Two-Year Evaluation of Mandatory Bundled Payments for Joint Replacement

Abstract

In 2016, Medicare implemented the Comprehensive Care for Joint Replacement Model (CJR), a national mandatory bundled payment model for lower extremity joint replacement (LEJR) in randomly selected metropolitan statistical areas (MSAs). Hospitals in selected MSAs receive bonuses or pay penalties based on LEJR spending through 90 days post-discharge. We conducted difference-in-differences analyses using Medicare claims from 2015–2017, comparing LEJR episodes in 75 MSAs randomized to mandatory participation in CJR (treatment MSAs) with episodes in 121 control MSAs, before vs. after CJR implementation. Our primary outcomes were institutional spending per LEJR episode (primarily hospital and post-acute facility payments), rates of post-surgical complications, and the proportion of patients with higher spending risk (a measure of patient selection). Analyses adjusted for hospital of admission and beneficiary and procedure characteristics. In 2015–2017 there were 280,161 LEJR procedures in 803 hospitals in treatment MSAs and 377,278 procedures in 962 hospitals in control MSAs. After CJR initiation, institutional spending per LEJR episode declined more in treatment than in control MSAs (differential change: -$812 or −3.1% relative to the treatment group baseline; p<0.001). The differential reduction was driven largely by a 5.9% relative decrease in the fraction of episodes with any institutional post-acute care. The program had no effect on complication rates (p=0.67) or the fraction of LEJR procedures performed on higher-risk patients (p=0.81). In its first 18 months, the CJR program resulted in a modest reduction in spending per LEJR episode, before accounting for program bonuses and penalties, without increasing complication rates