The logic for reducing the CJR number downward is potentially to allow for market forces to work more effectively to reduce total costs of total joint arthroplasty (TJA). In certain areas of the country, like Minneapolis/St. Paul and Chicago, outpatient TJAs have been performed in ambulatory surgery centers (ASCs) for more than 5 years and 10 years, respectively. The cost savings to payers is dramatic with bundled payments as low as $21,000. Using appropriate preoperative patient selection criteria and optimizing patient comorbidities prior to TJA, complication and readmission rates have been reduced in some cases to less than 1%. In 2014, more than 400,000 Medicare beneficiaries received a total knee arthroplasty or total hip arthroplasty, costing the government more than $7 billion for hospitalizations alone which is more than $50,000/case.
If CMS decides to allow for facility reimbursement for outpatient TJA, the hospital bundling initiative (CJR) would be threatened. It is clear that hospitals and surgeons will have to collaborate in order to remain financially viable with these programs. In some areas, hospitals are joint venturing with surgeons in ASCs by either a partial acquisition of an existing center that the provider owns or allowing buy-in of an ASC department that the hospital owns. Other methods of controlling these patients with surgeon input is with a joint venture and/or “gain sharing” model within the existing hospital system. Loss of hospital patient volume will occur in time as these patients shift more to an outpatient ASC setting, many of which have overnight capabilities for a 24-hour length of stay.
Clearly, the Medicare reimbursement for TJA in an outpatient setting will be lower than for a commercial payer; however, if patient volumes increase due to improved outcomes at a lower cost, there may be a shift by both payers (and referrals from satisfied patients), whereby the center notes increased volume. The difficulty that surgeons have with hospital systems at this time is the incredible bureaucracy that exists in attempting to make any change.
In a physician-owned ASC, change becomes relatively easy if a procedure can be performed safely, profitably and provide a good outcome. Market forces will continue to change the way TJA is performed throughout the country and utilizing preop patient education and stratification software, case managers, OR efficiency systems and rapid recovery techniques, good outcomes at a relatively lower cost can be maintained and replace mandatory government programs with successful hospital- and surgeon-created bundled payment TJA programs.
Jack M. Bert, MD
Section Editor, Business of Orthopedics, Orthopedics Today
Minnesota Bone and Joint Specialists
St. Paul, Minn.
Disclosures: Bert reports no relevant financial disclosures.