Medicare launches major payment shift for hip, knee surgery

Medicare is launching a major shift in how it pays for hip and knee replacements. The goal: improve quality and control costs.

The Obama administration said on Monday that starting April 1, hospitals in 67 metropolitan areas will be held responsible for the results of hip and knee replacements, from surgery, through recovery and rehabilitation. The aim is better coordination from start to finish, instead of a piecemeal approach to care.

Hospitals can receive additional financial rewards by meeting certain targets for quality and overall costs. Eventually, they will be financially liable if they fall short.

Hip and knee replacements are the most common inpatient surgery for Medicare recipients. There were about 400,000 such procedures last year, ranging in cost from $16,500 to $33,000 across the nation.