Hospitals Soon to Be Penalized for Preventable Hip and Knee Complications

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changes to Medicare paymentsOn July 9, federal health care regulators proposed changes to Medicare payments that aim to reduce costs for hip and knee surgeries and to penalize hospitals with high complication rates.

The proposed changes, which shift focus towards quality as opposed to quantity of procedures, have two main components.

The first is that joint replacement surgery and follow-up services like physical therapy that occurs within 90 days of the initial discharge will be treated as a single service. This is different from the current model where each surgical or recovery service is billed individually. The change is expected to be more affordable.

The second change requires hospitals to repay 25% of the Medicare payments if the patient develops an avoidable infection or other complication during their stay in hospital. Sylvia Burwell, the Department of Health and Human Services secretary, notes the importance of this change and points out that some hospitals have complication rates up to three times higher than average.

Combined, the changes are meant to hold hospitals more accountable for the entire care episode. The idea is that since follow-up services cannot be additionally billed and with penalties for complications, hospitals will have more incentives to ensuring that elderly and disabled patients get more thorough follow-up care. Hospitals who have low complication rates will also receive bonuses under the proposed change.

The changes will be applied to over 800 hospitals across 75 regions in the country including New York City, Los Angeles, and Flint, Michigan. Certain critical-access hospitals, such as smaller facilities that provide temporary emergency care for rural communities, will be exempted.

Public comments on the proposal are open until September 8, 2015. If finalized, the changes will begin on January 1, 2016 and last five years.

Joint replacement surgery is one of the most common inpatient procedures for Medicare patients, with 400,000 being performed in 2013 alone.

Sources for Today’s Article:
Sun, L.H., “Medicare Proposes Payment Changes to Hospitals for Hip, Knee Replacement,” Washington Post web site, July 10, 2015; http://www.washingtonpost.com/national/health-science/medicare-proposes-payment-changes-to-hospitals-for-hip-knee-replacement/2015/07/09/9c6a90e0-2675-11e5-aae2-6c4f59b050aa_story.html.
O’Donnell, J., “Feds Want to Penalize Hospitals with Too Many Hip, Knee Surgery Problems,” USA Today web site, July 9, 2015; http://www.usatoday.com/story/news/nation/2015/07/09/cms-hip-knee-replacements-payments/29928727/.

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