Joint Replacements: Bundled Payments Reduce Cost, Not Quality

Diana Phillips

September 26, 2016

Bundled payment for lower extremity joint replacement reduces the per episode cost of care without diminishing care quality, according to the findings of a study published online September 19 in JAMA.

The findings reflect outcomes from the first 21 months of the Center for Medicare & Medicaid Services (CMS) Bundled Payments for Care Improvement (BPCI) initiative, which links payments for services provided during an episode of care that involves an inpatient hospital stay. BPCI-participating hospitals are accountable for total episode payments, including hospitalization and Medicare-covered services, during the 90 days after discharge.

Although promising, the findings are preliminary and not yet generalizable to other healthcare organizations or clinical episodes, according to the authors.

To assess the cost and quality implications of bundled payments on lower extremity joint replacements, Laura A. Dummit, MSPH, from the Lewin Group, Falls Church, Virginia, and colleagues used Medicare Part A and Part B enrollment and claims data from 2011 to 2015 to compare the mean Medicare payments and quality outcomes for more than 30,000 primarily knee and hip replacements initiated at BPCI-participating hospitals during the first 7 quarters of the initiative with the same surgical procedure performed at matched comparison hospitals that were randomly selected from hospitals not participating in the initiative.

During the baseline study period (October 2011 - September 2012), 176 BPCI-participating hospitals and 768 matched comparison hospitals initiated, respectively, 29,441 and 29,440 lower extremity joint replacement episodes. In the intervention period, from October 2013 through June 2015, there were 31,700 episodes in the BPCI hospitals and 31,696 at 841 matched comparison hospitals.

For BPCI group, the mean Medicare payments for the hospitalization and 90-day postdischarge period declined by $3286 between the baseline and intervention periods, going from $30,551 (95% confidence interval [CI], $30,201 - $30,901) to $27,265 (95% CI, $26,838 - $27-692). The respective reduction in mean Medicare payments for the non-BPCI group was $2119, going from $30,057 (95% CI, $29,765 - $30,350) in the baseline period to $27,938 (95% CI, $27,639 - $28,237) in the intervention period.

The larger payment reduction ($1166 difference) for the BPCI group was primarily a result of reduced payments for institutional postacute care, the authors write. Specifically, relative to the comparison hospitals, mean payments for skilled nursing facility care declined $546 more (95% CI, −$892 to −$199; P = .002), and inpatient rehabilitation facility care payments declined $445 more (95% CI, −$811 to −$79; P = .02) for the BPCI population.

"Differential changes in utilization were consistent with the reductions in Medicare payments," the authors report, noting that the lower Medicare payments were attributable to use of institutional postacute care.

"There was no evidence that the greater reduction in payments was due to shifting service use outside the episode period," they add.

No Drop in Quality Detected

To assess quality, the researchers reviewed claims-based quality measures, including unplanned readmissions, emergency department visits, and mortality, and determined that outcomes were statistically similar between the BPCI and comparison populations.

In addition, a survey of patients approximately 6 months after surgery during the intervention period in the BPCI and control hospitals shows that a higher proportion of patients in the BPCI group reported improvements in mobility and pain, with no evidence to suggest worsening on any measure.

"This analysis of lower extremity joint replacement episodes, which account for more than 450 000 Medicare hospitalizations per year, significantly extends the evidence on the use of payment incentives to reduce spending for episodes of care, while maintaining or improving quality," the authors write.

The findings are limited, however, by the observational study design and the fact that "[t]he BPCI initiative is voluntary and the hospitals that chose to participate differ from other hospitals, precluding causal inferences and generalizations of results," the authors explain. For example, the BPCI hospitals were more likely to be nonprofit, urban, part of a system, a teaching hospital, and larger. In addition, they were located in markets that had larger populations, higher median incomes, and fewer skilled nursing facility beds; they were more likely to have an inpatient rehabilitation facility; they were more competitive, defined by a lower Herfindahl-Hirschman index; and they were less dependent on Medicare admissions that could be subject to bundled payments.

In addition, the findings, which reflect only the experience of hospital participants, cannot be generalized to other healthcare organizations or clinical episodes, the authors note. "Further studies are needed to assess longer-term follow-up as well as patterns for other types of clinical care."

