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Hospitals Face Up to $3 Million Financial Loss from CJR Ruling
Palmer Hamilton

By: Palmer Hamilton on February 9th, 2016

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Hospitals Face Up to $3 Million Financial Loss from CJR Ruling

We now have a better understanding of the financial implications of the Comprehensive Care for Joint Replacement (CJR) model, the new CMS rule that requires bundled payments for hip and knee replacements.

The financial risk for hospitals is significant: Up to $3 million in penalties is possible over the next five years if no action is taken, according to PMMC’s financial_loss_image.jpganalysis.

Click here to read the full news release on the announcement.

Under the new model, hospitals will be held accountable for the total cost of all delivered services across the entire episode of care and will have to meet regional financial targets set by CMS (Centers for Medicare and Medicaid Services). If the total cost of care for a patient (including both hospitalization and post discharge) exceeds CMS’s target, then the hospital will be penalized and must pay back the difference.

CJR is largely intended to strengthen the coordination of care and motivate hospitals to work more closely with other members of the patient’s care team, such as physicians, nursing facilities, and home health agencies. This is intended to create a better patient experience, increase quality of care, and result in a better economic value.

So what is the role of finance and how do they mitigate the risk?

Healthcare finance plays a critical role in the management of CJR and will be responsible for leading the data analysis to understand the financial implications for the hospital and to support care coordination. As a first step, finance is encouraged to obtain both external and internal episodic benchmark data to share with internal stakeholders and post-acute care providers.

Learn about Episodic Bundled Payment Data

 

 

About Palmer Hamilton

Palmer Hamilton has over 25 years of healthcare experience with hospitals and insurers. He has a BA in English from VMI as well as an MBA from Wake Forest University, and he served as a Captain in the US Army. He has spoken at several HFMA events and has been published as well. His experience includes most aspects of the Revenue Cycle, and he is currently product manager for Online Analytics, a web-based solution for healthcare finance benchmarking.