News Ticker

Bundling May Cut Costs for Some Surgeries

Alternative payment models may offer savings, but thin evidence should yield caution. (Volume 9, Issue 14)

Payment reform is a key focus of today’s policymakers. A growing number of new payment models aim to reward health care providers that deliver high-quality care more cost-effectively. New payment models such as hold health care organizations accountable for the costs of care across an entire episode of care – a period that extends beyond the acute stay to encompass the full duration of a medical or surgical condition.

Source: Steven Depolo (Flickr/CC)

Source: Steven Depolo (Flickr/CC)

This study describes the results of a bundled payment initiative on quality outcomes and cost for hip and knee replacements. As lower extremity joint replacements are the most commonly performed inpatient surgical procedures reimbursed by Medicare with more than $6 billion in acute hospitalization costs in 2014, this study is particularly salient.

The study examined costs and quality for episodes of lower extremity joint replacement in the first 21 months of Medicare’s Bundled Payments for Care Improvement (BCPI) initiative.

Hospitals participating in the BPCI initiative had a greater reduction in Medicare than those that did not implement a bundled payment approach. Although payments at all sites declined, the average Medicare payment for BPCI episodes declined by $1,116 more than competitors. There were no significant differences between BPCI and comparison hospitals with regard to quality – mortality, unplanned readmissions, and emergency room visits.

Substantial reductions in payments for BPCI hospitals were largely due to significantly greater decreases in spending on institutional post-acute care after joint replacement, including payments to skilled nursing and inpatient rehabilitation facilities.

Unfortunately, the results of this study cannot be broadly generalized. First, voluntary participation in the BPCI initiative means these facilities likely differ in meaningful ways from many hospitals. Second, this study reflects experience with bundled payments for two elective procedures and cannot be generalized to other clinical episodes. Lastly, bundled payments risk producing incentives to avoid vulnerable or complex patient populations.

While bundled payments offer the potential for high-quality care at lower cost the evidence is to too thin to make a blanket recommendation to expand this payment model broadly.

commentary by Chloe Slocum, MD

She is 2016-2017 Commonwealth Fund Mongan Fellow in Minority Health Policy at Harvard Medical School and a spinal cord injury physician in Boston, MA.

IMPORTANCE: Bundled Payments for Care Improvement (BPCI) is a voluntary initiative of the Centers for Medicare & Medicaid Services to test the effect of holding an entity accountable for all services provided during an episode of care on episode payments and quality of care.

OBJECTIVE: To evaluate whether BPCI was associated with a greater reduction in Medicare payments without loss of quality of care for lower extremity joint (primarily hip and knee) replacement episodes initiated in BPCI-participating hospitals that are accountable for total episode payments (for the hospitalization and Medicare-covered services during the 90 days after discharge).

DESIGN, SETTING, AND PARTICIPANTS: A difference-in-differences approach estimated the differential change in outcomes for Medicare fee-for-service beneficiaries who had a lower extremity joint replacement at a BPCI-participating hospital between the baseline (October 2011 through September 2012) and intervention (October 2013 through June 2015) periods and beneficiaries with the same surgical procedure at matched comparison hospitals.

EXPOSURE: Lower extremity joint replacement at a BPCI-participating hospital.

MAIN OUTCOMES AND MEASURES: Standardized Medicare-allowed payments (Medicare payments), utilization, and quality (unplanned readmissions, emergency department visits, and mortality) during hospitalization and the 90-day postdischarge period.

RESULTS: There were 29?441 lower extremity joint replacement episodes in the baseline period and 31?700 in the intervention period (mean [SD] age, 74.1 [8.89] years; 65.2% women) at 176 BPCI-participating hospitals, compared with 29?440 episodes in the baseline period (768 hospitals) and 31?696 episodes in the intervention period (841 hospitals) (mean [SD] age, 74.1 [8.92] years; 64.9% women) at matched comparison hospitals. The BPCI mean Medicare episode payments were $30?551 (95% CI, $30?201 to $30?901) in the baseline period and declined by $3286 to $27?265 (95% CI, $26?838 to $27?692) in the intervention period. The comparison mean Medicare episode payments were $30?057 (95% CI, $29?765 to $30?350) in the baseline period and declined by $2119 to $27?938 (95% CI, $27?639 to $28?237). The mean Medicare episode payments declined by an estimated $1166 more (95% CI, -$1634 to -$699; P?

CONCLUSIONS AND RELEVANCE: In the first 21 months of the BPCI initiative, Medicare payments declined more for lower extremity joint replacement episodes provided in BPCI-participating hospitals than for those provided in comparison hospitals, without a significant change in quality outcomes. Further studies are needed to assess longer-term follow-up as well as patterns for other types of clinical care.

PMID: 27653006 Dummit, LA, et al. JAMA. 2016; 316 (12): 1267-78.