Bundled Payments in Orthopaedics

Excerpt

Healthcare spending currently accounts for approximately 18% of the Gross Domestic Product in the United States, up from 13% in 2000. Hospital reimbursement for total joint replacement (Diagnosis Related Group 470) represented the largest Diagnosis Related Group payment by the Centers for Medicare & Medicaid Services (CMS) to hospitals in 2008, accounting for 4.6% of payments [1]. In light of the billions of dollars CMS pays each year for joint replacement surgery, and the volume of procedures performed, CMS has begun to study different payment models to better control costs and incentivize higher quality care delivery. The current fee-for-service payment model has been scrutinized because it incentivizes increased utilization of services, and costs to the healthcare system, while providing few incentives to improve quality or reduce cost. Modification in the packaging of and payment for care into bundles has been identified as a possible strategy to align the incentives of healthcare stakeholders around value instead of volume. …