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Sometimes a knee or hip replacement costs Medicare – the health program for seniors and the disabled – $16,500. Sometimes it costs twice that.
And quality is all over the map. Infection rates and failed knee or hip implant procedures can be more than three times higher in some facilities than others.
Thursday, the Centers for Medicare & Medicaid Services proposed bundling the payments — that is, giving hospitals in 75 markets around the country a fixed amount of money to manage costs all the way from prep to surgery to discharge.
“The effort by CMS is to say, ‘Look, doctors, nurses, therapists, figure out the best pathway forward to help patients get the outcomes we are looking for,’ ” says Dr. David Miller of the University of Michigan.
What CMS is actually telling providers is that they now must live within a fixed budget.
In 2013, there were more than 400,000 inpatient primary procedures, costing more than $7 billion for hospitalizations. CMS expects bundling for these two common procedures will save $150 million over the next five years.
In theory those savings will come by offering hospitals incentives to avoid duplication, needless testing and general sloppiness that’s being baked into these procedures.
“Right now, our healthcare system is dependent upon those unnecessary things that we do to fund the way we currently work,” says Dr. Tom Feeley, with the MD Anderson Cancer Center in Houston. “We are reimbursed for things that don’t need to be done. And if you stop reimbursing us for the things that don’t need to be done, that will change behavior.”
This five-year pilot program represents a major shift in how CMS pays for care. Many in healthcare circles see the logic behind the move, but there’s an important caveat.
“There is no proof that it works, yet,” says Dr. Tom Tsai at Harvard.
There are some encouraging signs, particularly out of Sweden, that this work will improve care and save money. Tsai says this proposal is just the beginning.
“When we design new drugs, we do trials to see if a new drug will work. Not all the new drugs work. But it’s important to innovate so we can learn from these experiences,” he says.
Even if bundling payments for hip and knee replacement is less successful than health officials hope, Tsai says just trying to reduce wasteful spending and improve patient care represents major progress.
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