The Obama administration proposed last month that the federal Medicare program make one bundled payment for each joint replacement surgery performed in 800 hospitals in 75 U.S. metro areas.
This is the most significant thing that’s happened in the U.S. health care sector all year. It’s far, far bigger than the U.S. Supreme Court’s ruling that upheld the Obamacare subsidies.
One reason is simple math: Joint replacement procedures are so lucrative for hospitals that any changes to payments in that area will—and have—grabbed the attention of hospitals and doctors.
Medicare spends more than $7 billion per year on joint replacement surgeries. Each procedure without complications costs about $25,000 to Medicare. One with complications costs about $50,000.
The second reason is more complex and requires a bit of a history lesson.
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