Catalyst for Payment Reform

8 Joint Replacements; 3 Family Members; 1 Turnkey Solution

8 Joint Replacements; 3 Family Members; 1 Turnkey Solution

As I sat down to write this, I took an inventory of all of the people I know who have had total hip or knee replacement procedures.  It’s a lot of procedures across 3 family members (none of whom are me).  Specifically, in my relatively small family, there have been 3 separate knee replacements, 4 separate hip replacements, and one more planned separate hip replacement.  That’s 7 – soon to be 8 – total joint replacements and none of the procedures are “do-overs.”  It kind of staggering to think about. The bigger picture numbers are quite staggering, too.  By 2030, hip replacements are projected to almost double, and knee replacements are projected to increase by more than 600 percent.  Medicare pays an average of $15,000 per knee replacement.  Total hip or knee replacement costs an average of $21,978 and $21,622 respectively in the private sector.

If you purchase health care on behalf of a population (retirees or employees), the rates of increase in these procedures and prices matter, as you are likely to have to pay for more of them.  If you’re an employee/patient, it matters because you might be one of the many who needs such a procedure.  As both the demand and cost for hip and knee replacement surgeries grow, both the cost of the procedures and the large variation in price will continue to be critical issues for purchasers, payers, and patients.

So what are purchasers and patients to do about this looming issue?  One innovation is Total Joint Replacement (TJR) Bundled Payment.  TJR bundled payment benefits the purchaser with a fixed price on a package of services and a warranty on outcomes, and benefits the patient with coordinated care among many providers from pre-procedure evaluation to post-surgery rehabilitation.

CPR developed a Total Joint Replacement Bundled Payment Toolkit for purchasers to guide them toward a potential solution that impacts the unpredictability of cost and quality of joint replacement procedures.  A bundled payment program, along with complementary benefit design, is one promising strategy for achieving these goals.  CPR’s toolkit covers everything from a health plan questionnaire to assess the capabilities of implementing a bundled payment program, to model contract language for both health plans and providers (if a purchaser is considering a direct contract), to details of the bundle from beginning to end – by phase of care, provider, facility, prescription, and patient.  (Tip: a critical component of the bundle is a 90-day warranty!).

If you are currently trying to tackle the issue of joint replacements for your population – or you can see the wave of procedures coming – check out the toolkit and learn how CPR’s six plug-and-play tools can help you develop a bundled payment program through your health plans and providers.  Aligned incentives between plans, providers, purchasers, and patients is a recipe for success to address the cost and quality of these increasingly common procedures.

CPR’s Program Director, Andréa Caballero, wrote this blog.

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