Evaluation of Economic and Clinical Outcomes Under Centers for Medicare & Medicaid Services Mandatory Bundled Payments for Joint Replacements | Orthopedics | JAMA Internal Medicine | JAMA Network
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Figure.  Medicare Spending on Postacute Care in the 90 Days After Discharge per Episode
Medicare Spending on Postacute Care in the 90 Days After Discharge per Episode

Unadjusted, 90-day postacute care spending among episodes with index admissions at Comprehensive Care for Joint Replacement (CJR) hospitals and non-CJR hospitals. All Medicare Severity Diagnosis Related Group 470 and 469 episodes were included. Data points denote the month of the index admission; thus, the last data point shown is 3 months before the end of data availability. The first vertical line indicates the initial CJR announcement by the Centers for Medicare & Medicaid (CMS), the second vertical line indicates the release of the CMS final rule, and the third vertical line was the start of the CJR model.

Table 1.  Baseline Characteristics of Treatment and Control Groupsa
Baseline Characteristics of Treatment and Control Groupsa
Table 2.  Changes in Spending and Quality of Care Associated With Random Assignment Into the CJRa
Changes in Spending and Quality of Care Associated With Random Assignment Into the CJRa
Table 3.  Changes in Use and Patient Characteristics Associated With Random Assignment Into the CJRa
Changes in Use and Patient Characteristics Associated With Random Assignment Into the CJRa
Table 4.  Changes in Institutional Postacute Spending and Length of Stay Among Episodes With Institutional Postacute Care Associated With Random Assignment Into the CJRa
Changes in Institutional Postacute Spending and Length of Stay Among Episodes With Institutional Postacute Care Associated With Random Assignment Into the CJRa
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Centers for Medicare & Medicaid Services (CMS), HHS.  Medicare Program; Comprehensive Care for Joint Replacement Payment Model for acute care hospitals furnishing lower extremity joint replacement services: final rule.  Fed Regist. 2015;80(226):73273-73554.PubMedGoogle Scholar
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Lam  V, Teutsch  S, Fielding  J.  Hip and knee replacements: a neglected potential savings opportunity.  JAMA. 2018;319(10):977-978. doi:10.1001/jama.2018.2310PubMedGoogle ScholarCrossref
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Centers for Medicare & Medicaid Services. Comprehensive Care for Joint Replacement model. https://innovation.cms.gov/initiatives/cjr. Updated March 18, 2019. Accessed January 9, 2019.
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Finkelstein  A, Ji  Y, Mahoney  N, Skinner  J.  Mandatory Medicare Bundled Payment program for lower extremity joint replacement and discharge to institutional postacute care: interim analysis of the first year of a 5-year randomized trial.  JAMA. 2018;320(9):892-900. doi:10.1001/jama.2018.12346PubMedGoogle ScholarCrossref
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Lewin Group. CMS Comprehensive Care for Joint Replacement Model: performance year 1 evaluation report. https://innovation.cms.gov/Files/reports/cjr-firstannrpt.pdf. Published August 2018. Accessed January 9, 2019.
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Chen  LM, Ryan  AM, Shih  T, Thumma  JR, Dimick  JB.  Medicare’s acute care episode demonstration: effects of bundled payments on costs and quality of surgical care.  Health Serv Res. 2018;53(2):632-648. doi:10.1111/1475-6773.12681PubMedGoogle ScholarCrossref
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Lewin Group. CMS Bundled Payments for Care Improvement (BPCI) initiative models 2-4: year 1 evaluation & monitoring annual report. https://innovation.cms.gov/Files/reports/BPCI-EvalRpt1.pdf. Published February 2015. Accessed January 9, 2019.
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Lewin Group. CMS Bundled Payments for Care Improvement initiative models 24: year 4 evaluation & monitoring annual report. https://innovation.cms.gov/Files/reports/bpci-models2-4-yr4evalrpt.pdf. Published June 2018. Accessed January 9, 2019.
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Dummit  LA, Kahvecioglu  D, Marrufo  G,  et al.  Association between hospital participation in a Medicare bundled payment initiative and payments and quality outcomes for lower extremity joint replacement episodes.  JAMA. 2016;316(12):1267-1278. doi:10.1001/jama.2016.12717PubMedGoogle ScholarCrossref
