PMMC Predicts Hospitals Face up to $3 Million Financial Loss from CJR Ruling

The Comprehensive Care for Joint Replacement (CJR) model, the new CMS rule that requires bundled payments for hip and knee replacements beginning April 1, poses a potentially large financial risk to healthcare providers upwards of $3 million over the next five years.

Under the new model, hospitals will be held accountable for the total cost of all delivered services across the entire episode of care and will have to meet regional financial targets set by CMS (Centers for Medicare and Medicaid Services).

If the total cost of care for a patient (including both hospitalization and post discharge) exceeds CMS’s target, then the hospital will be penalized and must pay back the difference.

“Healthcare providers, like never before, face the challenge of complete financial ownership for the entire episode of care for hip and knee replacements,” said Roger Shaul, President at PMMC. “Healthcare finance leaders need to have the foresight to understand how they can meet the CMS payment targets to avoid penalties and where they need to improve their coordination of care.” 

CJR is largely intended to strengthen the coordination of care and motivate hospitals to work more closely with other members of the patient’s care team, such as physicians, nursing facilities, and home health agencies. This is intended to create a better patient experience, increase quality of care, and result in a better economic value.

CJR is the first mandatory bundle and it represents the prototype for massive change in healthcare finance that will take place in the next two years, as CMS has a goal of moving to 50% alternative payment models by 2018.

Healthcare finance plays a critical role in the management of CJR and will be responsible for leading the data analysis to understand the financial implications for the hospital and to support care coordination. As a first step, finance is encouraged to obtain both external and internal episodic benchmark data to share with internal stakeholders and post-acute care providers.

PMMC has developed a CJR solution that analyzes complex CMS data by census region to calculate CJR payment targets and allow healthcare providers to adjust the management of the bundled episode cases. For more information, click here

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