Beginning April, 2016, CMS will pay hospitals in 67 regions of the US a single bundled payment for all costs associated with knee and hip replacements. The mandatory five-year program is a test of a new reimbursement model for the high-volume, high-cost procedures which also vary widely in costs.
The model sets a fee that covers the costs of the procedure, inpatient stay, and all related care costs within 90 days of discharge. That includes the costs of the hospital, physicians, and post-acute care providers. The goal is to encourage greater coordination that leads to cost savings and quality improvement.
CMS says that if hospitals are able to provide the services at a lower cost than the bundled payment amount—while still preserving or enhancing quality—they would be allowed to keep some of the savings. If their costs exceed the payment level, they would have to pay some of the higher costs themselves.
CMS originally proposed mandating the bundled model in 75 areas of the US. About 800 hospitals are expected to fall within the 67 regions finally chosen.