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Centers for Medicare & Medicaid Services.  Medicare program; cancellation of advancing care coordination through episode payment and cardiac rehabilitation incentive payment models; changes to Comprehensive Care for Joint Replacement Payment Model: Extreme and Uncontrollable Circumstances Policy for the Comprehensive Care for Joint Replacement Payment Model (CMS-5524-P). https://www.federalregister.gov/documents/2017/12/01/2017-25979/medicare-program-cancellation-of-advancing-care-coordination-through-episode-payment-and-cardiac. Published December 1, 2017. Accessed January 9, 2019.
11.
Centers for Medicare & Medicaid Services. Comprehensive Care for Joint Replacement Model: episode exclusions. https://innovation.cms.gov/Files/worksheets/ccjr-exclusions.xlsx. Published July 30, 2018. Accessed January 9, 2019.
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Centers for Medicare & Medicaid Services. Comprehensive Care for Joint Replacement Model: PBPM exclusions. https://innovation.cms.gov/Files/worksheets/cjr-icd10hipfracturecodes.xlsx. Published July 30, 2018. Accessed January 9, 2019.
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Austin  PC.  An Introduction to propensity score methods for reducing the effects of confounding in observational studies.  Multivariate Behav Res. 2011;46(3):399-424. doi:10.1080/00273171.2011.568786PubMedGoogle ScholarCrossref
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O’Donnell  BE, Schneider  KM, Brooks  JM,  et al.  Standardizing Medicare payment information to support examining geographic variation in costs.  Medicare Medicaid Res Rev. 2013;3(3):E1-E17. doi:10.5600/mmrr.003.03.a06PubMedGoogle ScholarCrossref
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Wooldridge  J.  Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: MIT Press; 2001.
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Buntin  MB, Zaslavsky  AM.  Too much ado about two-part models and transformation? comparing methods of modeling Medicare expenditures.  J Health Econ. 2004;23(3):525-542. doi:10.1016/j.jhealeco.2003.10.005PubMedGoogle ScholarCrossref
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Pope  GC, Kautter  J, Ellis  RP,  et al.  Risk adjustment of Medicare capitation payments using the CMS-HCC model.  Health Care Financ Rev. 2004;25(4):119-141.PubMedGoogle Scholar
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Angrist  J, Pischke  J-S.  Mostly Harmless Econometrics: An Empiricist’s Companion. Princeton, NJ: Princeton University Press; 2009.
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Barnett  ML, Wilcock  A, McWilliams  JM,  et al.  Two-year evaluation of mandatory bundled payments for joint replacement.  N Engl J Med. 2019;380(3):252-262. doi:10.1056/NEJMsa1809010PubMedGoogle ScholarCrossref
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Zhu  JM, Patel  V, Shea  JA, Neuman  MD, Werner  RM.  Hospitals using bundled payment report reducing skilled nursing facility use and improving care integration.  Health Aff (Millwood). 2018;37(8):1282-1289. doi:10.1377/hlthaff.2018.0257PubMedGoogle ScholarCrossref
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Navathe  AS, Troxel  AB, Liao  JM,  et al.  Cost of joint replacement using bundled payment models.  JAMA Intern Med. 2017;177(2):214-222. doi:10.1001/jamainternmed.2016.8263PubMedGoogle ScholarCrossref
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Navathe  AS, Liao  JM, Polsky  D,  et al.  Comparison of hospitals participating in Medicare’s voluntary and mandatory orthopedic bundle programs.  Health Aff (Millwood). 2018;37(6):854-863. doi:10.1377/hlthaff.2017.1358PubMedGoogle ScholarCrossref
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Navathe  AS, Liao  JM, Shah  Y,  et al.  Characteristics of hospitals earning savings in the first year of mandatory bundled payment for hip and knee surgery.  JAMA. 2018;319(9):930-932. doi:10.1001/jama.2018.0678PubMedGoogle ScholarCrossref
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Navathe  AS, Liao  JM, Dykstra  SE,  et al.  Association of hospital participation in a Medicare bundled payment program with volume and case mix of lower extremity joint replacement episodes.  JAMA. 2018;320(9):901-910. doi:10.1001/jama.2018.12345PubMedGoogle ScholarCrossref
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Fisher  ES.  Medicare’s bundled payment program for joint replacement: promise and peril?  JAMA. 2016;316(12):1262-1264. doi:10.1001/jama.2016.12525PubMedGoogle ScholarCrossref
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    Original Investigation
    June 3, 2019

