Bundled Payments Are Effective in Reducing Costs Following Bilateral Total Joint Arthroplasty

BackgroundAlternative payment models such the Centers for Medicare and Medicaid Services Bundled Payments for Care Improvement (BPCI) initiative have been effective in reducing costs following unilateral total hip (THA) and knee arthroplasty (TKA), but few studies exist on bilateral arthroplasty. This study aimed to determine whether the BPCI program for bilateral THA and TKA reduced episode-of-care costs.MethodsWe retrospectively reviewed a consecutive series of patients who underwent simultaneous bilateral primary THA and TKA between 2015 and 2016. We recorded demographic variables, comorbidities, readmissions, and calculated 90-day episode-of-care costs based on Centers for Medicare and Medicaid Services claims data. We compared data from patients before and after the start of our BPCI program, and performed a multivariate analysis to identify independent risk factors for increased costs.ResultsOf 319 patients, 38 underwent bilateral THA (12%) while 287 underwent bilateral TKA (88%). There were 239 patients (74%) in the bundled payment group. Although there was no change in readmission rate (9% vs 8%), the post-BPCI group demonstrated reduced hospital costs ($21,251 vs $18,783), post–acute care costs ($15,488 vs $12,439), and overall 90-day episode-of-care costs ($39,733 vs $34,305). When controlling for demographics, procedure, and comorbidities, our BPCI model demonstrated a per-patient reduction of $5811 in overall claims costs. Additional risk factors for increased episode-of-care costs included age ($516/y increase) and cardiac disease ($5916).ConclusionOur bundled payment program for bilateral THA and TKA was successful with reduction in 90-day episode-of-care costs without placing the patient at higher risk of readmission. Older Medicare beneficiaries and those with cardiac disease should likely not undergo a simultaneous bilateral procedure due to concerns about increased costs.     

Are We at the Bottom? BPCI Programs Now Disincentivize Providers Who Maintain Quality Despite Caring for Increasingly Complex Patients

BackgroundThe Bundled Payments for Care Improvement (BPCI) initiative has been successful at reducing Medicare costs after total joint arthroplasty (TJA). Target pricing is based on each institution's historical performance and is periodically reset. The purpose of this study was to examine the performance of our BPCI program accounting for patient complexity, quality, and resource utilization.MethodsWe reviewed a consecutive series of 9195 Medicare patients undergoing primary TJA from 2015 to 2018. Demographics, comorbidities, and readmissions by year were compared. We then examined 90-day episode-of-care costs, changes in target price, and financial margins during the duration of the BPCI program using Medicare claims data.ResultsPatients undergoing TJA in 2018 had a higher prevalence of diabetes and cardiac disease (all P < .001) as compared with those in 2015. From 2015 to 2018, there was a decrease in the rate of discharge to rehabilitation facilities (23% vs 14%, P < .001) and length of stay (2.1 vs 1.7 days, P < .001) with no difference in readmissions (6% vs 6%, P = .945). There was a reduction in postacute care costs ($6076 vs $4,890, P < .001) and 90-day episode-of-care costs ($19,954 vs $18,449, P < .001). However, the target price also decreased ($22,280 vs $18,971, P < .001), and the per-patient margin diminished ($2683 vs $522, P < .001).ConclusionSurgeons have maintained quality of care at a reduced cost despite increasing patient complexity. The target price adjustments resulted in declining margins during the course of our BPCI experience. Policy makers should consider changes to target price methodology to encourage participation in these successful cost-saving programs.     

Bundled Payments for Care Improvement: Boom or Bust?

Background

As early implementors of the Centers for Medicare and Medicaid Services (CMS) Bundled Payments for Care Improvement (BPCI) initiative, our private practice sought to compare our readmission rates, post-acute care utilization, and length of stay for the first year under BPCI compared to baseline data.

BPCI: Everyone Wins,Including the Patient

Background

Alternative payment models are becoming increasingly more common with the rising cost of the US health care. Bundled payment programs for elective hip and knee arthroplasty have shown promising results by improved outcomes and significant cost reduction.

Hip Fractures and the Bundle: A Cost Analysis of Patients Undergoing Hip Arthroplasty for Femoral Neck Fracture vs Degenerative Joint Disease

Background

The purpose of this study is to determine whether episode Target Prices in the Bundled Payment for Care Improvement (BPCI) initiative sufficiently match the complexities and expenses expected for patients undergoing hip arthroplasty for femoral neck fracture (FNF) as compared to hip degenerative joint disease (DJD).

