The price Medicare pays for joint replacement had hardy changed in two decades when the Centers for Medicare and Medicaid Services (CMS) began an experimental program to pay bundled payments for a full 90-day episode of care. The program was designed to save Medicare money while rewarding surgeons who keep costs down and penalizing those whose costs are higher.
Surgeons whose patients cost Medicare less than the lump sum over 90 days get a portion of their savings as a reward. Surgeons who don’t save Medicare money face penalties large enough to bankrupt them.
Foolishly, the bundled payments vary from surgeon to surgeon and from one hospital to the next. The program is known as the Medicare Bundled Payments for Care Improvement Advanced (BPCI-A). It is currently voluntary but Medicare wants to mandate participation for every surgeon by 2024.
The author, Andrew Wickline, was successful at coming in under budget so CMS changed the rules. Dr. Wickline wrote in Stat News:
I was among the few lucky ones. The protocols I developed helped me decrease costs and beat the house by reducing medical complications. But as happens in Las Vegas, when you win, the house makes new rules.
Even though my program featured one of the lowest costs in the country, Medicare lowered my target price even further. Once I realized it had rigged the game, I cashed out before I lost my shirt.
Dr. Wickline cited an anecdote of a San Francisco-based surgeon who has outperformed his colleges since 2015. Nicholas Mast consistently had lower costs and fewer complications than the national average. Dr. Mast dropped out of the BPCI-A program after Medicare changed the rules making it harder to achieve rewards, while increasing the likelihood of financial penalties. He has since dropped out of the Medicare program altogether and no longer treats Medicare patients.
It’s getting worse for Medicare surgeons.
This year, Medicare again reduced surgeon reimbursement while recommending an 8.5% lift for hospitals. Hospitals, though, are prohibited from prescribing or directing care. Only physicians can do that. Therefore, they are best positioned to create value since they orchestrate the entire episode of care. How does rewarding hospitals with more taxpayer dollars and cutting pay for the surgeons who help bring in patients save money?
Dr. Wickline believes three changes are needed to fix the BPCI-A program:
- Set a standard 90-day bundled payment that’s the same for all hospitals and surgeons. If the surgeon comes in lower than the bundled price they share in the reward.
- If a patient ends up costing more than the target bundled cost, the surgeon receives no additional reimbursement but also does not suffer a financial penalty. This is necessary if Medicare expects surgeons to treat difficult cases.
- Review surgeons who continually fail to meet the target costs. Provide additional training to help them meet their goals or potentially expel them from the Medicare program if they cannot meet their goals.
Something that Dr. Wickline did not say but seems obvious is to review surgeons who consistently meet their goals to see what they are doing that could be replicated in other surgeons.
3 thoughts on “Stat News: Medicare’s Bundled Payment Initiative for Joint Replacement a Rigged Game”
Medicare will always find a way “rig the game” financially. Their sole goal is to reduce health care costs, and all their programs – MIPS, MACRA, bundled payments, etc. – are intended to do this. Unlike private insurance companies that have to compete with each other, Medicare assumes access, and differences in quality and customer service are only important in egregious cases. As our healthcare becomes more taxpayer funded, it is becoming less accessible, less service-oriented, and lower quality.
It does not make sense for the bundled payment to vary by surgeon and by hospital.
This is a test comment only. bob hertz