    Evaluation of Economic and Clinical Outcomes Under Centers for Medicare & Medicaid Services Mandatory Bundled Payments for Joint Replacements

    Author Affiliations
    • 1Avant-garde Health, Boston, Massachusetts
    • 2Harvard Business School, Boston, Massachusetts
    • 3Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts
    • 4Department of Medicine, Massachusetts General Hospital, Boston
    JAMA Intern Med. 2019;179(7):924-931. doi:10.1001/jamainternmed.2019.0480
    Key Points

    Question  How did Medicare spending, quality, volume of episodes, and patient characteristics change for primary lower extremity joint replacements after the Comprehensive Care for Joint Replacement model was instituted?

    Findings  In the first 2 years, 90-day Medicare Part A spending decreased significantly by $582 per episode (−2.5%) associated with the Comprehensive Care for Joint Replacement model, driven by a 5.5% decrease in postacute spending. No detectable changes in hospital length of stay, readmissions, complications, 30- or 90-day mortality, volume of episodes, or patient characteristics relative to control were found.

    Meaning  Over 2 years, the Comprehensive Care for Joint Replacement model was associated with reduced Medicare Part A spending driven by postacute savings, without changes in volume, quality, or patient selection.

    Abstract

    Importance  In 2016, the Centers for Medicare & Medicaid Services (CMS) launched its first mandatory bundled payment program, the Comprehensive Care for Joint Replacement (CJR) model, by randomizing metropolitan statistical areas (MSAs) into the payment model.

    Objective  To evaluate changes in key economic and clinical outcomes associated with the CJR model.

    Design, Setting, and Participants  A retrospective, national, population-based analysis of Medicare fee-for-service beneficiaries undergoing lower extremity joint replacement was conducted using 100% Medicare Part A data and 5% Medicare Part B data. Within an intention-to-treat framework, a difference-in-differences approach was used to compare Medicare spending, quality of care, volume of episodes, and patient selection in episodes of lower extremity joint replacements in the first 2 years of the program between propensity score–matched CJR and non-CJR hospitals (episodes initiated from April 1, 2016, through December 31, 2017, with the latter completed by March 31, 2018). Lower extremity joint replacement episodes in MSAs randomly assigned to the CJR model were compared with those in MSAs not assigned to the CJR model.

    Exposures  Random assignment of MSAs into the CJR model within prespecified strata.

    Main Outcomes and Measures  Spending and its components, quality of care, volume of episodes, and patient characteristics were the main outcomes.

    Results  After propensity score matching, there were 157 828 primary lower extremity joint replacement cases across 684 hospitals in the CJR (treatment) group (101 641 [64.4%] women; mean [SD] age, 72.8 [8.9] years) and 180 594 cases across 726 hospitals in the non-CJR (control) group (115 580 women [64.0%] women; mean [SD] age, 72.6 [8.8] years). The CJR was associated with a decrease of $582 per episode in Medicare Part A spending, a 2.5% savings on claims (95% CI, −$873 to −$290; P < .001) driven by a 5.5% decline in 90-day postacute care spending, concentrated in skilled nursing facilities (−4.5% change from baseline; 95% CI, −$460 to −$26; P = .03) and inpatient rehabilitation facilities (−22.9% change from baseline; 95% CI,−$497 to −$176; P < .001). Estimated savings on claims, while consistent with changes in practice patterns, may not have exceeded the reconciliation payments to hospitals reported by CMS to date. No significant changes in hospital length of stay, readmissions, complications, 30- or 90-day mortality, volume of episodes, or patient characteristics relative to control were found.

    Conclusions and Relevance  The CJR was associated with reduced Medicare Part A spending on claims over 2 years, largely through lower postacute spending. Mandatory bundled payments may serve as a useful model for policy efforts to change clinicians’ and facilities’ behavior without harming quality.

