Bundled payment care initiative: How this all started

For the past 40 years health care policymakers have attempted to come up with creative ways to deal with uncontrolled medical inflation. Medicare has enacted multiple changes to their reimbursement system and experimented with different payment models. Bundled payments were first implemented for hospital in 1984. Since then experimental models that bundled both hospital and physician payments have been attempted with moderate success. With the passage of the Affordable Care Act, CMS was required to pilot a bundled payment model. As a result the Bundled Payments for Care Improvement Initiative was announced and piloted at multiple hospitals around the country.     

Private payer bundled payment arrangements

In 2015, the Centers for Medicare & Medicaid Services (CMS) began a mandatory bundling initiative to cover all services for hip and knee replacements. Broader expansion of alternative payment and delivery models has recently been introduced in the private sector. Bundled payments incentivize providers to appropriately reduce spending without compromising quality of care. Establishing market size, competitive pricing, and care coordination are integral to ensure the viability of a bundled payment model. The purpose of this study is to address key considerations for providers who plan to create an effective bundle in the private sector.     

The 5 Clinical Pillars of Value for Total Joint Arthroplasty in a Bundled Payment Paradigm

Background

Our large, urban, tertiary, university-based institution reflects on its 4-year experience with Bundled Payments for Care Improvement. We will describe the importance of 5 clinical pillars that have contributed to the early success of our bundled payment initiative. We are convinced that value-based care delivered through bundled payment initiatives is the best method to optimize patient outcomes while rewarding surgeons and hospitals for adapting to the evolving healthcare reforms.

Bundled care payment models

In response to rising national healthcare spending, the Medicare program has proposed episode-based payments models as an alternative to the traditional fee-for-service program. A “bundled payment” is a single reimbursement provided for all aspects of care for a single diagnosis or procedure. This reimbursement model is argued to improve care delivery by accomplishing the following goals: (1) Improve coordination between hospital and physicians as well as between different care teams. (2) Improve efficiency of care thereby reducing spending. (3) Incentivize quality improvement. Post-implementation analyses of the bundled payment pilot models have demonstrated positive financial results, though the appropriate inclusion criteria for providers and optimal payment calculations remain under investigation.     

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.

Can a machine learning model accurately predict patient resource utilization following lumbar spinal fusion?

BACKGROUND CONTEXTWith the increasing emphasis on value-based healthcare in Centers for Medicare and Medicaid Services reimbursement structures, bundled payment models have been adopted for many orthopedic procedures. Immense variability of patients across hospitals and providers makes these models potentially less viable in spine surgery. Machine-learning models have been shown reliable at predicting patient-specific outcomes following lumbar spine surgery and could, therefore, be applied to developing stratified bundled payment schemes.PURPOSE(1) Can a Naïve Bayes machine-learning model accurately predict inpatient payments, length of stay (LOS), and discharge disposition, following dorsal and lumbar fusion? (2) Can such a model then be used to develop a risk-stratified payment scheme?STUDY DESIGNA Naïve Bayes machine-learning model was constructed using an administrative database.PATIENT SAMPLEPatients undergoing dorsal and lumbar fusion for nondeformity indications from 2009 through 2016 were included. Preoperative inputs included age group, gender, ethnicity, race, type of admission, All Patients Refined (APR) risk of mortality, APR severity of illness, and Clinical Classifications Software diagnosis code.OUTCOME MEASURESPredicted resource utilization outcomes included LOS, discharge disposition, and total inpatient payments. Model validation was addressed via reliability, model output quality, and decision speed, based on application of training and validation sets. Risk-stratified payment models were developed according to APR risk of mortality and severity of illness.RESULTSA Naïve Bayes machine-learning algorithm with adaptive boosting demonstrated high reliability and area under the receiver-operating characteristics curve of 0.880, 0.941, and 0.906 for cost, LOS, and discharge disposition, respectively. Patients with increased risk of mortality or severity of illness incurred costs resulting in greater inpatient payments in a patient-specific tiered bundled payment, reflecting increased risk on institutions caring for these patients. We found that a large range in expected payments due to individuals’ preoperative comorbidities indicating an individualized risk-based model is warranted.CONCLUSIONSA Naïve Bayes machine-learning model was shown to have good-to-excellent reliability and responsiveness for cost, LOS, and discharge disposition. Based on APR risk of mortality and APR severity of illness, there was a significant difference in episode costs from lowest to highest risk strata. After using normalized model error to develop a risk-adjusted proposed payment plan, it was found that institutions incur significantly more financial risk in flat bundled payment models for patients with higher rates of comorbidities.     

