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Managing Costs for CJR – Where to Start

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When the Comprehensive Care for Joint Replacement (CJR) program went into effect earlier this year, one thing became clear to healthcare providers: CMS was done overpaying for hip and knee replacements.

For hospitals in the 67 regions affected by CMS’s first mandatory bundled payment program, reducing the costs associated with these procedures has become an organizational imperative. Even hospitals not chosen to participate in CJR have effectively been put on notice – CMS is aiming to have 50% of all payments be in alternative payment models by 2018, and announced another mandatory bundle program this past summer. It’s clear where this is going.

What’s less clear to many organizations is how to measure success under bundled payment initiatives.

If your organization is facing CJR target pricing, you won’t be able to recognize improvement until you understand how well you’re already doing. That said, the first step in addressing CJR costs is to evaluate your organization’s baseline performance in the program’s four main components.

Post-Acute Care

Post-acute care can total 50% or more of an episode’s 90-day costs, making it an obvious candidate for cost-reduction efforts. Patients should always be discharged to the care setting best suited to their recovery, but costs accumulate quickly based on the setting and the resulting length of stay. To understand your current spending and identify potential efficiencies:

  • Evaluate discharge destinations.
  • Identify the providers to whom patients are most commonly referred.
  • Work with those providers and facilities to establish a best-practice total joint protocol.

Many organizations have created a pre-operative evaluation tool to set expectations for recovery and try to arrange for discharges to home whenever possible. Others have focused on building relationships with post-acute providers to collaborate on care protocols that right-size the appropriate length of stay.

Readmissions

Readmissions are not a mandatory quality metric in CJR, but they do contribute to the costs of the 90-day episode.

  • Identify the reason for each readmission.
  • Analyze trends.

If your organization’s readmission rate is higher than average compared to national and regional benchmarks, consider organizing targeted initiatives to address the most common readmission types.

Inpatient Stay

The cost of an inpatient stay is affected by a number of factors, including supplies, labor, anesthesia, medications, labs, and discharge processes. Inpatient cost management initiatives aim to reduce the variability and unpredictability that drive up the costs of both labor and supplies. Start reducing variation with any of the following tactics:

  • Capitate implant costs.
  • Cap anticipated procedure costs.
  • Standardize commodity supplies.
  • Standardize testing and discharge work flows.

Quality

CMS will calculate a quality score for each participating hospital based on the complication rate, HCAHPS survey scores, and patient-reported outcomes. Organizations with a Below Acceptable composite CJR quality score are ineligible for reconciliation payments. Organizations with Acceptable, Good, and Excellent scores receive increasing discounts for both the reconciliation and repayments.

To ensure a high quality score:

  • Begin with a baseline evaluation of complication rates, HCAHPS scores, and patient-reported outcomes.
  • Arrange for quality-improvement initiatives as needed.

Because the HCAHPS measure is hospital-wide (rather than specific to total joints), quality-improvement initiatives may require collaboration with other hospital programs to achieve the desired results. As a result, quality-improvement measures can vary greatly in terms of resource demands and overall impact.

All hospitals, whether they were chosen for CJR or not, can benefit from evaluating their baseline performance in these areas. With CMS having recently proposed three new mandatory bundles that will start on July 1, 2017, now is the time to start assessing your processes and identifying areas for improvement.

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