Medicare’s new bundled payment programs offer home health care providers an incredible opportunity to improve care for joint replacement surgery patients, while potentially lowering costs.

In the past, Medicare has made separate payments to each provider for the individual services they offer to a patient for a single illness or course of treatment. This often results in fragmented care with minimal coordination across providers. Providers are rewarded for the quantity of services offered rather than quality. Research shows that bundled payments can realign incentives for providers, allowing them to work in collaboration with each other with patient outcomes being the priority.

With the new joint replacement model, Medicare bundles payments through coordinated care between health organizations. Hospitals would not be under any risk during the first year. However, risk may ramp up over the next several years, with Medicare switching from pricing, based on a hospital’s prior clinical experiences to a regional model by the final year. The model is expected to save the government as much as $343 million over the next five years.

The new plan signifies the latest effort by the government to incentivize hospitals and home health care providers to work more collaboratively in an effort to improve patient outcomes and reduce unnecessary hospital readmissions. For home care providers, this means that rather than bill separately for their services, home care will be included in the overall Medicare payment. Disincentives will be included in the payment scheme in order to take away financial rewards to hospitals for complications that may result in the patient being readmitted to the hospital. This will encourage acute care providers to coordinate with home care providers to ensure they get it right the first time and provide all the right tools for proper home-based recovery.

I recently discussed the opportunities home care providers have to participate in the bundled payment model with Home Health Care News, in an article focused on the ways home care providers should be preparing for the Comprehensive Care Joint Replacement model.

CareCentrix recently demonstrated the advantages of coordinated care when it aligned a hospital and a home health care agency by overlaying a single care plan for every patient leaving the hospital. The program resulted in skilled nursing facility utilization dropped from 40 percent of patients to 11 percent. Hospital readmissions fell from 10 percent of patients to just 2 percent.