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March 7, 2016

After several years of evolutionary changes, the Center for Medicare and Medicaid Services (CMS) announced on January 26, 2015, a timeline of moving from volume to value in Medicare payments; i.e., from 30 percent of provider payments in 2016 to 50 percent by 2018.1Implementation of the Comprehensive Care Joint Replacement (CJR) initiative signals an intention to mandate, at least for targeted geographic areas, a value-oriented payment system across the entire continuum of care, from surgery and inpatient care, to post-acute care recovery and rehabilitation.

Average hip and knee implant costs represent 25 to 40 percent of DRG reimbursement for lower extremity hip and new replacement +/- complications. Given the high cost of implants, and the ability of supply chain personnel to analyze materials management, OR  financial data, an opportunity exists to utilize their work-flow and process expertise to facilitate an analysis of provider variation across the entire continuum of care. This would require the integration of electronic medical record (EMR) data and the addition of clinical (nurse) expertise.   

In this article, we discuss the CJR, the consistently wide variation in the total cost of care (inclusive of post-acute) for joint replacement within specified U.S. regions, and the critical role of analytics to facilitate efficiency and effectiveness, and by default, competitive advantage.  Future success in a value-oriented payment environment requires participation in a CJR-like effort, whether mandatory or not. 

Comprehensive Care Joint Replacement: A Strategic Mandate for Providers (pdf)