Three Key Metrics To Control Post-Acute Care Costs And Optimize CJR Reimbursements

After spending last weekend with a group of clinicians, administrators and healthcare executives at the Interdisciplinary Conference on Orthopedic Value-Based Care, one thing is clear: Bundled payments implemented by Medicare’s Comprehensive Joint Replacement program are shaking up the foundation of how every stakeholder must address joint replacement therapy.

The Comprehensive Joint Replacement Program represents much more than reimbursement reform — value-based care is transforming how healthcare is delivered, leaving many wondering how to best position themselves to maximize revenue and mitigate risk.

With so many stakeholders involved, it seems extremely complicated to identify and manage the drivers of expenses that CJR seeks to control. The first step to a sound bundled payment strategy begins with an examination of current processes and realignment to create a multi-disciplinary and team-based system of coordinated care that is centered around the patient.  Then, the data shows that most of the variation in episode costs, and thus the opportunity for improvement, can be tracked to post-acute care (PAC) utilization. Optimizing this portion of the episode is a key focal point for hospitals operating under CJR regulations, and tracking metrics associated with this recovery period is core to any successful CJR strategy.

There are three important metrics related to PAC that should be analyzed to help identify and eliminate the barriers to maintaining healthy margins when subject to bundled payments for joint replacements.

1. Percentage of patients discharged directly to their homes – It’s fairly obvious that patients discharged to private homes cost much less than those that require institutional post-acute care, so tracking that data is imperative.  As a rule of thumb, hospitals that discharge 50 percent or more of joint replacement patients to their homes are healthy programs. Increasing this metric over time will require coordination with all stakeholders.  Dashboards are effective tools to tracking this important driver of success.
2. Length of stay in institutional facilities – PAC spending accounts for 44 percent of total episode costs for knee replacements, and length of stay in skilled nursing facilities (SNF) is the largest driver of that cost. Tracking this metric in the aggregate is important, but also examine average length of stay by facility, particularly for your largest volume SNF’s, and look for variations.  This data will help you make informed decisions about your network and engage with your partners to reduce unnecessary costs.
3. Hospital readmission rates – Hospital readmission rates vary considerably among diagnoses, and knee replacement surgery is fortunate to enjoy low rates with an average of only 7 percent.  Targeting a readmission rate of 5 percent or less is a worthy goal.  However, you need to also examine the costs of your readmissions, which is available in the data the Centers for Medicare & Medicaid Services provide to CJR hospitals.  It is possible to have a low readmission rate, but high readmission costs due to catastrophic readmissions.  Parsing the data on readmission rates and costs will help pinpoint issues that you can then go tackle.

With the five year long trial of Comprehensive Joint Replacement Program bundled payments not even a year old and uncertainty surrounding the future of healthcare policy with the newly elected administration, many healthcare providers have not begun learning how to best comply with these changes.  As of now, CMS remains committed to using alternative payments for 50 percent of all Medicare reimbursement by next year, and most hospital leaders believe value-based care is here to stay. It makes sense to begin planning for this eventuality because it involves redesigning processes and care delivery, and results in better outcomes and a better patient experience.

At Sequence Health, we believe that simple low-cost technology solutions that provide real-time insight into how patients are recovering from surgery are beneficial to all healthcare providers, whether they are working within CJR requirements or simply dedicated to providing the highest quality care and reducing expenses.

Let us show you how you can increase patient satisfaction, lower costs, and position for value-based care changes associated with Comprehensive Joint Replacement program.