CMS Bundled Payment Model Reduced Hospital Stays to 2.9 Days

March 30, 2016 - Slowly, healthcare providers are moving their reimbursement toward the bundled payment model across some of their medical services.  The Centers for Medicare & Medicaid Services (CMS)  along with commercial health  insurers  are putting much of their focus toward value-based care reimbursement and the bundled payment model. Bundles involve paying providers for specific episodes of care instead of for every service they have performed such as in fee-for-service reimbursement systems.

For example, CMS has established the Comprehensive Care for Joint Replacement program, which requires the use of bundles for surgeries involving joint replacement. In fact, CMS has taken on a wide variety of programs related to bundled payment over the last few decades.

For instance, in 1983, CMS positioned bundled reimbursement through the inpatient prospective payment system, which established a certain amount of money toward a patient's hospital stay. In the early 1990s, CMS created a bundled payment program for providers who perform coronary artery bypass graft (CABG) surgery.

More recently, the organization has taken on the Medicare Bundled Payment for Care Improvement (BPCI) initiative and the Comprehensive Care for Joint Replacement program. One study from New York University's Langone Medical Center shows that using the bundled payment model among joint replacement surgeries does bring cost savings along with improvements in the quality of patient care and health outcomes, according to a press release from the NYU Langone Medical Center.

NYU Langone's Department of Orthopaedic Surgery experienced a decrease in the length of hospital stay among its patients. Additionally, the study shows a reduction in hospital readmissions at 30, 60, and 90-day intervals.  Admission to post acute care facilities also decreased.

“The study highlights what we've seen firsthand since implementing our bundled payment initiative - that value-based care is best for our patients,” lead study author Richard Iorio, MD, the Dr. William and Susan Jaffe Professor of Orthopaedic Surgery and Chief of the Division of Adult Reconstructive Surgery at NYU Langone, said in a public statement. “Our Medicare patients are healthier after a joint replacement and less likely to come back to the hospital thanks to the protocols we put in place as part of this program.”

“Key stakeholders and physicians across all areas of NYU Langone had to work together to create new protocols and guidelines to standardize care and ensure all patients have all the necessary resources before a surgery takes place and once at home to ensure the most optimal recovery possible,” he continued.

This particular study and the processes used to analyze the bundled payment model stem from the CMS  Comprehensive Care for Joint Replacement program. With more than 600,000 knee replacements performed around the United States every year, ensuring that the surgeries are successful, health outcomes are strong, and healthcare costs are reduced is vital for this industry.

The way that the bundled payment model works for knee or hip replacements is by providing a fixed amount of payment for the hospital and other medical facilities across a 90-day period of medical Services instead of using the fee-for-service payment system in which providers are reimbursed for every treatment or diagnostic procedure.

This means that hospitals  have to take on financial Risk and be responsible for every complication that occurs during and after a joint replacement surgery. This could include hospital infections and  high readmission rates.

The NYU Langone's Hospital for Joint Diseases was originally chosen as a pilot site for the Comprehensive Care for Joint Replacement program five years ago. The hospital was responsible for using the bundled payment model among Medicare beneficiaries undergoing joint replacement surgeries.

The researchers focused on studying 721 Medicare patients in the first year of the pilot program and later compared their results to the third year of the program where they analyzed 785 Medicare beneficiaries.

The average length of hospital stays was reduced from  about 3.6 days to only around 2.9 days when implementing the bundled payment model. Admissions to rehabilitation centers also fell from 44 percent to 28 percent.

“Bundled care payment programs benefit everyone - our surgeons, the health care system, and most importantly, our patients,” Joseph Zuckerman, MD, the Walter A. L. Thompson Professor of Orthopaedic Surgery and Chair of Orthopaedic Surgery at NYU Langone, stated in the press release. “As we shift towards this quality over quantity-based system of care, providers will adapt and implement protocols to ensure every joint replacement patient is given the same resources to have the most successful outcome.”

This study shows how important it is for healthcare providers to pursue bundled reimbursement, as it can potentially reduce costs and bring better health outcomes. Additionally, physicians and hospitals should consider risk-based contracting with insurers to achieve quality improvements and cost savings.

It could bring about stronger care coordination as well as a reduction in hospital-acquired infections and fewer hospital readmission rates, research shows. Essentially, healthcare providers should begin to move past smaller scale bundles and jump on the bandwagon of expanding their bundled payment systems in order to reduce healthcare costs and improve the quality of patient care.