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Bundled payment model linked with reduced Medicare payments for joint replacement
Investigators of this study found implementation of a bundled payment model for lower extremity joint replacement in a hospital system correlated with hospital savings and lower Medicare payments.
Researchers performed an observational study that included 3,942 patients who underwent lower extremity total joint replacement at the Baptist Health System while the system participated in the voluntary Acute Care Episodes and Bundled Payments for Care Improvement demonstration projects under the Comprehensive Care for Joint Replacement bundled payment model. There period studied spanned from 2008 to 2015. Investigators calculated the 30-day readmission rate, average Medicare payments per episode, ER visits, length of stay, hospital savings due to changes in internal hospital costs and post-acute care (PAC) spending.
Findings showed the Medicare episode costs for 3,739 of patients without any complications decreased on average 20.8% from $26,785 to $21,208. Investigators noted for 204 joint replacement episodes with complications, the Medicare episode costs decreased from $38,537 to $33,216 or 13.8%. Readmissions dropped by 1.4% and ER visits declined by 0.9%. In addition, investigators found a 67% decrease in the rates of prolonged length of stay.
According to researchers, 51.2% of the hospital savings overall came from reductions in internal costs, with 48.8% of savings coming from reductions in PAC spending. Per case, the implant costs decreased on average by $1,920.68. PAC spending on average decreased by $2,443.12 reportedly due to inpatient rehabilitation and skilled nursing facilities with the exception that the bundles were financially responsible for PAC.‒ by Monica Jaramillo
Disclosures: Navathe reports he is an advisor for Navvis and Company, Navigant Inc., Lynx Medical, Indegene Inc. and Sutherland Global Services; receives an honorarium from Elsevier Press; and grant funding from Oscar Health Insurance and Hawaii Medical Services. Please see the full study for a list of all other authors’ relevant financial disclosures.
Perspective
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This article focuses on documented savings in the cost of major joint replacement of lower extremity (MJRLE) using bundled payment methodologies that focus on the Acute Care Episode (ACE), Comprehensive Care for Joint Replacement Program (CJR) and some information related to the Bundled Payment for Care Improvement (BPCI) program.
Somerset and I have exposure to more than 50 orthopedic groups that are clients or members of The OrthoForum participating in the BPCI program. They are participating through Signature Health Care which is an OrthoForum member that is also a BPCI convener for these groups. The results noted in the article are consistent with results achieved by many of the orthopedic groups with which we work. We believe the results achieved under all the bundled payment programs are substantially, if not completely, driven by the intense management by the orthopedic surgeon and the care management team dedicated to the bundle payment program. Although the article in one paragraph downplays the internal hospital cost reductions and high cost post-acute care (PAC) use “without intensive care coordination investments,” we would argue the opposite is true. Investments in care coordination processes are what drive total program savings. For orthopedic groups and its physicians who have had good hospital relationships, implant costs have likely already been driven down through combined efforts, such as long-standing service line co-management agreements. Where those long-term relationships have not existed, the article accurately notes that savings have been achieved through gain-sharing arrangements executed due to the CJR or BPCI. Again, the important point is that without active physician participation and management of the entire care delivery process, which includes selection of implants incorporating all clinical issues, the savings cannot be achieved.
An often-overlooked element of the care management process is the communication with the patient and the patient’s family about the entire care process. There are challenges for family members in managing a relative’s post-surgical care. Historically, the easy answer for family members was to move the affected family member into a post-acute facility for the longest allowed period under reimbursement policy. This gave the family members a break in terms of the PAC burden the family might otherwise face. The care planning process requires the family meeting upfront and that the care plan communicated is adhered to as part of accepting the patient for surgery. This is not only acceptance by the patient, but the family members as well. While hospitals are an important element of the care delivery, only physicians can manage the care delivery process; and physicians and their care management teams are best at producing the result of the right care by the right provider at the right cost with the right outcome.