Nearly 800 hospitals are beginning the mandatory Comprehensive Care for Joint Replacement (CJR) model next month. In this Centers for Medicare and Medicaid (CMS) model, lower extremity joint replacements (LEJR) will be part of a bundled payment rather than fee-for-service. CJR hospitals will be financially responsible for the entire episode of care related to LEJR procedures performed in their hospitals on Medicare patients. CMS is launching CJR as part of its goal to move 50 percent of Medicare and Medicaid fee-for-service payments to alternative payment models, such as bundled payments, by 2018.
A Lot to Gain, A Lot at Risk
In the CJR model, hospitals have a large financial stake in what happens to patients during the entire episode of care – up to 90 days post-discharge after an LEJR procedure. Each hospital is given a bundle target price based on both their historical and regional LEJR episode expenditures. If a hospital’s average LEJR episode cost is below the target price, they can receive a reconciliation payment from CMS. If their average cost is above the target price, they will owe CMS the difference (beginning after the first year of the program). Every charge to Medicare made during the episode reduces the possible payment, so hospitals are looking for ways to minimize unnecessary expenditures.
While hospitals are the ones held accountable for the LEJR episode cost, they do not have to bear the risk alone. They can share both the risk and reconciliation payments with partners. Hospitals should not shy away from gainsharing and here are five reasons why.
1. Gainsharing Motivates All Care Partners
Gainsharing provides hospitals with the carrot to motivate their care partners to work with them on CJR. Between the actual surgery and post-acute care, there are many possible gainsharing collaborators to consider. Possible collaborators include: orthopedic physicians who perform the surgery and prescribe discharge and recovery protocols, physician group practices, non-physician practitioners, skilled nursing facilities (SNFs), home health agencies, and inpatient and outpatient physical and occupational therapists. There are many providers and facilities who can bill Medicare during the episode of care and yet only the hospital is on the hook for any costs above the target price. Gainsharing can be a motivational tool giving care partners financial incentives to improve their protocols while providing the best care in the most cost efficient manner.
A hospital may see gainsharing as revenue lost but this is the wrong view. Gainsharing helps to ensure there is revenue in the first place. With gainsharing, everyone is motivated to make changes so they can each have financial gain.
2. A Powerful Way to Engage Physicians
Engaging with physicians might be the most important key to redesigning care and lowering the cost of LEJR episodes. Physicians have established relationships with patients before they walk in the hospital doors and their recommendations can go a long way to influence patients’ choices for their post-surgical care. Physicians prescribe post-acute care protocols which can include the length of a SNF stay and as a result physicians can have a huge impact on post-acute care spending. Physicians must be engaged in order for hospitals to be successful with CJR and gainsharing is a great way to encourage physician involvement in the care redesign process.
3. Gainsharing Could Incentivize Post-Acute Providers During Stay Reductions
Hospital DRG payments are fixed for each procedure, meaning the only variable part of an episode of care’s cost is the post-acute period. Since CJR hospitals are looking for areas to reduce costs if they are above their bundle target price, PACs arguably have the most to lose financially when hospitals “trim the fat”. Given the high cost of a stay in a SNF or inpatient rehab, bundled payment episode initiators are beginning to question if stays in these types of facilities after LEJR procedures is necessary. Studies show that sending an otherwise healthy patient home after surgery with home health services results in the same or better outcomes than sending them to a skilled facility. PACs are going to lose with shorter stays but gainsharing can motivate them to be active CJR collaborators when gainsharing is presented as a way to make up the lost revenue from reduced length of stays.
4. Sharing Gains Also Means Sharing Risk
The start of the mandatory CJR model can be a bit intimidating. In just over a year a hospital is financially responsible for an entire episode of care. But hospitals don’t have to do this alone. Risk can be shared with many of the care providers during the episode. With many providers sharing risk and the possibility of gain, the entire care continuum can be aligned to communicate, share best practices, improve protocols, and maintain quality care. Ultimately, the alignment between providers through shared risk aligns everyone to work together which is essential to be successful in CJR. In addition, hospitals can unload some of the risk burden and feel less isolated during the mandatory transition to these bundled payments.
5. Gainsharing Physicians Can Be Rewarded for Excellent Care
Physicians may be wondering why they would want to gainshare. Gainsharing means the physician is also taking on financial risk, which can be scary. A physician working at a CJR hospital can benefit from gainsharing by being financially rewarded for quality care they are already providing, or for improvements they make to their protocols. As physicians begin to implement protocol changes, they benefit from their efforts to reduce overutilization of care and unnecessary expenses. Physicians are already providing great patient care, why not be rewarded for it through gainsharing?
Each hospital participating in CJR needs to evaluate the partners with whom they want to share financial risk as well as financial gains. Gainsharing is a valuable strategy for hospitals to consider which distributes risk, incentivizes partners, and provides the opportunity for higher financial gains with partners who are equally invested in care redesign.
For more information or assistance in working with bundled payments and value-based care, visit SignatureCareManagement.com.