(Reuters) - The U.S. agency that runs federally funded health insurance programs has proposed restructuring payments for hip and knee replacement surgeries, some of the most common surgeries received by patients covered by the plans.
The Centers for Medicare and Medicaid Services (CMS) invited providers on Thursday to comment on a proposal that would hold hospitals in 75 geographic areas accountable for the quality of care they deliver to Medicare fee-for-service beneficiaries for hip and knee replacements from surgery through recovery.
The targeted areas include over 800 hospitals, ranging from major cities like New York and Los Angeles, to smaller areas such as Lubbock, Texas, and Flint, Michigan, said CMS Chief Medical Officer Patrick Conway.
Officials at the American Hospital Association and the Advanced Medical Technology Association did not immediately respond to requests for comment.
CMS said the plan is part of the Obama administration’s ongoing commitment to transform the U.S. health system to deliver better quality care and spend health care dollars in a smarter way.
The agency said that in 2013, there were more than 400,000 inpatient knee and hip procedures, costing Medicare more than $7 billion for hospitalization alone.
If approved, the program would go into effect in January, effecting about 25 percent, or 100,000, of those replacement surgeries. Savings over the five-year program were estimated at $150 million.
While some incentives exist for hospitals to avoid post-surgery complications, hospital readmission, or drawn out rehabilitation, the quality and cost of care for the replacement surgeries vary greatly among providers, CMS said.
Through the proposed five-year payment model, health care providers in 75 geographic areas would continue to be paid by Medicare. However, the hospital would be held accountable for the quality and costs of care for the entire episode - from the time of the surgery through 90 days after discharge.
Depending on the hospital’s quality and cost performance, it might receive an additional payment or be required to repay Medicare for a portion of costs.
Large U.S. hospital chains that would be affected include Tenet Healthcare Corp and HCA Holdings Inc. Major manufacturers of replacement joints include Stryker Corp and Johnson & Johnson.
CMS said the bundled payments for joint replacement surgeries would build upon successful demonstration programs already underway in Medicare.
The agency is accepting comments on the plan through Sept. 8.
Reporting by Deena Beasley; Editing by Lisa Shumaker