Variation of Medicare Payments for Total Knee Arthroplasty

We analyzed the 2009 Medicare inpatient claims data and other databases to estimate Medicare payments for primary or revision total knee arthroplasty (TKA). The average Medicare hospital payment per procedure was $13,464 for primary TKA (n = 227,587) and $17,331 for revision TKA (n = 18,677). For both primary and revision TKAs Medicare payments varied substantially across patients, hospitals and healthcare markets. Less than one percent of primary TKA cases but seven percent of revision TKA cases triggered Medicare “outlier” payments, which were $10,000 or higher per case beyond regular diagnosis-related-group payments. Urban and major teaching hospitals were more likely to treat these unusually expensive cases. Hospitals in the Northeast and West regions tended to receive higher Medicare payments than hospitals in the Midwest.     

Effect of Bundled Payments and Health Care Reform as Alternative Payment Models in Total Joint Arthroplasty: A Clinical Review

Background

In an effort to control rising healthcare costs, healthcare reforms have developed initiatives to evaluate the efficacy of alternative payment models (APMs) for Medicare reimbursements. The Center for Medicare and Medicaid Services Innovation Center (CMMSIC) introduced the voluntary Bundled Payments for Care Improvement (BPCI) model experiment as a means to curtail Medicare cost by allotting a fixed payment for an episode of care. The purpose of this review is to (1) summarize the preliminary clinical results of the BPCI and (2) discuss how it has led to other healthcare reforms and alternative payment models.

Target Price Adjustment for Hip Fractures Is Not Sufficient in the Bundled Payments for Care Improvement Initiative

BackgroundUnder the Bundled Payments for Care Improvement (BPCI) initiative, the Centers for Medicare and Medicaid Services (CMS) adjusts the target price for total hip arthroplasty (THA) based upon the historical proportion of fracture cases. Concerns exist that hospitals that care for hip fracture patients may be penalized in BPCI. The purpose of this study is to compare the episode-of-care (EOC) costs of hip fracture patients to elective THA patients.MethodsWe reviewed a consecutive series of 4096 THA patients from 2015 to 2018. Patients were grouped into elective THA (n = 3686), fracture THA (n = 176), and hemiarthroplasty (n = 274). Using CMS claims data, we compared EOC costs, postacute care costs, and performance against the target price between the groups. To control for confounding variables, we performed a multivariate analysis to identify the effect of hip fracture diagnosis on costs.ResultsElective THA patients had lower EOC ($18,200 vs $42,605 vs $38,371; P < .001) and postacute care costs ($4477 vs $28,093 vs $23,217; P < .001) than both hemiarthroplasty and THA for fracture. Patients undergoing arthroplasty for fracture lost an average of $23,122 (vs $1648 profit for elective THA; P < .001) with 91% of cases exceeding the target price (vs 20% for elective THA; P < .001). In multivariate analysis, patients undergoing arthroplasty for fracture had higher EOC costs by $19,492 (P < .001).ConclusionPatients undergoing arthroplasty for fracture cost over twice as much as elective THA patients. CMS should change their methodology or exclude fracture patients from BPCI, particularly during the COVID-19 pandemic.     

From Winners to Losers: The Methodology of Bundled Payments for Care Improvement Advanced Disincentivizes Participation in Bundled Payment Programs

BackgroundThe Bundled Payments for Care Improvement (BPCI) initiative improved quality and reduced costs following total hip (THA) and knee arthroplasty (TKA). In October 2018, the BPCI-Advanced program was implemented. The purpose of this study is to compare the quality metrics and performance between our institution’s participation in the BPCI program with the BPCI-Advanced initiative.MethodsWe reviewed a consecutive series of Medicare primary THA and TKA patients. Demographics, medical comorbidities, discharge disposition, readmission, and complication rates were compared between BPCI and BPCI-Advanced groups. Medicare claims data were used to compare episode-of-care costs, target price, and margin per patient between the cohorts.ResultsCompared to BPCI patients (n = 9222), BPCI-Advanced patients (n = 2430) had lower rates of readmission (5.8% vs 3.8%, P = .001) and higher rate of discharge to home (72% vs 78%, P < .001) with similar rates of complications (4% vs 4%, P = .216). Medical comorbidities were similar between groups. BPCI-Advanced patients had higher episode-of-care costs ($22,044 vs $18,440, P < .001) and a higher mean target price ($21,154 vs $20,277, P < .001). BPCI-Advanced patients had a reduced per-patient margin compared to BPCI ($890 loss vs $1459 gain, P < .001), resulting in a $2,138,670 loss in the first three-quarters of program participation.ConclusionDespite marked improvements in quality metrics, our institution suffered a substantial loss through BPCI-Advanced secondary to methodological changes within the program, such as the exclusion of outpatient TKAs, facility-specific target pricing, and the elimination of different risk tracks for institutions. Medicare should consider adjustments to this program to keep surgeons participating in alternative payment models.     

