Evaluating the Effects of CMS' Prospective Episode-Based "Bundling" Payment Model for Lower Limb Joint Replacement: Post-acute Care Setting, Costs and Patient Outcomes

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Prompted by the growth in Medicare spending and uncertainty about the effectiveness of post-acute care provided at alternative settings (e.g., inpatient rehabilitation facilities, skilled nursing facilities, home health agencies), the Center for Medicare and Medicaid Services (CMS) has established a mandatory, episode- based, prospective bundling payment model for persons undergoing elective joint arthroplasties, implemented as part of its Comprehensive Care for Joint Replacement (CJR) Rule of 2016. Bundles are based on inpatient DRGs and include all relevant Medicare costs during an episode-of-care, defined as the inpatient stay and 90 days post-acute discharge, regardless of post-acute care setting. In this application, we take advantage of the natural experiment afforded by CMS’ regional variation in implementation of the CJR Rule to examine the impact of bundling on service use, outcomes, and cost of care for the approximately 400,000 Medicare beneficiaries undergoing joint replacements every year. Specifically, our aims are: 1. To examine the effect of bundling on acute care length-of-stay, post-acute care discharge setting, and 90-day medical care costs among beneficiaries undergoing total knee (TKA) or hip (THA) arthroplasty, conditions targeted for bundled payments; 2. To estimate the effect of bundling on clinical and utilization outcomes at 12-months post-acute care discharge among patients with targeted conditions, and to quantify potential spillover effects on care and outcomes of patients with non-targeted musculoskeletal (hip fractures, amputations) and neurological (stroke) conditions; and 3. To estimate the impact of bundling on the value of care provided to patients with targeted and non-targeted conditions, and to discuss the implications of these relationships for post-acute care policy and program initiatives. Using difference-in-difference-in-difference techniques, we will estimate the effect of bundling on 12-month outcomes, including complications, medical (in)stability, re-hospitalizations, and mortality. Analyses conducted with serial cohorts of patients with non-targeted conditions will provide additional comparison groups and enable us to estimate possible spillover effects of the CJR Rule. Results from this study will provide important “real time” information for all interested in the challenges of providing effective post-acute care to the large and growing number of elderly persons requiring rehabilitation, including government, policy-makers, payers, and consumers. The findings will also be relevant in the current ACA- replace and repeal environment, which is expected to further reduce access to and reimbursement for these and other post-acute care services.