Bundled Payment For Joint Replacements Saved Hospitals and CMS Money

MedicalResearch.com Interview with:

MedicalResearch.com Interview with: Amol Navathe, MD PhD University of Pennsylvania Staff Physician, CHERP, Philadelphia VA Medical Center Assistant Professor of Medicine and Health Policy, Perelman School of Medicine Senior Fellow, Leonard Davis Institute of Health Economics, The Wharton School Co-Editor-in-Chief, HealthCare: the Journal of Delivery Science and Innovatio

Dr. Amol Navathe


Amol Navathe, MD PhD

University of Pennsylvania
Staff Physician, CHERP,
Philadelphia VA Medical Center
Assistant Professor of Medicine and Health Policy, Perelman School of Medicine
Senior Fellow, Leonard Davis Institute of Health Economics, The Wharton School
Co-Editor-in-Chief, HealthCare: the Journal of Delivery Science and Innovation

MedicalResearch.com: What is the background for this study?

Response: Bundled payments pay a fixed price for an episode of services that starts at hospital admission (in this case for joint replacement surgery) and extends 30-90 days post discharge (30 days in this study). This includes physician fees, other provider services (e.g. physical therapy), and additional acute hospital care (hospital admissions) in that 30 day window.

MedicalResearch.com: What are the main findings?

a. Episode spending came down ~$5500 or 20.8%, e.g. from $26,785 to $21,208 per episode for joint replacements without pre-existing complications, with no decline in quality (maybe even improvement, e.g. cases with prolonged length of stay dropped 67%.
b. Cost drop is focused on implants (29% drop) and post-acute rehabilitation services (27% drop).
c. Orthopedists and hospitals do not focus on changing practices to save money until they are incentivized to do so (in BPCI).

MedicalResearch.com: What should readers take away from your report?

Response: Participation in bundled payments seemed to be a “win-win-win-win.” Meaning, a win for CMS (large drop in spending – came down 20.8% per joint replacement episode), a win for patients (quality seemed stable-to-improved), a win for the hospital (50% of savings went directly into hospital profit margin), and a win for physicians (the orthopedic surgeons got bonus checks sharing in the savings).

MedicalResearch.com: What recommendations do you have for future research as a result of this study?

Response: We need to better understand at a national level the effects that bundled payments are having within the hospital – this is currently unknown.

We are also studying strategies that hospitals are using to succeed in bundles and reduce unwarranted variation.

MedicalResearch.com: Is there anything else you would like to add?

– Baptist achieved 25% of its own savings from internal costs –> this is over and above Medicare savings and shows the potential for this to be good for hospital profit margins.
– quick hit wins like switching PAC provider level and reducing implant cost drove the majority of savings –> more savings are still on the table.
– Bundles resulted in reduced implant costs, while in prospective payment hospitals had the same incentive –> demonstrates the efficacy as a physician engagement mechanism.
– Bundle design matters –> only got PAC savings in BPCI, not ACE.

Disclosures: I receive grant funding from BCBS of Hawaii (HMSA) and Oscar Health; an honorarium from Elsevier Press; and consulting/speaking fees from Indegene, Navigant, Navvis and Company, and Sutherland Global – none of which are related to this study/topic.

MedicalResearch.com: Thank you for your contribution to the MedicalResearch.com community.

Citation:

Navathe AS, Troxel AB, Liao JM, Nan N, Zhu J, Zhong W, Emanuel EJ. Cost of Joint Replacement Using Bundled Payment Models. JAMA Intern Med. Published online January 03, 2017. doi:10.1001/jamainternmed.2016.8263

Note: Content is Not intended as medical advice. Please consult your health care provider regarding your specific medical condition and questions.

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