Global Budget Revenue on a Single Institution's Costs and Outcomes in Patients Undergoing Total Hip Arthroplasty

Background

The state of Maryland was granted a waiver by the Center for Medicare and Medicaid Services to implement a Global Budget Revenue (GBR) reimbursement model. This study aims to compare (1) costs of inpatient hospital stays; (2) postacute care costs; (3) lengths of stay (LOS); and (4) discharge disposition who underwent primary total hip arthroplasty at a single Maryland-based orthopedic institution before and after the implementation of GBR.

The Hospital Frailty Risk Score is Not an Accurate Predictor of Treatment Costs for Total Joint Replacement Patients in a Medicare Bundled Payment Population

BackgroundMedically complex patients require more resources and experience higher costs within total joint arthroplasty (TJA) bundled payment models. While risk adjustment would be beneficial for such patients, no tool currently exists which can reliably identify these patients preoperatively. The purpose of this study is to determine if the Hospital Frailty Risk Score (HFRS) is a valid predictor of high-TJA treatment costs.MethodsRetrospective analysis was performed on patients who underwent primary TJA between 2015 and 2020 from a single large orthopedic practice. ICD-10 codes from an institutional database were used to calculate HFRS. Cost data including inpatient, postacute, and episode of care (EOC) costs were collected. Charlson comorbidity index, demographics, readmissions, and complications were analyzed.Results4936 patients had a calculable HFRS and those with intermediate and high scores experienced more frequent readmissions/complications after TJA, as well as higher EOC costs. However, HFRS did not reliably predict EOC costs, yielding a sensitivity of 49% and specificity of 66%. Multivariate analysis revealed that both patient age and sex are superior individual cost predictors when compared with HFRS. Secondary analyses indicated that HFRS more effectively predicts TJA complications and readmissions but is still nonideal for clinical applications.ConclusionHFRS has poor sensitivity as a predictor of high-EOC costs for TJA patients but has adequate specificity for predicting postoperative readmissions and complications. Further research is needed to develop a scale that can appropriately predict orthopedic cost outcomes.     

Improving Value in Total Hip and Knee Arthroplasty: The Role of High Volume Hospitals

Background

Recent healthcare reform efforts have focused on improving the quality of total joint replacement care while reducing overall costs. The purpose of this study is to determine if higher volume centers have lower costs and better outcomes than lower volume hospitals.

Risk-Adjusted Cost Performance for 90-Day Total Hip Arthroplasty Episodes: Comparing US Hospitals Nationwide Before CJR

BackgroundWe characterize variation in total hip arthroplasty (THA) episode payments in the United States. Medicare population immediately preceding implementation of the comprehensive care for joint replacement (CJR) bundled care model and propose a model for ongoing evaluation of hospital performance.MethodsWe identified THA episodes in Medicare part A 2014-2016 (n = 366,380) and compared 90-day episode payments across years and geographic regions. We fit hierarchical models that regressed episode payments on patient-level fixed and region-level and hospital-level random effects. Random effects estimates were used to characterize risk-adjusted hospital cost performance. We ranked hospitals (n = 3218) in each region by their cost performance estimate and constructed 95% confidence intervals to visualize high-performing and low-performing hospitals.ResultsMean part A episode payments declined from 2014 to 2016 throughout the United States ($19,925-$17,775; P < .001), primarily attributable to decreased postacute care payments. Ninety-day readmission rates fell by a percentage point (from 7.9% to 6.8%; P < .001). We found significant variation in risk-adjusted episode payments, postacute care utilization, and readmission rates across regions, and ever greater variation at the hospital level.ConclusionMedicare part A payments decreased for THA episodes between 2014 and 2016. The time frame for this decrease is notable for preceding full implementation of CJR, thus suggesting a more universal embrace of value-based care principles before the start date of CJR. These decreases were primarily because of decreased postacute care utilization and possibly related to falling readmission rates. Yet, significant variation in hospital cost performance remains, even after risk adjustment.     

