A new study has found that Medicare’s recent switch to bundled payments for joint replacements is an effective way to save millions — possibly billions — annually, without affecting patient care, if it’s allowed to continue. But that may not happen.
According to a report in Kaiser Health News, Donald Trump’s nominee to head Health and Human Services has already made his opinion of the program known — and it’s not good.
The way the new program works, Medicare basically agrees to pay a set (bundled) fee to hospitals for all care related to hip or knee replacement surgery; the bundled payment covers the period from the surgery date until 90 days later. Under the traditional system, hospitals would collect payments individually for the multiple separate components of care and rehabilitation.
But Georgia congressman and orthopedic surgeon Tom Price, Trump’s nominee for secretary of HHS, is opposed to mandated bundled payments for such orthopedic operations, and in fact termed the process “experimenting with Americans’ health” last September in a letter to the Medicare agency.
Not only that, but the agency that designed and implemented the experiment, the Center for Medicare and Medicaid Innovation, was created by the Affordable Care Act under its mandate to come up with new ways to encourage cost-effective care and will disappear if Republicans follow through on their resolve to repeal the ACA.
The study, published in the Journal of the American Medical Association, reported on program results. One of the study’s authors is Dr. Ezekiel Emanuel, a professor at the University of Pennsylvania who actually helped design the ACA, and the research is based on Medicare claims data from 2008 through mid-2015.
As of April 2016, CMS imposed the mandatory bundled payment system of approximately 800 hospitals in 67 cities for joint replacements and 90 days of care after the surgery as part of the Comprehensive Care for Joint Replacement program. The program had previously been tested on smaller hospitals who participated voluntarily.
According to the study, hospitals saved an average of 8 percent under the program, with some saving considerably more. While Price has been skeptical that bundled payments save money, researchers estimated that if every hospital used this model, it would save Medicare $2 billion annually — and that care might actually be better under the bundled system. Fewer patients under the bundled payment system endured protracted hospital stays.
Dr. Amol Navathe, an assistant professor of medicine and health policy at the University of Pennsylvania, and one of the authors of the JAMA study, suggested with his colleagues that the bundled payments enhanced collaboration among surgeons, administrators and patients, because programs would only save money if standardized pathways for care were created.
Darshak Sanghavi, the former director of prevention and population health at the Center for Medicare and Medicaid Innovation, said that the system had to be mandatory in order for it to work; otherwise only high-performing hospitals would participate and less-efficient hospitals would continue to submit high bills to Medicare.
Sanghavi was quoted saying, “Stopping the programs for ideological reasons I think impedes innovation in a way that is going to consign us to having really, really high costs of care that’s going to continue in the future.”