    Introduction

    Quiz Ref IDIn April 2016, the Centers for Medicare & Medicaid Services (CMS) initiated its first mandatory bundled payment program, the Comprehensive Care for Joint Replacement (CJR) model.1 The CJR aimed to improve the value of care for patients undergoing lower extremity joint replacements. By paying hospitals a bundled payment that covered essentially all services from hospitalization through 90 days after discharge, the CJR encouraged hospitals and allied clinicians and facilities to work together to reduce spending and improve the quality of care.

    The CJR provided a unique experiment to assess the outcome of a mandatory bundled payment model in a clinical domain with potential for savings.2 Within the program, hospitals could earn a reconciliation payment from CMS (shared savings) if total Medicare fee-for-service payments for the joint replacement episode were less than a target set by CMS based on a combination of a hospital’s historical spending and regional spending.3 Only hospitals that met CMS quality thresholds would be eligible for the reconciliation payment, which was capped at 5% of the target in the first calendar year (2016) and 10% in the second (2017). Hospitals had no downside financial risk in 2016, the first year, if total CMS payments exceeded the target or if quality was below the CMS threshold, but began to assume downside risk of up to 5% of the target in 2017. Early evidence from the first 9 months of the CJR showed decreased use of institutional postacute care, mixed results on spending, and no effects on quality.4,5 Before the CJR, 2 voluntary CMS bundled payment models for lower extremity joint replacements—the Acute Care Episode demonstration and the Bundled Payments for Care Improvement (BPCI)—were also associated with mixed results on spending and no significant changes in quality.6-9

    We studied changes in spending, quality, volume of episodes, and patient characteristics associated with the CJR model over the first 2 years of the program (episodes initiated from April 1, 2016, through December 31, 2017, with the latter completed by March 31, 2018).

    Methods
    Study Design

    We conducted a retrospective, national, population-based analysis of Medicare fee-for-service beneficiaries undergoing lower extremity joint replacement. The study was approved by the institutional review board of Harvard Medical School.

    Quiz Ref IDThe CJR was implemented through the random assignment of metropolitan statistical areas (MSAs) into the model. The CMS first grouped MSAs into 8 strata according to population size and historical spending and then randomized a portion of MSAs within each stratum into the CJR. Initially, 75 such MSAs were randomly selected into the CJR, within which all hospitals were required to participate, provided they were not participating in the BPCI program for lower extremity joint replacements.3 After subsequent CMS modifications to the exclusion criteria, 67 of the initial 75 MSAs were retained in the CJR.1,10

    Target spending for the episode set by the CMS included all Medicare Part A and B claims payments through 90 days postdischarge, except a list of specific claims that the CMS identified as unlikely to be related to a lower extremity joint replacement.11 Given that patients with hip fractures have higher needs after discharge, the CMS set a different target price for hip fracture episodes.12

    We used an intention-to-treat approach within a difference-in-differences framework to compare episodes of care among hospitals in treatment and control MSAs. Despite the reduction of MSAs in the CMS final rule, we considered all hospitals in the randomly assigned 75 MSAs to be eligible for the treatment group, as the 8 excluded MSAs may have been plausibly affected by the program. Hospitals from the 121 MSAs not selected to participate in CJR composed the control group. We excluded all 155 hospitals in the BPCI program for major joint replacement of the lower extremity from the 196 eligible MSAs. To balance the treatment and control groups before analysis, we matched hospitals within each of the 8 CMS strata based on a propensity score calculated using preintervention hospital characteristics, including patient case mix, nature of lower extremity joint replacement cases, volume of cases, bed size, and discharge disposition (eFigure 1 in the Supplement).13 We restricted the analysis to episodes from matched hospitals.

    This evaluation spanned the first 24 months of the program (ie, the first 2 full performance years), with our postintervention period defined as April 2016, when hospitals began facing CJR incentives, through March 2018 when the last episodes were completed. Our preintervention period spanned January 2014 through July 2015, when the CMS first announced the CJR model. We omitted the intervening period between July 2015 and April 2016 during which the public comment period and final rule were taking place, given that public knowledge of the program existed but hospitals had yet to face incentives.

