Case Management

CMS approves bundled payments for knee and hip replacement surgeries

Case Management Insider, December 8, 2015

On November 16, CMS released a final rule that bundles acute care payments for knee and hip replacement surgeries, the most common type of inpatient surgery for Medicare beneficiaries.

Doctors performed more than 400,000 procedures on Medicare patients in 2004, which resulted in $7 billion in associated hospital stays. CMS decided to implement the bundled payment to improve the quality of these procedures, which officials say vary greatly from one hospital to another.

“Incentives to coordinate the whole episode of care—from surgery to recovery—are not strong enough, and a patient’s health may suffer as a result,” stated CMS officials in a written release. “When approaching care without seeing the big picture, there is a risk of missing crucial information or not coordinating across different care settings. This approach leads to more complications after surgery, higher readmission rates, protracted rehabilitative care, and variable costs. These are not the health outcomes patients want.”

To combat problems related from care disconnects, The Comprehensive Care for Joint Replacement (CJR) model seeks to ensure better coordination of care, prevent readmissions, and extended recovery times, and will also step up claims and compliance monitoring.

In the news release, CMS officials said the change will achieve those goals by doing the following:

  • Making hospitals responsible for quality and costs during the care “episode,” related to the surgery, which extends not only from procedure itself, but 90 days after discharge
  • Rewarding or penalizing hospitals that don’t meet established cost targets
  • Bundling payments for care related to hip and knee replacement procedures to give “hospitals, physicians and other providers an incentive to work together to deliver more effective and efficient care”

Currently, the model is slated to be tested in 67 regions across the country. The program will begin April 1, 2016.

Got questions about the rule and what it means for your organization? Send them to Kelly Bilodeau at and we’ll have our experts answer them.


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