Industry Insights

SNF Impact of Joint Replacement Bundled Payments

July 2015
Authors:  Suzy Harvey

Suzy Harvey

Managing Consultant

Consulting

Health Care

910 E. St. Louis Street, Suite 200
P.O. Box 1190
Springfield, MO 65801-1190 (65806)

Springfield
417.865.8701

 & Chris Murphy

Chris Murphy

Partner

Consulting

Health Care

Two Warren Place
6120 S. Yale Avenue, Suite 1400
Tulsa, OK 74136-4223

Tulsa
918.584.2900

On July 9, 2015, the Centers for Medicare & Medicaid Services (CMS) announced a proposed rule on the Comprehensive Care for Joint Replacement (CCJR) demonstration model. The CCJR model is a five-year demonstration project that would test bundled payments for lower extremity joint replacements (LEJR). The model will only apply to elective LEJR procedures provided by Inpatient Prospective Payment System (IPPS) hospitals in the 75 selected metropolitan statistical areas (MSA). When finalized by CMS, the CCJR model will be implemented January 1, 2016.

Skilled nursing facilities (SNF) that admit a high number of total hip and knee replacements for rehab, or have partnered with an area hospital for orthopedic aftercare, need to be aware of how the CCJR model will affect them. To determine if you are in one of the MSAs, visit the CCJR model web page

For hospitals participating in the CCJR model, all services provided during an episode of care will be subject to the bundled payment. An episode of care for the CCJR model includes hospitalization and all Part A and B services provided 90 days post-discharge. Hospitals will be responsible for repaying Medicare for costs over the target price set by Medicare. These hospitals will be looking at both their cost associated with LEJR and the cost of post-acute care (PAC) partners or collaborators as described by CMS. SNFs and other PAC providers will continue to bill and get paid for service just as they do now. Since PAC provider performance will affect ultimate payment for hospitals, hospitals likely will closely review cost of care for each episode and begin to steer referrals to PAC providers with good outcomes and lower cost of care. Participating hospitals might want to partner with PAC providers to look at cost-saving strategies for services delivered during a CCJR episode. In preparation for this, PAC providers in the affected MSAs should closely review outcomes and efficiency for LEJR admissions and begin working on revising care plans to improve efficiency. PAC providers need to be prepared to share program information and financial results with potential hospital partners.

The CCJR proposed rule lays the foundation for all arrangements between the hospital and its collaborators, including waiving the SNF three-day qualifying stay requirement beginning the second year of the program. But the waiver is only valid if the beneficiary is transferred to a SNF with a three-star or higher rating on the CMS Nursing Home Compare website. Beneficiaries still would retain their right to choose the SNF, but if the SNF is not rated at least three stars, the use of the three-day stay waiver is not available. As a result, hospitals will be looking for PAC partners, especially SNFs, to which they can discharge patients more quickly than today.  

If your SNF is not rated three stars or better, there are a few steps to take:

  • Evaluate needed changes to increase your rating on Nursing Home Compare and be prepared to share those changes with potential hospital partners.
  • If you’re unable to increase your rating prior to the program’s inception, be prepared to share information about your quality and cost to care for LEJR patients.
  • Identify other specialties to supplement your skilled program volume, as hospitals may be reluctant to refer LEJR cases to lower-rated facilities.

Contact your BKD advisor for assistance in determining how the CCJR model will affect your SNF.

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