Updated on: October 20, 2017

First-Year CJR Results Released: Hospitals Earn $37.5 Million

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Original story posted on: October 19, 2017

Report offers peek behind the curtain at financial picture.

The Centers for Medicare & Medicaid Services (CMS) just released a preliminary report outlining the first-year results of the Comprehensive Care for Joint Replacement (CJR) program.

The report on the first mandatory “bundled payment” program reveals that participating hospitals were able to cut costs enough to earn more than $37 million in reconciliation payments, an indication that CMS is unlikely to abandon the shared savings models.

Under the CJR program, hospitals were given the opportunity to reduce costs for a 90-day period involving episodes of care for patients undergoing total joint replacement and receive a portion of the savings in return. In turn, the hospitals could share the funds with collaborating parties, including physicians and post-acute providers. In proposed rule CMS-5542-P, through which CMS has proposed decreasing mandatory participation in CJR, it also provided baseline financial data on regional hospital performance. Looking at these two sources of data allows us to get a glimpse behind the financial curtain. What does the data tell us?

  • CMS only provided information on hospitals that received a reconciliation payment. It did not provide the names of hospitals that did not qualify for a reconciliation payment or indicate any information on “losses” incurred by these hospitals.

  • A total of 799 hospitals were in metropolitan service areas (MSA) where participation in CJR was mandatory.

  • CMS paid out a total of $37,594,131.23, encompassing 33,152 surgeries.

  • A total of 383 hospitals received a reconciliation payment, ranging from $348.66 to $1,293,224.52. The average hospital total payment was $98,414. The average reconciliation payment per surgery was $1,133.99.

  • It is unknown how many of the 416 hospitals that did not receive a payment performed no surgeries or had costs that exceeded their targets. Either scenario would make a hospital ineligible for a payment.

  • Hospitals receiving payments ranged from having performed one eligible surgery to 850 eligible surgeries. The average hospital receiving a payment performed 87 surgeries.

  • On a per-surgery basis, the best-performing hospital performed 12 qualifying surgeries and received an average reconciliation payment of $3,590.97 per surgery. The second-best performing hospital performed two surgeries and received $3,404.70 per surgery. The lowest-performing hospital that received a reconciliation payment performed 63 surgeries and received $13.83 per surgery.

  • The New York-Newark-Jersey City MSA had the most hospitals receiving a payment, with 59 hospitals receiving an average of $1,582.40 per surgery.

  • The Los Angeles-Long Beach-Anaheim MSA had 36 hospitals receive an average of $1,360.84.

  • The best-performing MSA was San Francisco-Oakland-Hayward, where the 14 hospitals that received a payment were paid an average of $1,876.65.

  • Four of the 67 total MSAs had no hospitals that received a payment: Carson City, Nev., Gainesville, Ga., Greenville, N.C., and Sebastian-Vero Beach, Fla.

  • There was a very large variation in baseline 90-day costs among the MSAs. The lowest-cost MSA is Bismarck, N.D., with 90-day costs of $22,479. The highest-cost MSA was Miami-Fort Lauderdale-West Palm Beach, with 90-day costs of $33,072, a 47percent higher cost to Medicare. This includes almost all Part A and B costs, including facility fees and professional billing.

  • There was no correlation between baseline costs and ability to reduce costs and receive a reconciliation payment. In the highest baseline cost area, Miami-Fort Lauderdale-West Palm Beach, the average hospital received a $1,296 payment, whereas in Portland-Vancouver-Hillsboro, which had the second-lowest baseline costs at $22,604, the average hospital received a reconciliation payment of $1,278.

It is unclear how CMS will use this data as it continues to refine and remodel the movement from volume to value. Furthermore, the broad range of hospitals receiving payments, including high- and low-cost hospitals, shows that there are savings to be found everywhere – which should empower CMS to continue to expand such programs.

Ronald Hirsch, MD, FACP, CHCQM

Ronald Hirsch, MD, FACP, CHCQM is vice president of the Regulations and Education Group at R1 Physician Advisory Services. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute-care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the Advisory Board of the American College of Physician Advisors, a member of the American Case Management Association, and a Fellow of the American College of Physicians. Dr. Hirsch is a member of the RACmonitor editorial board and is regular panelist on Monitor Mondays.

The opinions expressed are those of the author and do not necessarily reflect the views, policies, or opinions of R1 RCM, Inc. or R1 Physician Advisory Services (R1 PAS).

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