Reining in the outliers
The average total Medicare expenditure for surgery, hospitalization
and recovery ranges from $16,500 to $33,000 across geographic areas,
according to CMS. The CJR program will pay hospitals a single bun-
dled amount for an episode of care, which begins at the hospitaliza-
tion of a beneficiary who is ultimately discharged under MS-DRG 469
or 470 (for major lower extremity joint replacement with or without
complications, respectively), and ends 90 days post-discharge in order
to cover the complete recovery period. The targeted bundled payment
includes fees for the facility, physician and anesthesia provider, as
well as all aspects of perioperative care and 90 days of recovery treat-
ment. Hospitals that spend less than the targeted amount will earn
additional payment, while those that spend more will pay a portion of
the difference to CMS.
For CMS, it's all about controlling the cost of post-acute care. The
DRG is a fixed payment, so where hospitals decide to send patients to
recover following surgery ultimately causes the variations seen in the
total cost of joint replacements. Are beneficiaries sent to an inpatient
facility, a skilled nursing center or a home health program? There
doesn't seem to be a definitive pattern based on the specific condition
of individual patients. Instead, it appears habit drives the decision-
making. If a hospital routinely sends patients to a skilled nursing facil-
ity, that's where they always end up, not because it's the best place for
them to recover, but because that's how it's always been done. For pri-
vate sector payers, the post-discharge care decision has an impact on
the overall cost of the procedure, but it's dwarfed by the price of the
surgery itself.
Assessing outcomes at 90 days under the CJR program will hopefully
lead to physicians and hospitals partnering with individual patients to
J A N U A R Y 2 0 1 6 • O U T PA T I E N TS U R G E R Y. N E T • 5
