Medicare's new way of paying hospitals could cause a bundle of problems for some - Insurance News | InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Newswires
Topics
    • Advisor News
    • Annuity Index
    • Annuity News
    • Companies
    • Earnings
    • Fiduciary
    • From the Field: Expert Insights
    • Health/Employee Benefits
    • Insurance & Financial Fraud
    • INN Magazine
    • Insiders Only
    • Life Insurance News
    • Newswires
    • Property and Casualty
    • Regulation News
    • Sponsored Articles
    • Washington Wire
    • Videos
    • ———
    • About
    • Meet our Editorial Staff
    • Advertise
    • Contact
    • Newsletters
  • Exclusives
  • NewsWires
  • Magazine
  • Newsletters
Sign in or register to be an INNsider.
  • AdvisorNews
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Exclusives
  • INN Magazine
  • Insurtech
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Video
  • Washington Wire
  • Life Insurance
  • Annuities
  • Advisor
  • Health/Benefits
  • Property & Casualty
  • Insurtech
  • About
  • Advertise
  • Contact
  • Editorial Staff

Get Social

  • Facebook
  • X
  • LinkedIn
Newswires
Newswires RSS Get our newsletter
Order Prints
September 15, 2016 Newswires
Share
Share
Post
Email

Medicare’s new way of paying hospitals could cause a bundle of problems for some

Insurance Weekly News

By a News Reporter-Staff News Editor at Insurance Weekly News -- ANN ARBOR, Mich. -- Hospitals that take care of the oldest, sickest and most complicated patients could suffer financially under the Medicare system's new approach to paying for some types of care, a new study finds.

But there's still time to adjust the approach to make the playing field more level, the researchers from the University of Michigan Institute for Healthcare Policy and Innovation say in a new paper published in the September issue of Health Affairs.

While the payment program only applies right now to hip and knee replacements in 800 hospitals in certain metro areas, and only started four months ago, its use is likely to expand to more conditions and include more hospitals. The Centers for Medicare and Medicaid Services -- the federal agency that runs Medicare -- has put an emphasis on the approach as it tries to encourage smarter spending for the care of millions of older and disabled Americans.

That's why the U-M team set out to use real-world data to look at the potential impact of the approach, called mandatory bundled payments. They simulated the impact of the new Medicare program, called Comprehensive Care for Joint Replacement.

CJR pays hospitals a set "bundled" amount for the full range of care provided to a hip or knee replacement patient, rather than paying individual bills for parts of that care such as the operation, hospital stay, and care after the hospitalization. "Reconciliation payments" then reduce payments to hospitals if their spending is above a target, and increase payments if spending is below a target.

"Previous bundled payment programs have based reconciliation payments on a hospital's own past performance, but under CJR those payments gradually become based on a comparison with hospitals in a wide region," says Chandy Ellimoottil, M.D., M.S., lead author of the new paper. "We found that this will result in more penalties for hospitals that care for more complex patients. We also found that changing the program to account for patient complexity would dampen this impact."

The new analysis uses anonymous Medicare data from 23, 251 Michigan residents who had hip or knee replacement surgery at 60 hospitals across a three-year period.

The hospitals that operated on patients who had more co-existing health problems, or were older or more seriously ill, stood to lose hundreds of dollars per patient under the program, they found.

But if the program used a standard measure to adjust for patient complexity, those hospitals could hold on to more than $100,000 per year.

That amount may be a drop in the bucket in a large hospital's budget. But if mandatory bundled payments using the CJR formula get rolled out in other types of care, the numbers could become very large, says Ellimoottil.

Adjusting a hospital's performance based on how old or sick a patient is - a process called risk adjustment - is already used in many other Medicare programs that assess health care quality and spending..

Introducing appropriate risk adjustment into mandatory bundled payments could still happen even in the CJR program that launched in April, the authors say. That's because the formula for paying or penalizing hospitals based on the regional price comparison doesn't start to take a major effect until the third year of the program.

"There could be a lot of unintended consequences from this approach unless risk adjustment is added," Ellimoottil warns. "In past bundled payment programs, patient complexity didn't matter because hospital payments have been based on a comparison with the hospital's own past pricing, which reflects the complexity of the patient population it serves. Now, under this new model of regional comparison, complexity becomes relevant, and risk adjustment is needed."