Skilled Nursing Facilities After Total Knee Arthroplasty: The Time for Selective Partnerships Is Now!

Background

Bundled payment initiatives for total knee arthroplasty (TKA) patients are dramatically impacted by discharges to skilled nursing facilities (SNFs), making target prices set by the Center for Medicare and Medicaid Services difficult to achieve. However, we hypothesized that a granular examination of SNF discharges would reveal that some may disproportionately increase costs compared to others.

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.     

Bundled payments in spine surgery

Interest in the application of bundled payments to the field of spine surgery continues to grow. There may be great potential for cost-savings for spinal procedures under bundled payments. However, challenges such as heterogeneity of DRGs, complex procedures requiring lengthy recoveries, and appropriate outcomes measurement pose barriers to successful bundled payment design. In this paper, we review the challenges and opportunities posed by bundled payments in spine surgery. We also present several key considerations for policymakers interested in payment reform within spine surgery. Surgeon involvement will be critical in providing guidance for generating effective alternative payment models.     

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.

Does Femoral Component Cementation Affect Costs or Clinical Outcomes After Hip Arthroplasty in Medicare Patients?

BackgroundBundled payment initiatives were introduced to reduce costs and improve quality of care. Cemented vs cementless femoral fixation is a modifiable variable that may influence the cost and quality of care. New bundled payment data from the Centers for Medicare and Medicaid Services allowed us to study the influence of femoral fixation strategy on (1) 90-day costs; (2) readmission rates; (3) reoperation rates; (4) length of stay (LOS); and (5) discharge disposition for Medicare patients undergoing total hip arthroplasty.MethodsWe retrospectively studied 1671 primary total hip arthroplasty Medicare cases, comparing 359 patients who received cemented femoral fixation to 1312 patients who received cementless fixation. Centers for Medicare and Medicaid Services cost data as well as clinical data were reviewed. Demographic differences were present between the 2 cohorts. Statistical analyses were performed, including multiple regression models to adjust for baseline differences.ResultsControlling for cohort differences, cemented patients were significantly more likely to be discharged home compared to cementless patients. Cemented patients also demonstrated trends toward lower costs, lower readmission rates, and shorter LOS compared to cementless patients. All reoperations within the early postoperative period occurred in patients managed with cementless femoral fixation.ConclusionAmong Medicare patients, cemented femoral fixation outperformed cementless fixation with respect to discharge disposition and also trended toward superiority with regards to LOS, readmission, cost of care, and reoperation. Cemented femoral fixation remains relevant and useful despite the rising popularity of cementless fixation.     

What Are the Risk Factors for 48 or More–Hour Stay and Nonhome Discharge After Total Knee Arthroplasty? Results From 151 Illinois Hospitals, 2016-2018

BackgroundBundled payment programs and the Centers for Medicare and Medicaid Services removal of total knee arthroplasty (TKA) from the inpatient-only list potentially incentivize avoiding patients with extended length of stay (eLOS) and nonhome discharge (NHD). We aimed to describe which patients are most at risk of eLOS (>2 days), very eLOS (veLOS; >4 days), and NHD.MethodsAdmissions for unilateral TKAs at 151 Illinois nonfederal hospitals from January 2016 to June 2018 were selected from the Illinois Hospital and Health Systems Association COMPdata administrative hospital discharge database. Records included patient age, race and ethnicity, Illinois region, insurance status, principal diagnosis, and date of procedure. Zip code level median household income, Charlson comorbidity index, and obesity status were computed. Hospitals were characterized through their bundled payment participation status, academic status, and annual knee replacement volume. Poisson regression was used to test the associations between patient and hospital characteristics and the likelihood of eLOS, veLOS, and NHD.ResultsOf the 72,359 admissions included, 25.0% had an NHD, 41.1% had eLOS, and 4.0% veLOS. Female patients, those 75 years old or more as compared to those 65-74 years old, non-Hispanic blacks, Hispanics and Asians versus non-Hispanic whites, Medicaid/uninsured patients versus those privately insured, obese patients, those with nonzero Charlson comorbidity index, and those treated at low-volume hospitals (<200 TKAs/year vs >600 TKAs/year) were more likely to have eLOS, veLOS, and/or NHD (P < .05).ConclusionArthroplasty surgeons may be incentivized to avoid the abovementioned patient groups due to bundled payment programs and recent Centers for Medicare and Medicaid Services legislation.     

