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Medicare shakes up joint replacement payments


From the Kansas Health Institute:

Medicare patients likely won’t notice the difference, but their doctor may have more skin in the game when it comes to their outcomes if they get joint replacement surgery at many of Kansas’ largest hospitals.

The Centers for Medicare and Medicaid Services recently announced a program that would require participating hospitals to repay some money for knee and hip replacements if the average cost of a procedure is too expensive due to complications.

Knee and hip replacements are the most common inpatient surgery procedure for patients covered by Medicare, the government’s health insurance program primarily for people 65 and older.

The replacement program covers 67 metropolitan areas and about 800 hospitals nationwide, according to CMS. The Kansas City area, Topeka and Wichita are on the list, with almost all hospitals in those areas participating. In Missouri, Cape Girardeau, Columbia and the Kansas City and St. Louis metropolitan areas are listed.

Patients still can choose their hospital and where they receive rehabilitation care after the surgery, said Kim King, administrative director of care coordination for Shawnee Mission Health. The only difference will be that starting in 2017, patients who select a “high-quality” rehabilitation facility won’t have to stay in the hospital for three nights, as Medicare usually requires, she said.

In 2014, Medicare spent more than $7 billion for about 400,000 joint replacements — or an average of about $17,500 per procedure. The cost and quality of joint replacements varies widely across the country, however. Medicare can pay an average of anywhere from $16,500 to $33,000 for a knee or hip replacement, depending on where it is performed, and some hospitals have three times as many complications as others, according to CMS.

Hospitals won’t be penalized in the first year, according to CMS, but after that, they will need to repay some of their reimbursements if complication rates for joint replacements are too high. The penalties will rise from 5 percent in the second year to 20 percent in the fifth year.

Hospitals with low complication rates will be eligible for increases in their payments, with the amount rising over the five years of the program. The target rates differ depending on whether the patient has other chronic conditions that would make significant complications more likely.

Patrick Conway, CMS principal deputy administrator and chief medical officer, said the payment plan is designed to encourage hospitals and facilities such as rehabilitation centers to better coordinate their care, improve patient outcomes and limit costs.

“One beneficiary said it best when she described that what she cared about for her hip replacement was getting out of the hospital as quickly as possible without an infection or complication and then being able to go back to playing with her grandkids and gardening,” he said in a news release. “The model incentivizes a system that aligns with her goals and the goals of so many beneficiaries.”

In 2014, Medicare spent more than $7 billion for about 400,000 joint replacements — or an average of about $17,500 per procedure.

King said Shawnee Mission Health’s two hospitals are well-prepared for the new system. Staff members currently work with rehabilitation facilities, home health agencies and patients to clarify treatment goals and recovery procedures, she said.

“We were already working on this, so for us, this doesn’t present any major challenges,” she said. “When the patient leaves here, those expectations are set.”

Providing additional coordination and follow-up can improve outcomes, King said. Since 2011, Shawnee Mission Health has provided “transition coaches” for patients with conditions like heart failure and found readmissions went down when they checked on patients after sending them home, she said. The coaches began following up with joint replacement patients last year, she said.

Brenda Dykstra, vice president of business and strategic development at University of Kansas Hospital, said the CMS initiative is “consistent” with current efforts to improve coordination when a patient leaves the Kansas City, Kan., hospital. Most joint replacement patients receive care from a rehabilitation hospital, a skilled nursing facility or a home health agency after the surgery, she said, and some use multiple services.

“This work will continue so we can enhance the coordination of care when a patient leaves the acute care hospital following their surgery,” she said in an email.

Gaylee Dolloff, president of Health Partners of Kansas, which is part of Wesley Medical Center in Wichita, said the hospital has a successful knee and hip replacement program but will continue to look for any changes it could make as it collects data for CMS.

CMS has been working with hospitals to prepare for the new model, Conway said. Ideally, the result will be fewer complications and less health care spending, he said.

“We want hospitals to be successful under this model because success means that Medicare’s beneficiaries will receive better-quality care,” he said.

The nonprofit KHI News Service is an editorially independent initiative of the Kansas Health Institute and a partner in the Heartland Health Monitor reporting collaboration. All stories and photos may be republished at no cost with proper attribution and a link back to KHI.org when a story is reposted online.