Reducing Medicare joint replacement spending while maintaining quality

Reducing Medicare spending while maintaining quality of care

Surgeons perform more than 1 million hip and knee replacements each year in the United States, a number that has risen dramatically in recent decades. Joint replacements are among the most common procedures for Medicare beneficiaries, making them an important opportunity for the Centers for Medicare & Medicaid Services (CMS) to improve the efficiency of care while protecting patient outcomes.

In 2016, the CMS Innovation Center launched the Comprehensive Care for Joint Replacement (CJR) Model. The model was designed to encourage hospitals, physicians, and post-acute care providers to better coordinate care for beneficiaries undergoing lower-extremity joint replacement, from the initial procedure through recovery, while creating financial incentives to reduce unnecessary spending and maintain or improve quality of care.

The CJR Model held participating hospitals financially accountable for the cost and quality of care provided during an episode that included a joint replacement and the subsequent recovery period.

Supporting implementation and monitoring

Charged with supporting payment reconciliation, Mathematica helped the CMS Innovation Center implement the CJR Model by calculating episode target prices and reconciliation results and helping CMS administer the model’s financial incentives. Our work included determining whether participating hospitals were eligible to receive reconciliation payments or required to make repayments to Medicare based on their spending and quality performance.

Mathematica also provided hospitals with detailed data and reports on their episodes, giving participants information they could use to understand their performance and find ways to improve care and reduce unnecessary spending.

As the monitoring partner, Mathematica used advanced analytics to identify potentially concerning patterns related to quality, spending, patient outcomes, beneficiary access, and compliance with CJR Model requirements. This work helped CMS monitor whether the model was working as intended and identify areas that warranted further review.

Lower Medicare spending while maintaining quality of care

After a major redesign of the model grounded in the evidence and insights Mathematica uncovered, CJR generated an estimated $113 million in net savings for Medicare during Performance Years 6 and 7. These savings reflected both reductions in Medicare spending on episodes of care and net repayments from participating hospitals to Medicare.

An independent evaluation showed that across Performance Years 6 and 7:

• The model reduced episode payments by an estimated $975 per episode relative to what would have occurred without the model.
• Hospitals maintained quality of care for Medicare beneficiaries even as the model reduced costs.