Bundled Payment “Creep”: Institutional Redesign for Primary Arthroplasty Positively Affects Revision Arthroplasty

Background

Revision total joint arthroplasty (TJA) is associated with increased readmissions, complications, and expense compared to primary TJA. Bundled payment methods have been used to improve value of care in primary TJA, but little is known of their impact in revision TJA patients. The purpose of this study is to evaluate the impact of a care redesign for a bundled payment model for primary TJA on quality metrics for revision patients, despite absence of a targeted intervention for revisions.

Cost analysis of renal replacement therapy by transplant in a system of bundled payment of dialysis

Renal replacement therapies (RRT) for patients with end-stage renal failure represent a high burden on European countries' healthcare budget. Our purpose was to report and compare the costs of RRT by hemodialysis (HD) or peritoneal dialysis (PD) and renal transplantation (RT) after introduction of a bundled payment system of dialysis. We analyzed average annual cost of RT in a public national health system hospital - surgical/anesthesiologist team and material, induction and maintenance immunosuppression therapy, hospital stay, diagnostic examinations (DE), and post-transplant office visits (including DE). Incentives paid to hospitals performing RT were included. Annual cost of HD or PD was estimated by bundled payment established in a recently revised law - 537.25 €/wk. Total first year cost or RT is 61 658.14 € and from the second year forth 543.86 €/month. Dialysis costs 28 033.71 €/yr. Break-even point for cost is at 32 months, and from there on, RT is less expensive. Strategies aimed at increasing RT are needed as it confers better survival than RRT by dialysis with lower costs to Portuguese health system.     

Anemia management under a bundled payment policy for dialysis: a preview for the United States from Japan

The goal of a bundled payment policy for dialysis is to decrease overall expenditures and shift financial risk from the payer to the provider. The primary target for cost reduction is invariably erythropoiesis-stimulating agents (ESAs), because of their large costs and potential for dose sparing. Japan succeeded in reducing ESA doses and maintaining stable hemoglobin levels through modest increases in intravenous iron administration. Dialysis providers in the United States have this and other strategies available.     

The Cost of an Episode of Care in a Total Knee Arthroplasty Patient Is More Than a Total Hip Arthroplasty Patient Within an Alternative Payment Model

BackgroundAlternative payment models were set up to increase the value of care for total joint arthroplasty. Currently, total knee arthroplasty (TKA) and total hip arthroplasty (THA) are reimbursed within the same bundle. We sought to determine whether it was appropriate for these cases to be included within the same bundle.MethodsThe data were collected from consecutive patients in a bundled payment program at a single large academic institution. All payments for 90 days postoperatively were included in the episode of care. Readmission rates, demographics, and length of stay were collected for each episode of care.ResultsThere was a significant difference in cost of episode of care between TKA and THA, with the average TKA episode-of-care cost being higher than the average THA episode-of-care cost ($25803 vs $23805, P < .0001). There was a statistically significant difference between the 2 groups between gender, race, medical complexity, disposition outcome, and length of stay. The TKA group trended toward a lower readmission rate (5.3%) compared to the THA group (6.6%).ConclusionThe cost of an episode of care for patients within the bundled payment model is significantly higher for patients undergoing TKA compared with those undergoing a THA. This should be taken into consideration when determining payment plans for patients in alternative payment plans, along with other aspects of risk that need to be considered in order to allow for hospitals to be successful under the bundled payment model.     

Conversion Total Knee Arthroplasty is Associated with Increased Post-Acute Care Costs

BackgroundAlternative payment models have been viewed as successfully decreasing costs following primary total knee arthroplasty (TKA) while maintaining quality. Concerns exist regarding access to care for patients who may utilize more resources in a bundled payment arrangement. The purpose of this study is to determine if patients undergoing conversion of prior surgery to TKA have increased costs compared to primary TKA patients.MethodsClaims from Medicare and a single private insurer were queried for all primary TKA patients at our institution from 2015 to 2016. Ninety-day post-acute care costs were compared between primary and conversion TKA. Secondary endpoints included discharge disposition, complications, and readmissions. A multivariate regression analysis was performed to identify independent risk factors for increased post-acute care costs and short-term outcome metrics.ResultsOf 3999 primary TKA procedures, 948 patients (23%) underwent conversion TKA. Conversion TKA was associated with greater post-acute care costs in patients with commercial insurance ($4714 vs $3759, P = .034). Among Medicare beneficiaries, prior ligament reconstruction was associated with increased post-acute care costs ($1917 increase, P = .036), while prior fracture fixation approached statistical significance ($2402 increase, P = .055). Conversion TKA was an independent risk factor for readmissions (odds ratio 1.46, 95% confidence interval 1.00-2.17, P = .050), while patients with a prior open knee procedure had higher rates of complications (odds ratio 2.41, 95% confidence interval 1.004-5.778, P = .049).ConclusionOur data suggest that conversion from prior knee surgery to TKA is associated with increased 90-day post-acute care costs and resource utilization, particularly prior open procedures. Without appropriate risk adjustment in alternative payment models, surgeons may be financially deterred from providing quality arthroplasty care given the reduced net payment and surgical complexity of such cases.     

