In what is being billed as an important step away from the fee-for-service health care system, the Obama administration announced an outcome-based measure of compensating medical providers for performing hip or knee replacements on Medicare patients.
The new policy, which will take effect in April, will pay hospitals more for positive outcomes after joint replacements. And the federal government will demand money back in the case of unsatisfactory results, including infections or implant failures.
In a statement justifying the new policy, the Department of Health and Human Services and the Centers for Medicare and Medicaid Services described the current payment model as one that failed to hold consistent poor performers accountable. Patients at some hospitals experience complications three times more than those at other hospitals, said the statement.
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"Today, we are embarking on one of the most important steps we will take to improve the quality and value of care for hundreds of thousands of Americans who have hip and knee replacements through Medicare every year," said Health and Human Services Secretary Sylvia Burwell. "By focusing on episodes of care, rather than a piecemeal system, we provide hospitals and physicians an incentive to work together to deliver the best care possible to patients."
The hope is that financial incentives will push hospitals to take better care of patients in the recovery process, after the core service has been performed. That means coordinating with other specialists, nursing homes, home care services and other providers to ensure that the patient avoids common post-surgery complications.
"This model is about improving patient care. Patients want high quality, coordinated care — not just for a day, but for an entire episode of care. Hospitals, physicians and other providers who work together can be successful and improve care for patients in this model, and CMS will help providers succeed," said Patrick Conway, chief medical officer for CMS.
The policy will be applied immediately in 67 metropolitan areas, down from the 75 areas CMS originally proposed. CMS also says it is revising the methodology for grading hospitals.
More importantly, the policy will be implemented in phases to prevent it from potentially devastating hospitals. In the first year of the policy, CMS says it does not plan to ask for any repayments from poor performing hospitals. The following year, repayments will be capped at 5 percent. They will be raised to 10 percent and 20 percent in the third and fourth years of the program.
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