    Data Source

    We used 100% Medicare Part A and 5% Part B fee-for-service claims data from January 2014 through March 2018. The Part B claims data included a consistent subsample of fee-for-service Medicare beneficiaries across years. We identified episodes of lower extremity joint replacement (typically knee and hip replacements) using the billing Medicare Severity Diagnosis Related Group (MS-DRG) 469 or 470, denoting major joint replacement or reattachment of lower extremity, with and without major complication or comorbidity, respectively. Approximately 90% of Medicare episode spending for the CJR patients is for Part A coverage, for which we analyzed the 100% claims data. The CJR excluded patients who died within 90 days of hospital discharge; we included those patients to assess changes in mortality. Following CJR exclusion criteria as set forth by the CMS, we excluded beneficiaries without Medicare as their primary payer or enrolled in Medicare Advantage.1

    Statistical Analysis

    Within our intention-to-treat framework, we used a difference-in-differences approach to assess changes in key economic and clinical outcomes associated with the CJR. The dependent variables included Medicare spending, quality of care, volume of episodes, and patient characteristics. In analyzing Medicare spending, we focused on Part A spending using the 100% Part A claims and distinguished Part A spending for the index hospitalization from Part A spending on postacute care during the 90-day period following the index hospitalization. Given that the postdischarge period was a substantive opportunity to influence spending, specifically through changes in postacute care, we further decomposed Part A postacute spending into its components: skilled nursing facilities, inpatient rehabilitation facilities, home health agencies, readmissions, long-term care hospitals, psychiatric hospitals, and other outpatient payments. We augmented these detailed Part A spending analyses with 5% Part B claims, which allowed us to analyze changes in Part B spending on physician and other services among a 5% subsample of the episodes. Within this 5% subsample, we were also able to assess total Medicare spending, calculated as the sum of Part A and Part B spending. We adjusted spending for geographic differences in regional labor costs and practice expense following the CMS Standardization Methodology.14 Outcomes related to quality of care included the length of stay of the hospitalization, 90-day complication rates, 90-day readmission rates, and 30-day as well as 90-day mortality rates.

    For our spending and quality analyses, we used a linear ordinary least-squares model at the episode level15,16 in which we regressed the outcome of interest on a vector of episode-level characteristics, including beneficiary age and sex; the CMS Hierarchical Condition Category risk score17; an indicator for hip fracture status; a vector of quarter-year indicators; and interactions between each quarter-year indicator and an indicator denoting initial randomization of the index hospital where the episode was triggered into the CJR, consistent with our intention-to-treat approach (irrespective of any subsequent exit). To account for unobserved time-invariant hospital characteristics, we included a hospital fixed effect. The interactions between the quarter-year indicators and the indicator of random assignment into the CJR produced our coefficients of interest. We calculated mean program effects using a linear combination of these interaction term coefficients in the post-CJR period. Standard errors were clustered at the hospital level.

    Our measures of use comprised the volume of lower extremity joint replacement episodes (MS-DRG 469 and 470) per 1000 fee-for-service Medicare beneficiaries triggered. To account for potential shifts in volume between hospitals within MSAs, we examined changes in use using an analogous difference-in-differences model at the MSA level.

    Furthermore, because bundled payment incentives might lead hospitals to differentially select patients of certain risk or clinical profiles, we conducted analyses of selection using a similar model at the MSA level. We examined changes in the mean age, sex, and CMS Hierarchical Condition Category risk score of beneficiaries admitted for lower extremity joint replacements. We also examined changes in the proportion of episodes that involved a hip fracture.

    In secondary analyses, we examined changes in skilled nursing facility and inpatient rehabilitation facility spending—the 2 largest components of postacute care spending—among episodes that involved admission to these postacute facilities. Other outcomes of interest, such as pain and functional status, were not available in the administrative claims data. In sensitivity analyses, we examined changes in spending among episodes in the 67 MSAs that received the full CJR treatment relative to controls. We used an instrumental variables approach in which we allowed initial random assignment to the CJR to serve as the instrument for eventual receipt of full CJR treatment, analogous to prior work in the literature.3,18 We also tested the robustness of our main results after excluding hip fracture cases from the sample. Results are reported with 2-tailed P values, with P < .05 considered significant. Statistical analysis was conducting using R, version 3.5.1 (R Core Team).

