The Centers for Medicare & Medicaid Services (CMS) is proposing to test a new reimbursement model that pays hospitals a single bundled payment for all costs associated with knee and hip replacements, including the procedure, inpatient stay, and all related care costs within 90 days of discharge. Hospitals in 75 geographic areas of the country would be required to participate.
The agency says that it chose hip and knee replacements for this bundled payment test because they are high-expenditure, high-utilization procedures with significant variation in spending between hospitals and regions. The intent is to encourage hospitals to coordinate care with other providers, including physicians and skilled nursing facilities, to reduce costs and improve quality. 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.
Comments are due on the proposal by September 8, 2015. It is scheduled to go into effect in January, 2016.