Today's News

Friday, March 17, 2000

HCFA pushes forward on demonstration project

By Walter Gorski Manager, government relations AAOS Washington office

The Health Care Financing Ad-ministration (HCFA) continues to move forward on a Medicare demonstration project that would bundle Medicare Part A and Part B payments for hip and knee replacement procedures. Under the demonstration, HCFA would designate between 30 and 50 hospitals as "participating centers of excellence" and pay a global fee to designated facilities for these procedures.

While HCFA says it is actively pursuing this new payment scheme, the demonstration continues to be bogged down by staffing shortages and computer problems. The demonstration slated to begin in early 1997 still has yet to begin.

Under the demonstration, the Secretary of the Department of Health and Human Services would be authorized to pay selected facilities a global bundled payment for all services associated with knee and hip replacement surgery. Beneficiaries would not be required to receive services at the designated "Centers," but the "Centers" would be allowed to market their designation, provide additional services or waive beneficiary cost-sharing to attract beneficiaries.

Medicare officials comment that this demonstration is just one of variety of payment experiments to revise Medicare's reimbursement policies and bring them in line with the modern health care marketplace. This particular initiative shows how Medicare is attempting to move from being a bill payer to a purchaser of health care services, using its considerable purchasing power to take advantage of market efficiencies. HCFA's stated goal for this demonstration is to test the feasibility of contracting with facilities to provide high quality care to Medicare beneficiaries at prices that represent substantial savings to the Medicare program while having no adverse impacts on mortality or other outcomes.

But adding to internal ob-stacles, HCFA has been mired in the selection of demonstration sites. A number of health care facilities have declined to participate in HCFA's experiment.

The knee and hip replace-ment demonstration project grew out of Medicare's experience with the Participating Health Bypass Center Demonstration and the Cataract Alternative Payment Demonstration. Based on quality and projected savings from these initial "centers of excellence" demonstrations, HCFA in 1996 expanded the demonstration to include hip and knee replacements.

While HCFA's demonstration is on hold, the Clinton Administration has again proposed legislation in its fiscal year 2001 budget to expand the "participating centers of excellence" designation for knee and hip replacement to all fifty states. President Clinton has recommended the expansion of "participating centers of excellence" in each of his budgets to the Congress.

AAOS is very concerned with a number of aspects of HCFA's initiative and the Administration's budget proposal, which expands the designation to all 50 states. AAOS is opposed to both the HCFA demonstration and the Administration's proposal. AAOS collected data showing that total hip and knee replacement are not suitable for HCFA's demonstration criteria. Knee and hip replacement surgeries are successfully and routinely performed in virtually all hospitals across the nation. This data contradicts HCFA's contention that quality of care will improve when hospitals increase the volume of procedures.

In addition, AAOS has strong evidence to present to lawmakers that the quality of care would be severely affected if the proposal were enacted into law. Removing patients from their trusted local medical community would interfere with continuity of care having an adverse effect on both pre and post-operative care and on the ability to provide family assistance and support. Further, limiting the number of sites has the potential of causing economic hardships on hospitals and local communities not included in demonstration.

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Last modified 17/March/2000 by IS