    Results
    Sample

    We identified 815 hospitals in MSAs that were randomly selected to participate in the CJR and 955 hospitals in MSAs that were randomly selected not to participate in the program (eTable 1 in the Supplement). At the hospital and episode levels, baseline preintervention differences in hospital and episode characteristics between treatment and control groups were statistically significant. After the propensity score match (eFigure 2 in the Supplement), 684 hospitals from CJR MSAs and 726 hospitals from non-CJR MSAs composed our main analytic sample. Baseline characteristics exhibited improved balance, and the standardized mean difference decreased after propensity score matching (Table 1). Within a joint replacement episode, Medicare Part A spending accounted for a mean of 88% in the CJR group and 89% in the non-CJR group with Part B spending accounting for the remainder.

    Spending

    Quiz Ref IDTotal Medicare Part A spending decreased by a mean of $582 per episode among episodes in MSAs randomly assigned to the CJR relative to that among episodes in non-CJR MSAs over the first 2 years of the program, a 2.5% savings from baseline (95% CI, −$873 to −$290; P < .001) compared with the mean pre-CJR episode spending in the treatment group (Table 2). Within Part A spending, spending on the index admission did not change (a difference of $3 per episode; 0.0% relative to baseline; 95% CI, −$26 to $32; P = .83). Rather, the claims savings were explained by a decline in 90-day postacute care spending of $585 per episode, a 5.5% savings relative to the pre-CJR mean (95% CI, −$874 to −$296; P < .001). The Figure shows unadjusted 90-day, postacute care spending in the treatment and control groups across the study period.

    Quiz Ref IDSavings within postacute claims were explained by lower spending on skilled nursing facilities (−$243 per episode or −4.5%; 95% CI, −$460 to −$26; P = .03) and inpatient rehabilitation facilities (−$337 per episode or −22.9%; 95% CI, −$497 to −$176; P < .001). No statistically significant changes were detected in other segments of Part A spending, including on home health agencies ($35 or 1.9% per episode; 95% CI, −$47 to $118; P = 0.40), readmissions (−$50 per episode or −4.3%; 95% CI, −$143 to $43; P  = 0.29), long-term care hospitals (−$3 per episode or −2.6%; 95% CI, −$44 to $39; P = 0.89), psychiatric hospitals (−$7 per episode or −32.6%; 95% CI, −$18 to $6; P = .23), or outpatient payments ($20 per episode or 3.4%; 95% CI, $0 to $40; P = .05) (Table 2).

    In our 5% subsample of beneficiaries with Medicare Part B data, changes in Part B spending were not statistically significant (−$68 per episode or −2.3%; 95% CI, −$205 to $69; P = .33). Total Part A and B claims spending for the 5% subsample was estimated to have decreased by a mean of $730 per episode among CJR hospitals relative to non-CJR hospitals (2.7% savings), but this was less statistically precise (95% CI, −$1745 to $286; P = .16) owing in part to the smaller sample size of the 5% population (Table 2).

    Results were qualitatively similar when excluding or including only hip fracture cases (eTable 2 in the Supplement). Tests of preintervention spending trends between treatment and control showed that differences were not statistically significant (eTable 3 in the Supplement). Instrumental variables analysis of the 67 MSAs that received full treatment in the CJR produced qualitatively similar results relative to our main findings, including Part A savings of $522 per episode (2.2% savings; 95% CI, −$820 to −$225; P < .001) and a 4.8% reduction in postacute spending ($522 per episode, 95% CI, −$816 to −$227; P < .001) (eTable 4 in the Supplement).

    Estimates of net savings require comparing savings on claims with reconciliation payments to hospitals from the program. The CMS reported that the mean reconciliation payment to hospitals was $872 per episode over the first 2 years.3 This amount exceeds our estimated savings on Medicare Part A claims and is closer to, but also exceeds, our estimated savings from Part A and Part B claims using the 5% subsample, although that estimate was statistically less precise. This comparison is limited by differences in the sample; CMS payments were calculated across all episodes nationwide, whereas our sample was generated using the exclusion criteria and propensity match. Moreover, this study included episodes extending into quarter 1 of 2018, whereas CMS payments reported on episodes ending in 2016-2017. Nevertheless, this crude comparison cautions that savings on claims, while consistent with changes in clinician or hospital behavior, may not have exceeded the reconciliation payments from the CMS in the first 2 years.

