By: Paul R. DeMuro
The Obama Administration plans to move billions of dollars in Medicare payments into contracts that radically alter how hospitals and physicians are paid. The idea is to find alternative payment mechanisms to Medicare’s fee-for-service system that base payments on quality and cost-effectiveness. This movement is not confined to Medicare, but also extends to commercial payers and certain Medicaid programs.
Particularly interesting is the Centers for Medicare & Medicaid Services (CMS) mandatory bundled payment program known as the Comprehensive Care for Joint Replacement (CJR) Model, which is effective on April 1, 2016. The program applies to nearly 800 hospitals. Throughout the United States, they must accept one payment (a bundled payment) for all services for hip and knee replacements. This payment will cover the hospital admission, the services of the physicians and other professionals, any subsequent admissions for 90 days, and skilled nursing facility (SNF) stays during that time period, along with any other hospital outpatient services, e.g., physical therapy, home health, and hospice services during the 90-day period.
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