The percentage of residents discharged from hospitals to skilled nursing facilities dropped from 45% to 26% in just three years amid the implementation of a mandatory bundled payment program in New Jersey, a new study found.
Since April 2016, 38 hospitals in the Garden State have been required to participate in the Comprehensive Care for Joint Replacement (CJR) program, a federal initiative that seeks to reduce overall spending on common knee and hip replacements.
Under the CJR, the Centers for Medicare & Medicaid Services (CMS) issues a single reimbursement for the procedures, which providers across the care continuum essentially must share — with either bonuses or penalties if the eventual cost does not match the federal benchmark. As a result, acute-care providers have a significant incentive to increase discharges to the home health setting, which is typically less costly than institutional SNF care.
In New Jersey, the 38 participants in the CJR saw home health transfers rise from 26% to 52% between 2015 and 2018, according to research from the New Jersey Hospital Association’s (NJHA) Center for Health Analytics, Research & Transformation (CHART). SNF discharges, meanwhile, saw the greatest drop.
Hospitals that did not participate in the CJR but were involved in the Bundled Payments for Care Improvement (BPCI) program, a similar initiative, actually saw a slight increase in SNF discharges over that span. However, the researchers noted that these hospitals were only releasing about 10% of their hip and knee residents to the SNF setting prior to the implementation of CJR.
The NJHA team also observed that the BPCI program was implemented two years prior to CJR, giving participants more time to adapt to the shifting incentives and discharge patterns.
The CJR also led to reduced lengths of stay at Garden State hospitals, which dropped from 3.2 to 2.6 days at participating facilities — though the trade group stressed that more research is needed to determine the overall benefit or harm to patients.
“While these findings demonstrate that the CJR bundle has had an effect on reducing length of stay in New Jersey, they also highlight the need for additional investigation of whether complex patients who would previously have gone to an inpatient rehabilitation facility are receiving the services they require at a skilled nursing facility or in outpatient care, as well as other indicators of quality patient outcomes,” the NJHA noted in a release announcing the results.
The CJR has been a source of strain and controversy for SNF operators since its implementation, though CMS granted providers a reprieve in 2017 when officials reduced the geographic footprint for mandatory participation.
Hip and knee replacements have long been the bread-and-butter of skilled nursing reimbursements, with the common procedures covered under Medicare after a qualifying hospital stay. But with CJR reducing length of stay, some providers have struggled with the resulting financial pressure — including a Wisconsin provider that was forced to substantially reduce its Medicaid business, which joint replacements had been helping to subsidize.
Gregory Burke, a researcher at the New York-based United Hospital Fund, recently told SNN that “bundling is not your friend.”
“The economics of a nursing home pivots off of those Medicare admissions, and if they start to dry up, that’s a really scary item,” he said. “People ought to be looking very seriously at their hips and knees and cardiac and other things that are being pushed to bundles.”