The Michigan Value Collaborative

Helping Michigan hospitals achieve their best possible patient outcomes at the lowest reasonable cost

Month: February 2016

3 Reasons Why the Comprehensive Care for Joint Replacement (CJR) Model May Be a Bundle of Joy

Apoorv Dhir

Apoorv Dhir is a Research Assistant with MVC.

Patients and providers of joint replacement surgery may be uncertain about the impact that CJR will have starting April 1st, 2016. As with all reform, this anxiety is certainly understandable, but don’t worry! Here are 3 reasons why CJR may be a bundle of joy for your hospital and patients.

  1. CJR is a chance to trim down on costs.

When CJR takes effect, Medicare will set a target, standard price (the bundled payment) for each beneficiary undergoing joint replacement surgery. (Note: The amount of the payment will vary based on MS-DRG; you can read more about that here.) The underlying philosophy of bundled payments is to make the initial provider responsible for the entire episode of care. Although this may sound like an added burden, it is actually an important opportunity. Hospitals will now have total control over the cost of the patient’s entire episode of care. This change provides an opportunity to hone in on internal costs (e.g. streamline operations, cost-effective supply purchasing, etc.). Studies have shown that implantable medical devices are one of the largest inpatient expenses in joint replacements and that efforts to control supply costs can lead to downstream savings in both CJR and non-CJR cases.[i] Furthermore, bundled payments will give hospitals more robust purchasing power for post-acute services. This means that hospitals can use their ownership of the episode of care as leverage to negotiate with SNFs and other providers to serve patients with high-quality, cost-effective post-acute care. By enabling hospitals to procure cost-effective post-acute care, CJR will bring positive change to your own hospital’s operations and to the general healthcare value chain alike.

  1. Through CJR paybacks, hospitals can cash in on efficiency.

CJR is considered a retrospective payment model, which means that CMS will continue to pay providers through a fee-for-service system and then reconcile reimbursements, at the end of the year, based on the target set by the accrued bundled payments. As a result, hospitals spending less than the target bundled payments (hospitals that transcend Medicare’s expectations) will be paid the difference. So, not only will you save money for your hospital, but you’ll also be paid extra to do it. Obviously, a change of this magnitude will not be simple; it will take time, energy, and other resources to optimize care in such a way. But, the long-term benefit and opportunities for short-term payout are very important and incredibly exciting.

  1. Patients will receive higher quality, coordinated care as a result of CJR.

Of course, CJR aims to decrease spending without lowering quality of care for patients receiving joint replacement surgery. Accordingly, in order to receive credit for delivering cost-effective care, hospitals must pass on a few important quality measures. CMS will evaluate hospitals based on a risk-standardized complication rate and patient responses to the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS). Over time, CJR may incorporate voluntary submission of patient reported outcome (PRO) data after determining their usefulness in assessing performance. More detailed information about the quality measures associated with CJR can be found here. By bundling payments for joint replacements, CJR will give hospitals the prerogative to improve the entire episode of care for each of its patients. From pre-op through post-acute recovery, admitting hospitals will be responsible for the cost-effectiveness and quality of care for their patients. Along with adherence to the aforementioned quality measures, hospitals and other providers will have a strong incentive to communicate and coordinate their efforts, further improving the patient’s experience. Presumably, this approach will reduce variability in costs associated with joint replacements and promote best practices that will reduce inefficiencies all while improving patients’ lives.

In 2014, Medicare spent $7 billion on initial hospitalizations alone and an additional $6 billion on post-acute care services for beneficiaries receiving joint replacement surgery.[ii] Soon, CJR will put Medicare’s largest and most common expenditure to the test of payment reform. The successes and failures of CJR will likely be indicative of the usefulness of bundled payments in other future targeted attempts at conscientious payment reform. To find out more about CJR, click here. To find out if your hospital will be a part of the CJR program starting April 1st, click here. Questions or comments?  We’d love to hear from you.  You can comment on this article, or use the form at the bottom of this page.

[i] [ii] Mechanic, “Mandatory Medicare Bundled Payment – Is It Ready for Prime Time?” NEJM

We think you should trust MVC’s data, and here’s why

John Syrjamaki

John is a clinical information analyst for MVC.

As MVC has grown, one of the most common questions we receive is, “Are the data right?” In the past year, we’ve devoted a lot of time to address this question and strengthen the data.

What we did:

The coordinating center examined the level of agreement between services assigned to episodes of care by the MVC claims data algorithms, and services identified in clinical data maintained by the hospitals.

Why we did it:

  1. First, the results of the project will provide detailed information to participating hospitals about the reliability of the MVC data.
  2. Second, the clinical data provided by hospitals will inform refinements to our inclusion and exclusion algorithms for care occurring after the index hospital stay, thereby enhancing the validity of reports provided to hospitals.
  3. Third, the findings will confirm MVC’s ability to identify and describe services occurring within an episode that are often not visible in hospital records.

How we did it:

We selected 1,830 Blue Cross episodes from 2013-2014 from 11 service lines. Hospitals were able to identify almost all of these patients in their records (99% match rate) and record whether or not that patient received a service within 90 days post-discharge. The services that were evaluated were 30-day readmissions, emergency department visits, home health visits, skilled nursing facility admissions, and rehabilitation services.

What we found:

This project allowed us to improve both our classification algorithms and the inclusion and exclusion criteria used by MVC. This process also provided confirmatory evidence for the provision of services not apparent from hospital records but captured by MVC algorithms. Following adjustment of these algorithms, the level of agreement between MVC claims data and hospital clinical data significantly improved. The Kappa Coefficient, a statistic we used to measure agreement between the two data sources, increased for all services to 0.80 or greater, which is indicative of ‘excellent’ agreement. MVC data is particularly useful for identifying post-discharge services that occur at different facilities than the original index admission as well as outpatient services (e.g., home health, rehabilitation) that are often not evident in hospital records. The ability to identify such services will be of great value for hospitals in the era of payment bundling and other pending payment reforms.

Questions or comments?  We’d love to hear from you.  You can comment on this article, or use the form at the bottom of this page.