The form of risk-adjustment the team simulated, based on the CMS-HCC model, is an accepted model used in other settings. CMS didn't include it in the CJR program, the agency said, because it hasn't been validated for bundled payment in orthopedics. The new paper may help in that regard.

Ellimoottil, a urologist whose research extends to bundled payments for many types of care, notes that the new paper essentially confirms what many providers voiced concern about when the Medicare agency was accepting public comments on the CJR program before it went into effect.

"Patient complexity matters. Rolling out a one-size fits all model could really hurt hospitals that are trying to appropriately treat patients. We don't want to incentivize reducing access to care for Medicare patients who are medically complex."

Keywords for this news article include: Biotechnology, Biomedical Engineering, Biomedicine, Hospital, Medicare, Health Policy, Bioengineering, Medical Devices, Knee Replacement, University of Michigan Health System.

Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2016, NewsRx LLC

Advisor News

  • Help women break through their retirement roadblocks
  • Advisors await SEC decision on Vanguard fair fund distribution
  • What to do when adult children become the client
  • Judge rules insurers not liable for Newport Group’s AME Church pension lawsuit
  • Why vacation homes are becoming a major blind spot for advisors
More Advisor News

Annuity News

  • Legacy Marketing Group partners with Malibu Life USA for annuity launch
  • Best’s Market Segment Report: Global Life/Annuity Reinsurers Remained Poised for Steady Growth
  • When technology becomes easy to rent, what still separates life and annuity carriers?
  • Legacy Marketing Group® and Malibu Life USA Announce Distribution Partnership for New Fixed Indexed Annuity Platform
  • Empower Annuity Insurance Company of America Trademark Application for “EMPOWER WHAT’S NEXT” Filed: Empower Annuity Insurance Company of America
More Annuity News

Health/Employee Benefits News

  • Trump administration cuts health care coverage for some transgender youth in California
  • ‘Downright unaffordable’: State employees in Montana to face higher healthcare costs
  • ACA premiums to rise in Virginia
  • GSP Health plans new Woodward community health center
  • BRAND DRUGMAKERS RAISED PRICES ON 250 DRUGS THIS SUMMER
Sponsor
More Health/Employee Benefits News

Life Insurance News

  • How advisors can get clients to act sooner on life insurance
  • AM Best Affirms Credit Ratings of Crum & Forster Insurance Group’s Members and Monitor Life Insurance Company of New York
  • AM Best Affirms Credit Ratings of Life Insurance Company Centras Life JSC
  • AM Best Withdraws Credit Ratings of New Providence Life Insurance Company
  • When technology becomes easy to rent, what still separates life and annuity carriers?
More Life Insurance News

NEWS INSIDE

  • Companies
  • Earnings
  • Economic News
  • INN Magazine
  • Insurtech News
  • Newswires Feed
  • Regulation News
  • Washington Wire
  • Videos

FEATURED OFFERS

Press Releases

  • Classic Car Insurer OpenRoad Insurance Expands to 40 U.S. States in Two Years
  • How Aspire General Turned an Early Technology Bet Into Claims Automation at Scale with Kyber
  • Adjusto launches AI-Native contents claims services powered by its technology platform
  • URL Insurance Group Celebrates 40 Years of Service, Growth, and Industry Leadership
  • MassMutual Ascend Surpasses $2 Billion in Lifetime Advisory Annuity Sales, Reflecting Continued Momentum in RIA Channel
More Press Releases > Add Your Press Release >

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Advisor News
  • Annuity Index
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • From the Field: Expert Insights
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Magazine
  • Insiders Only
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Washington Wire
  • Videos
  • ———
  • About
  • Meet our Editorial Staff
  • Advertise
  • Contact
  • Newsletters

Top Sections

  • AdvisorNews
  • Annuity News
  • Health/Employee Benefits News
  • InsuranceNewsNet Magazine
  • Life Insurance News
  • Property and Casualty News
  • Washington Wire

Our Company

  • About
  • Advertise
  • Contact
  • Meet our Editorial Staff
  • Magazine Subscription
  • Write for INN

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2026 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • InsuranceNewsNet Magazine

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.