The Effect of Severity of Disease on Cost Burden of 30-Day Readmissions Following Total Joint Arthroplasty (TJA)

In order to control the unsustainable rise in healthcare costs the Federal Government is experimenting with the bundled payment model for total joint arthroplasty (TJA). In this risk sharing model, providers are given one payment, which covers the costs of the TJA, as well as any additional medical costs related to the procedure for up to 90 days. The amount and severity of comorbid conditions strongly influence readmission rates and costs of readmissions in TJA patients. We identified 2026 TJA patients from our database with APR-DRG SOI data for use in this study. Both the costs of readmission and the readmission rate tended to increase as severity of illness increased. The readmission burden also increased as SOI increased, but increased most markedly in the extreme SOI patients.     

Changes in Discharge to Rehabilitation: Potential Unintended Consequences of Medicare Total Hip Arthroplasty/Total Knee Arthroplasty Bundled Payments,Should They Be Implemented on a Nationwide Scale?

BackgroundAs a part of the 2010 Affordable Care Act, Medicare was committed to changing 50% of its reimbursement to alternative payment models by 2018. One strategy included introduction of “bundled payments” or a fixed price for an episode of care. Early studies of the first operative bundles for elective total hip and knee arthroplasty (THA/TKA) suggest changes in discharge to rehabilitation. It remains unclear the extent to which such changes affect patient well-being. In order to address these concerns, the objective of this study is to estimate projected changes in discharge to various type of rehabilitation, 90-day outcomes, extent of therapy received, and patient health-related quality-of-life before and after introduction of bundled payments should they be implemented on a nationwide scale.MethodsA nationwide policy simulation was conducted using decision-tree methodology in order to estimate changes in overt and patient-centered outcomes. Model parameters were informed by published research on bundled payment effects and anticipated outcomes of patients discharged to various types of rehabilitation.ResultsFollowing bundled payment introduction, discharge to inpatient rehabilitation facilities decreased by 16.9 percentage-points (95% confidence interval [CI] 16.5-17.3) among primary TKA patients (THA 16.8 percentage-points), a relative decline from baseline of 58.9%. Skilled nursing facility use fell by 24.0 percentage-points (95% CI 23.6-24.4). It was accompanied by a 36.7 percentage-point (95% CI 36.3-37.2) increase in home health agency use. Although simulation models predicted minimal changes in overt outcome measures such as unplanned readmission (TKA +0.8 percentage-points), changes in discharge disposition were accompanied by significant increases in the need for further assistive care (TKA +8.0 percentage-points) and decreases in patients’ functional recovery and extent of therapy received. They collectively accounted for a 30% reduction in recovered motor gains.ConclusionThe results demonstrate substantial changes in discharge to rehabilitation with accompanying declines in average functional outcomes, extent of therapy received, and health-related quality-of-life. Such findings challenge notions of reduced cost at no harm previously attributed to the bundled payment program and lend credence to concerns about reductions in access to facility-based rehabilitation.     

Editorial Commentary: Saving Cost in Orthopaedics While Preserving Patient Experience and Outcomes: We Can Have It All

Healthcare costs in the United States are the highest in the world and continue to increase unsustainably. As a result, cost-cutting measures are paramount. Bundled payments are a primary method to decrease healthcare use, and they are increasingly prominent in orthopaedic surgical care. Bundled payments require an accurate assessment of the cost of a procedure, which may be determined more reliably and feasibly than previously with time-driven activity-based costing. Time-driven activity-based costing identifies the cost of various stages of care, which allows cost-containment strategies to target the most expensive stages. Amidst the warranted focus on cost reduction, we must maintain a strong focus on the patient experience and patient outcomes. For example, reducing surgeon and staff time with the patient could negatively impact patient care, yet increasing efficiency in the operating room and perioperative setting could decrease the relative cost of staff without harming the patient experience. Other realms, such as implant and administrative costs, are important focuses that are less likely to directly hamper patient care. Controlling cost in the U.S. healthcare system will require a wide-reaching approach with contributions from all parties. As we work toward a more financially sustainable system, we must be sure to preserve excellent patient experience and outcomes.