    Quality

    Quiz Ref IDThe CJR was not associated with a statistically significant change relative to baseline in mean length of stay during the index hospitalization (0.2%; 95% CI, −0.03 to 0.04 days), 90-day readmission rates (−0.1%; 95% CI, −0.08% to 0.03%), 90-day complication rates among hip and knee replacements (10.2%; 95% CI, −0.04% to 0.56%), 30-day mortality rates (0.2%; 95% CI, −0.30% to 0.30%), or 90-day mortality rates (−1.8%; 95% CI, −0.33% to 0.24%) (Table 2; and eTable 2 in the Supplement).

    Volume of Episodes

    At the MSA level, the CJR was not associated with statistically significant changes in the volume of joint replacement episodes per 1000 beneficiaries triggered at CJR hospitals relative to those at non-CJR hospitals (0.30 episodes for MS-DRG 470: 95% CI, −0.09 to 0.68; P = .13; and 0.02 episodes for MS-DRG 469: 95% CI, −0.41 to 3.85; P = .11) (Table 3; and eTable 5 in the Supplement).

    Patient Selection

    We found no evidence that the CJR was associated with a change in the characteristics of patients undergoing joint replacements at the MSA level. Specifically, we found no changes in the mean age, sex, CMS Hierarchical Condition Category score, and proportion of cases involving a hip fracture among patients at CJR hospitals relative to non-CJR hospitals (Table 3). Results were mostly consistent when excluding hip fracture cases or within hip fracture cases (eTable 5 in the Supplement).

    Secondary Analyses

    Among episodes that involved a skilled nursing facility stay, spending on skilled nursing facilities decreased by $842 per episode, a 5.9% savings (95% CI, −$1237 to −$446; P < .001). This decrease was consistent with a 1.5-day decline in mean length of stay at skilled nursing facilities (95% CI, −2.2 to −0.9 days; P < .001) and modestly lower unadjusted use rates (from 38.3% to 28.6% for the CJR group and 38.0% to 28.6% for the non-CJR group) (Table 4; and eTable 6 in the Supplement). Meanwhile, among episodes that involved an inpatient rehabilitation facility stay, spending on those facilities did not change significantly, nor did rehabilitation facility length of stay, although such facilities appeared to have been used less frequently (from 8.8% to 4.6% for the CJR group and 7.4% to 5.5% for the non-CJR group) (Table 4; eTable 6 in the Supplement). Results were similar without hip fracture cases (eTable 7 in the Supplement).

    Discussion

    The CJR model is the first wide-scale mandatory bundled payment model implemented by the CMS in a randomized fashion. In this evaluation of the first 2 full years (episodes initiated from April 1, 2016, through December 31, 2017, with the latter completed by March 31, 2018), we found that the CJR was associated with a 2.5% decrease in 90-day Medicare Part A spending per episode, without detectable changes in the volume of inpatient admissions for primary hip and knee replacements, mean length of stay, complication rates of hip and knee replacements, 90-day readmissions, mortality out to 90 days, or characteristics of beneficiaries in whom the bundled payment was triggered. Lower episode spending on claims was driven by a decrease in 90-day postacute care spending, concentrated within skilled nursing facilities and inpatient rehabilitation facilities. There was a secular slowing in postacute spending among both the treatment and control groups during this period, but claims spending on episodes triggered by CJR hospitals slowed differentially more than claims spending triggered at non-CJR hospitals. However, our estimated savings on claims, while consistent with changes in clinician or hospital behavior, may not have exceeded the reconciliation payments to hospitals reported by the CMS to date. These estimates were more modest, although qualitatively similar, relative to a recent study of the CJR through 2017, in which estimated total savings on Part A and B claims within a 20% sample of Medicare beneficiaries ($1084 per episode) produced a net savings of 0.7%.19

    Our finding that episode savings were driven by declines in postacute care spending is consistent with interim analyses and qualitative evidence of hospital strategy.3,4,20 Our results also provide clues to the mechanisms by which postacute savings were achieved. For skilled nursing facilities, savings were from reduced lengths of stay and reduced use. For inpatient rehabilitation facilities, savings were primarily the result of reduced use.