The Impact of Comprehensive Care for Joint Replacement Bundled Payment Program on Care Delivery

Background

Comprehensive Care for Joint Replacement (CJR) is a Medicare initiative to test the impact of holding a hospital accountable for services provided during an episode of care for a lower extremity joint arthroplasty on costs and quality. This study examines whether hospital participation in CJR is associated with having programs focused on improving posthospitalization care or reducing costs using a survey of orthopedic surgeons.

Cadaveric versus living donor kidney transplantation: a Medicare payment analysis

BACKGROUND: We found previously that the clinical advantages of living donor (LD) renal transplantation lead to financial cost savings compared to either cadaveric donation (CAD) or dialysis. Here, we analyze the sources of the cost savings of LD versus CAD kidney transplantation. METHODS: We used United States Renal Data System data to merge United Network for Organ Sharing registry information with Medicare claims data for 1991-1996. Information was available for 42,868 CAD and 13,754 LD transplants. More than 5 million Medicare payment records were analyzed. We calculated the difference in average payments made by Medicare for CAD and LD for services provided during the first posttransplant year. RESULTS: Average total payments were $39,534 and $24,652 for CAD and LD, respectively (P<0.0001) during the first posttransplant year. The largest source of the difference in payments was in inpatient hospitals, representing $10,653.67 (P<0.0001). For patients who had Medicare as the primary payer, average transplant charges were significantly higher for CAD donation ($79,730 vs. $69,547, P<0.0001); average transplant payments demonstrated no statistical differences ($28,483 vs. $28,447, P = 0.858). Therefore, inferred profitability was significantly higher for LD. CONCLUSIONS: Medicare payments are remarkably lower for LD compared to CAD in every category. The single largest cost saving comes from inpatient hospital services. A portion of the savings from LD could be invested in programs to expand living kidney donation.     

Emergency Department Observation Versus Readmission Following total Joint Arthroplasty: Can We Avoid the Bundle Buster?

BackgroundAs the Center for Medicare and Medicaid (CMS) moves toward bundled payment plans for total joint arthroplasty (TJA), it becomes necessary to reduce factors that increase cost for an episode of care such as readmissions. The goal of this study is to evaluate the payment for observation stay versus readmission for patients who present to the emergency department.MethodsA retrospective review from 2014-2019 was conducted identifying all Medicare patients who had a primary, elective TJA and visited the ED within 90 days postoperatively. If a readmission was one midnight or less or had an equivalent diagnosis to an observation stay patient, it was characterized as a readmission that could have qualified as an observation stay. Using our institution’s average payment for Medicare readmissions and observations, actual and potential savings were calculated.ResultsSixty-nine out of 523 (13.2%) patients were placed under observation, while 454 (86.8%) patients were readmitted. Eighty-six out of 523 (18.9%) patients qualified for observation status. There was an actual savings of 11.8% by placing patients on observation status and readmission rate was decreased by 13.2%. Savings could have increased by a total of 27.7% and readmissions decreased by a total of 29.6% if all patients who qualified had been placed on observation status.ConclusionAt our institution, the implementation of observation stay has led to a savings of 11.8% and a potential total savings of 27.7%. The rate of readmissions was decreased by 13.2% and had the potential to decrease by a total of 29.6%.     

Is the New Outpatient Prospective Payment System Classification for Outpatient Total Knee Arthroplasty Appropriate?

