Characteristics of Hospitals Earning Savings in the First Year of Mandatory Bundled Payment for Hip and Knee Surgery

In JAMA, Amol Navathe and LDI colleagues Joshua Liao, Paula Chatterjee, Dan Polsky, and Ezekiel Emanuel examine hospital savings and quality results for the first year of the Comprehensive Care for Joint Replacement (CJR) bundled payment program. Since April 2016, Medicare has bundled payments for hip and knee replacements at 799 hospitals through CJR. The program incentivizes quality and cost containment by providing retrospective bonus payments that increase as hospitals exceed their cost and quality benchmarks, or imposing penalties if hospitals fall short. While the CJR program was initially mandatory for all hospitals based on location in one of 67 urban markets, the Centers for Medicare and Medicaid (CMS) recently changed its CJR rules to allow many rural and low-volume hospitals to participate on a voluntary basis. The authors used data from Medicare claims and the American Hospital Association to identify hospitals that achieved savings in the first year of the program (April 2016 – March 2017) and then look for characteristics that distinguish savings from nonsavings CJR hospitals.

Of 799 CJR hospitals, 382 (48%) achieved savings. The average savings per episode varied from $13.83 to $3590.97 (Figure). Compared to nonsavings hospitals, savings hospitals were more likely to be large hospitals with more than 400 beds (24% vs. 14.9%), have a higher volume of joint-replacement procedures (mean, 217 vs. 133), be non-profit (70% vs. 53%), teaching (62% vs. 52%), and integrated with a post-acute care facility (55.8% vs. 40%). Additionally, savings hospitals were less likely (2% vs. 23%) to be defined as “low-volume” by CMS and to be safety-net hospitals (22% vs. 37%) compared to nonsavings hospitals. Nearly all (92%) of the savings hospitals were rated as delivering good or excellent quality. Data on quality of care for the non-savings hospitals were unavailable.

Source: JAMA

These findings suggest that certain hospital types may be better positioned to succeed in mandatory bundled payment compared with others. These results may guide CMS and health care organizations, particularly as policy changes affect the number and composition of hospitals and markets required to participate in bundled payment programs.