    Our results are qualitatively similar to those of some evaluations of voluntary bundled payment models for joint replacements.5-8 A study of the Baptist Health System, for example, a participant in the Acute Care Episode demonstration and BPCI initiative, found a 20.8% decline in Medicare payments through lower postacute spending.21 Hospitals participating in the BPCI have been generally larger and had higher case volumes than CJR hospitals,22 although hospitals achieving savings across both programs had higher case volumes than hospitals without savings.23

    The absence of changes in the volume of episodes or patient characteristics at the MSA level suggests that hospitals in the CJR, on average, generally did not perform operations on more patients or change their patient case mix in response to the program, similar to recent findings from the BPCI initiative.24 This finding suggests that savings within the episode were not offset by an increase in total episodes, which was a concern among earlier results from the BPCI initiative.25

    Limitations

    We note several limitations of the study. First, our measures of total 90-day episode spending and Part B spending used 5% Medicare Part B claims data, while the rest of our outcomes used 100% Part A claims. Thus, the lack of statistical significance in our total 90-day episode spending estimate is likely owing to a lack of precision from the smaller sample size in that model. Moreover, our Part A and total 90-day spending results may not be directly comparable, as the latter is derived from a 5% subsample of the former. Second, we analyzed the quantity of episodes and patient characteristics at the MSA level to test for volume and selection program-wide. Although this is of policy interest, it is agnostic toward potential within-MSA shifts in volume or selection effects between hospitals. Third, our results may not generalize to other bundled payment programs or future years of the CJR when the potential gains and losses for hospitals increase from 5% to 10%, then 20%, and the model became voluntary for hospitals in certain MSAs. Fourth, there may be spillover effects from other payment reforms differentially adopted by CJR relative to non-CJR hospitals. Fifth, despite the program design and statistical adjustments, it is possible that unobserved confounders may influence our results.

    Conclusions

    Mandatory bundled payments for lower extremity joint replacements may be a useful strategy for slowing spending without harming quality. In subsequent years of the CJR, hospitals begin to bear downside risk and face further potential upside gains, which could heighten CJR incentives. Moreover, episode target prices will increasingly be based on the performance of hospitals in a region; thus, as average spending in a region falls, target prices will likely decrease and hospitals may find it more difficult to generate savings beneath the target. Further studies will be needed to assess the results of these changes associated with the CJR program over time.

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    Article Information

    Accepted for Publication: January 30, 2019.

    Corresponding Author: Zirui Song, MD, PhD, Department of Health Care Policy, Harvard Medical School, 180A Longwood Ave, Boston, MA 02115 (song@hcp.med.harvard.edu).

    Published Online: June 3, 2019. doi:10.1001/jamainternmed.2019.0480

    Author Contributions: Mr Haas and Ms Zhang had full access to all of the data in the study and take responsibility for the integrity of the data and the accuracy of the data analysis.

    Concept and design: All authors.

    Acquisition, analysis, or interpretation of data: All authors.

    Drafting of the manuscript: Haas, Zhang, Kaplan.

    Critical revision of the manuscript for important intellectual content: All authors.

    Statistical analysis: Zhang and Song.

    Obtained funding: Song.

    Administrative, technical, or material support: Kaplan, Song.

    Supervision: Haas, Kaplan, Song.

    Conflict of Interest Disclosures: Mr Haas and Ms Zhang reported personal fees and stock ownership from Avant-garde Health outside the submitted work and have patent 15/973,081 pending. Dr Kaplan reported personal fees and nonfinancial support from Avant-garde Health and personal fees and nonfinancial support from Medtronic outside the submitted work. Dr Song reported grants from the National Institutes of Health during the conduct of the study. No other disclosures were reported.

    Funding/Support: This work was supported in part by grant 1DP5OD024564 from the Office of the Director, National Institutes of Health (Director’s Early Independence Award, Dr Song).

    Role of the Funder/Sponsor: The National Institutes of Health had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

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