BackgroundIn 2018, the Centers for Medicare and Medicaid Services removed total knee arthroplasty (TKA) from the inpatient-only list, resulting in payment through the Outpatient Prospective Payment System with an average $3157 reduction. The purpose of this study is to determine if the reimbursement is justified by comparing the difference in facility costs between inpatient and outpatient TKAs.MethodsWe identified 4496 consecutive primary TKA procedures performed at 2 hospitals from 2015 to 2019. Itemized facility costs were calculated using a time-driven activity-based costing algorithm. Outpatient procedures were defined as those with a length of stay of less than 2 midnights (3851, 86%). Patient demographics, comorbidities, and itemized costs were compared between groups. A multivariate regression analysis was performed to determine the independent effect of outpatient status on true facility costs.ResultsOutpatient TKA patients had lower mean postoperative personnel costs ($1809 vs $947, P < .001), supply costs ($4347 vs $4229, P < .001), and overall total facility costs ($7371 vs $6937, P < .001) than inpatient TKA patients. Controlling for a younger patient cohort with fewer medical comorbidities, outpatient status was associated with a reduction in total facility costs of $972 (95% confidence interval $883-$1060, P < .001) compared to inpatient TKA.ConclusionOutpatient TKA costs hospitals nearly $1000 per patient less than inpatient TKA, yet the average difference in Medicare reimbursement for an outpatient procedure is $3157 less per patient. Centers for Medicare and Medicaid Services should reconsider the Outpatient Prospective Payment System classification of TKA to better incentivize surgeons to perform TKA as a lower cost outpatient procedure when safe and appropriate.     

No Changes in Patient Selection and Value-Based Metrics for Total Hip Arthroplasty After Comprehensive Care for Joint Replacement Bundle Implementation at a Single Center

BackgroundAlternative payment models for total hip arthroplasty (THA) were initiated by the Center for Medicare and Medicaid Services to decrease overall healthcare cost. The associated shift of financial risk to participating institutions may negatively influence patient selection to avoid high cost of care (“cherry picking,” “lemon dropping”). This study evaluated the impact of the Comprehensive Care for Joint Replacement (CJR) model on patient selection, care delivery, and hospital costs at a single care center.MethodsPatients undergoing a primary THA from 2015-2017 were stratified by insurance type (Medicare and commercial insurance) and whether care was provided before (pre-CJR) or after (post-CJR) CJR bundle implementation. Patient age, gender, and body mass index, Elixhauser comorbidities and American Society of Anesthesiologists scores, were analyzed. Delivery of care variables including surgery duration, discharge disposition, length of stay, and direct hospital costs were compared pre- and post-CJR.ResultsA total of 751 THA patients (273 Medicare and 478 commercial Insurance) were evaluated pre-CJR (29%) and post-CJR (71%). Patient demographics were similar (age, gender, BMI); however, commercially insured patients had less comorbidities pre-CJR (P = .033). Medicare patient post-CJR length of stay (P = .010) was reduced with a trend toward discharge to home (P = .019). Surgical time, operating room service time, 90-day readmissions and direct hospital costs were similar pre- and post-CJR.ConclusionThere was no differential patient selection after CJR bundle implementation and value-based metrics (surgical time, operating room service time) were not affected. Patients were discharged sooner and more often to home. However, overall direct hospital expenses remained unchanged revealing that any cost savings were for insurance providers, not participating hospitals.     

The Clinical and Financial Consequences of the Centers for Medicare and Medicaid Services’ Two-Midnight Rule in Total Joint Arthroplasty

BackgroundTo lessen the financial burden of total joint arthroplasty (TJA) and encourage shorter hospital stays, the Centers for Medicare and Medicaid Services (CMS) recently removed TKA from the inpatient-only list. This policy change now requires providers and institutions to apply the two-midnight rule (TMR) to short-stay (1-midnight) inpatient hospitalizations (SSIH).MethodsThe National Inpatient Sample from 2012 through 2016 was used to analyze trends in length of stay following elective TJA. Using publically-available policy documentation, published median Medicare payments, and National Inpatient Sample hospital costs, we analyzed the application of the TMR to SSIHs and compared the results to the previous policy environment. Specifically, we modeled 3 scenarios for all 2016 Medicare SSIHs: (1) all patients kept an extra midnight to satisfy the TMR, (2) all patients discharged as an outpatient, and (3) all patients discharged as an inpatient.ResultsThe overall percentage of Medicare SSIHs increased significantly from 2.7% in 2012 to 17.8% in 2016 (P < .0001). Scenario 1 resulted in no change in out-of-pocket (OOP) costs to patients, no change in CMS payments, and hospital losses of $117.0 million. Scenario 2 resulted in no change in patient OOP costs, reduction in payments from CMS of $181.8 million, and hospital losses of $357.3 million. Scenario 3 resulted in no change in patient OOP costs, no change in CMS payments, and an estimated $1.71 billion of SSIH charges at risk to hospitals for audit.ConclusionThe results of this analysis reveal the conflict between length of stay trends following TJA and the imposition of the TMR.