery.
Summary
