Comparison of Payment Margins Between the Bundled Payments for Care Improvement Initiative and the Comprehensive Care for Joint Replacement Model Shows a Marked Reduction for a Successful Program

Background: The Comprehensive Care for Joint Replacement (CJR) model was implemented to address the 2 most commonly billed inpatient surgical procedures, total hip arthroplasty and total knee arthroplasty. The primary purpose of this study was to review the economic implications of 1 institution’s mandatory involvement in the CJR in comparison with prior involvement in the Bundled Payments for Care Improvement (BPCI) initiative.

Methods: The mean cost per episode of care was calculated using our institution’s historical data. The target prices, projected savings or losses per episode of care, and projected annual savings for both BPCI and CJR were established and were comparatively analyzed.

Results: The CJR target prices will decrease in comparison with BPCI target prices by 24.0% for Medicare Severity-Diagnosis Related Group (MS-DRG) 469 without fracture, 22.8% for MS-DRG 469 with fracture, 26.1% for MS-DRG 470 without fracture, and 27.7% for MS-DRG 470 with fracture, resulting in a reduction in savings per episode of care by 92.8% for MS-DRG 469 without fracture, 166.0% for MS-DRG 469 with fracture, 94.9% for MS-DRG 470 without fracture, and 61.7% for MS-DRG 470 with fracture. Our institution’s projected annual savings under CJR will decrease by 83.3%.

Conclusions: These results suggest that the margin for savings in the CJR will be substantially reduced compared with the margin for savings in the BPCI. In hospitals that had previously devoted resources, these will have far less impact in the CJR, and hospitals new to the CJR that have not made these investments previously will require even greater resources for developing cost reduction and quality control strategies to remain financially solvent.

Level of Evidence: Economic Level IV. See Instructions for Authors for a complete description of levels of evidence.