These limitations should considered, together with the possibility that the design of the evaluation might not be "sufficiently sensitive to behavioral changes that could make any apparent savings misleading," Elliott Fisher, MD, MPH, from the Dartmouth Institute for Health Policy and Clinical Practice, Lebanon, New Hampshire, writes in an accompanying editorial.

"Using a different end point that takes volume into account, ie, mean total joint replacement payments per hospital (estimated by multiplying the volume of episodes by total per-episode costs), reveals that total spending actually declined less in the BPCI hospitals than in the comparison hospitals," Dr Fischer explains.

"It is thus too soon to tell whether the portion of the BPCI initiative focused on lower extremity joint replacement is actually improving care and achieving savings for the Medicare program," he adds.

The mandatory model of bundled payments for lower extremity joint replacement episodes that CMS began testing in 2016 through the Comprehensive Care for Joint Replacement (CJR) model, reported by Medscape Medical News, "should therefore be seen as an important step forward," Dr Fischer writes. "By requiring participation of all hospitals within the selected metropolitan statistical areas and being able to compare joint replacement performance in quality, outcomes, and costs in these regions with that in other similar regions, a much more rigorous evaluation will be possible."

The CJR program also is expected to include better quality measures, including, eventually, patient-reported functional outcomes, which will be especially useful if they are collected from patients in the comparison regions, Dr Fischer explains, noting that the program will facilitate careful monitoring of volume effects at the regional level.

Although results from the CJR program "will provide additional information about responses to bundled payment incentives from a more representative sample of hospitals," according the study authors, one potential unintended consequence could be the widening of racial disparities in joint replacement surgery, according to the authors of an accompanying commentary.

Said A. Ibrahim, MD, MPH, MBA, from the University of Pennsylvania Perelman School of Medicine, Philadelphia; Hyunjee Kim, PhD, from the Center for Health Systems Effectiveness at Oregon Health and Science University, Portland; and K. John McConnell, PhD, from the Center for Health Systems Effectiveness, Oregon Health and Science University, explain that the CJR alternative payment plan "unfolds in the setting of a well-documented disparity in health care," noting that arthritis-related activity, work limitations, and severe pain, which are clinical indications for joint replacement, "disproportionately affect African American patients compared with white patients."

These disparities persist across rates of use of effective joint replacement, the quality of the hospitals in which replacement surgery is sought, the types of rehabilitation care received, and quality outcomes.

Although the architects of the CJR model "recognize the potential for unintended consequences such as shifting care outside of the episode, limiting some aspects of care, or even an increase in the number of episodes of care," the potential effect of the model on racial disparity in joint replacement use is less appreciated, the editorialists write. "One possibility is that the program could exacerbate the existing racial disparity by indirectly discouraging hospitals from performing surgery in African American patients," they explain.

In contrast, because the CJR program "creates strong financial incentives to provide high-value postacute care, which is likely to benefit all patients regardless of race and [socioeconomic status]," it could reduce racial disparities, they acknowledge.

Given the unknowns in this regard, "[e]valuation of the policy should include specific assessments on how implementation of the model affects the existing racial disparity in joint replacement use and outcomes and how the model could be fine-tuned to address an important disparity in elective surgical care," they conclude.

Four of the study authors have disclosed owning UnitedHealth Group stock. Three of the authors are employees of the Lewin Group, which was contracted and paid by the Department of Health and Human Services, CMS, to evaluate the BPCI initiative. The Lewin Group is a subsidiary of Optum, which is a wholly owned subsidiary of UnitedHealth Group. Two of the authors performed work on this study at Abt Associates Inc, a subcontractor to The Lewin Group. Some of the study coauthors have disclosed receiving salary from CMS. Dr Fisher reported receiving speakers fees from the American College of Pathologists, Angiodynamics, Blue Cross and Blue Shield of Louisiana, the National Confederation of General Insurance, Private Pension and Life, Supplementary Health and Capitalization Companies, BlueCross BlueShield of South Carolina, Vizient, and Signature Health; receiving grants from the Commonwealth Fund and the Agency for Healthcare Research and Quality; and serving on the board of directors of the Institute for Healthcare Improvement and the Fannie E. Rippel Foundation.

JAMA. Published online September 19, 2016. Article full text, Fisher editorial full text, Ibrahim editorial full text

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