onmedic news: AOSS roundup: JNJ inks deal for bundled payments for hip & knee replacements

American Association of Orthopaedic Surgeons Johnson & Johnson (NYSE:JNJ) subsidiary DePuy Synthes today announced an exclusive strategic alliance with Value Stream Partners, a company specializing in knee and hip replacement bundled payment program development and implementation.

The announcement was made at the American Academy of Orthopaedic surgeons annual meeting this week.

“This exclusive arrangement with VSP will further enable us to help providers, healthcare systems, and governments face new challenges in healthcare delivery and achieve the Triple Aim of improving clinical outcomes, increasing patient satisfaction and lowering overall costs. We’re focused on innovation and offering total solutions that go beyond the implant and make a real difference both inside and outside of the operating room,” DePuy Synthes prez Juan-José Gonzalez said in a press release.

The Centers for Medicare & Medicaid Services are implementing a Comprehensive Care for Joint Replacement Model at acute care hospitals in 67 regions, Johnson & Johnson said. The new model compensates hospital providers for an entire episode of care, from the knee or hip replacement procedure through 90 days after discharge, rather than just the surgery.

“There are great clinical and economic incentives for hospitals, physicians, and post-acute care providers to put in place the processes, procedures and alignment strategies necessary to better coordinate care. VSP has a solid track record in designing, implementing and administering bundled payment programs with the necessary collaborative, alignment and balanced incentive strategies to be successful. We look forward to working with VSP to help provide our customers with tools to effectively address the new requirements under the bundled payment model and provide the best care possible for patients,” Gonzalez said in a prepared statement.

With the bundled payment model, hospitals may have to repay CMS for a portion of the spending for care if performance metrics, including quality and spending performance, are not met, DePuy Synthes said.

Bundled payment programs were at the center of 2 other announcements at AAOS this year.

Data from a 3-year pilot program at NYU’s Langone Medical Center reported that bundled payments improved care for medicare patients, reduced stay length and lowered readmission rates.

The protocols used in the program were developed as part of NYU Langone’s participation in the Bundled Payment for Care Improvement pilot initiative sponsored by the CMS.

“The study highlights what we’ve seen firsthand since implementing our bundled payment initiative – that value-based care is best for our patients. Our Medicare patients are healthier after a joint replacement and less likely to come back to the hospital thanks to the protocols we put in place as part of this program,” lead study author Dr. Richard Iorio of NYU Langone said in prepared remarks.

NYU Langone’s Hospital for Joint Diseases was chosen as a BPCI pilot site in 2011. Data from the 3-year study indicated a decrease in average hospital stay from 3.58 to 2.96 days, the study reported, and a 16% drop in the number of discharges to inpatient rehab care facilities.

Data indicated drops in the average number of readmissions with the bundle program. The rate fell from 7% to 5% at 30 days, from 11% to 6.1% at 60 days and from 13% to 7.7% at 90 days. The average cost to CMS of the episode of care decreased from $34,249 to $27,541 from the 1st to the 3rd year in the program.

“Bundled care payment programs benefit everyone – our surgeons, the health care system, and most importantly, our patients. As we shift towards this quality over quantity-based system of care, providers will adapt and implement protocols to ensure every joint replacement patient is given the same resources to have the most successful outcome,” Dr. Joseph Zuckerman of NYU Langone said in a press release.

Future research will examine how a bundled payment risk factor stratification and modification program to delay surgery in high risk patients affects patient outcomes and medical care.

A study from Truven Health Analytics reports that the primary driver of cost variation for major lower joint replacement are tied to hospital cost and length of stay, attributing $1,944 per additional day in in total cost variation due to facility costs.

The research was done as a series examinig the cost for knee and hip replacements ahead of the implementation of CMS’ CJR model.

“As providers and payers begin to consider bundled payment programs for these procedures, it is increasingly important to understand the cost implications of each additional inpatient day, as well as post-acute care and readmissions. Once claims-based, actual patterns are recognized and understood, guidelines and standard best practices can be put in place to guide discharge planning and post-acute care based on patient risk for readmission and other factors contributing to a successful recovery. In fact, we look forward to accessing more clinical data and predictive analytics to help improve the management and execution of bundled payments,” senior research fellow and lead researcher Bob Kelley said in prepared remarks.

The study identified that facility cost and patient length of stay, primarily in post-acute care, were the key drivers of cost variation, with geographic differences associated with larger costs, as opposed to skilled nursing facilities or home healthcare services.

Truven reported that an increase in facility cost only, with professional cost removed, for each day of hospitalization post procedure varied from $313 per day in the East North Central region to $1,944 per day in the Pacific region.

The study reported widely varying post-acute costs, with the average at $10,600 in rehab facilities versus $5,300 per patient in nursing facilities and $1,300 using home health services. Costs varied significantly by region as well, at roughly $7,000 in New England compared to $22,500 in the Pacific.

The cost per bundle for readmissions varied from $538 in the East South Central to $918 in the West South Central division. The study reported a lower rate of admission and lower cost per discharge due to the lower cost in the East South Central region.

Data from the study was collected from claims data from 2012 and 2013 through Truven’s Health MarketScan Commercial Database.

A different study from Truven identified the scope of cost variation for lower joint replacement, the group said.

Also released at the American Academy of Orthopaedic surgeons annual meeting this week:

Zimmer Biomet launches 3 new hip products