Study: Lack of risk adjustment in CJR program may penalize hospitals

The Comprehensive Care for Joint Replacement bundled payment program may unintentionally penalize hospitals because it lacks a mechanism, such as risk adjustment, to sufficiently account for patients’ medical complexity, according to a study reported this week in Health Affairs. Using Medicare claims for patients in Michigan who underwent lower extremity joint replacement in the period 2011-13, the authors applied payment methods analogous to those the Centers for Medicare & Medicaid Services intends to use in determining annual bonuses or penalties (reconciliation payments) to hospitals in the program. Calculating the net difference in reconciliation payments with and without risk adjustment, they found that reconciliation payments were reduced by $827 per episode for each standard-deviation increase in a hospital’s patient complexity. “Moreover, we found that risk adjustment could increase reconciliation payments to some hospitals by as much as $114,184 annually,” the authors said. “Our findings suggest that CMS should include risk adjustment in the Comprehensive Care for Joint Replacement program and in future bundled payment programs.”