Medicare’s new Compressive Care for Joint Replacement (CCJR) program could mean penalties for up to 60 percent of participating hospitals, according to a new report from Avalere. 

The study authors found that 480 of the 800 mandatory participating hospitals will be at risk for penalties due to higher costs than their regional peers.

“Most past CMS initiatives have stimulated activity among early adopters, but the mandatory programs are CMS’ attempt to bring the remaining hospitals into a value-based payment world,” said Josh Seidman, senior vice president at Avalere Health. “For many of those providers sitting on the sidelines of alternate payment models, this new initiative will be a wake-up call.”

The report found that 39 percent of total spending on knee and hip replacement episodes is linked to post-acute discharge care, which includes hospital readmissions and post-acute care facilities.

"The reality is that most hospitals don't know where their patients go after they are discharged," said Fred Bentley, vice president at Avalere. "Their success under CCJR will hinge on being able to track patients and partner with high-performing post-acute care providers."

Our Take: If Avalere’s estimates are correct, it is a sign that participating hospitals haven’t shored up relationships with high-quality post-acute care providers. We might be stating the obvious , but if nearly 40 percent of the spend is on factors outside of a hospital’s control, it’s imperative that they quickly identify partners who deliver the best care for the lowest cost.

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