FeaturePerspective

Study finds Medicare bundled payments inequitable for older, higher-risk patients

To prevent cherry picking of patients who need total joint arthroplasty, a presenter urged CMS to adjust bundled payments upward for several patient demographic factors.

“Based on our results, total joint arthroplasty TJA bundled payments should be adjusted upward for age, [American Society for Anesthesiologists] ASA class, hip fractures, non-white race and medical comorbidities and complications,” Scott M. Eskildsen, MD, an orthopedic surgery resident at the UNC School of Medicine, said. “Given the way bundled payments are given by preoperative payment, future bundled adjustments should not use postop factors, such as major complications/comorbid conditions] MCCs and should only use preop factors such as demographics,” he said.

Upward adjustment needed

For this study, Eskildsen and his colleagues collected financial data for Medicare patients who underwent 1,493 unilateral TJAs during a 2-year period. To represent appropriate adjustment levels, they used an in-hospital accounting system to identify variable hospital costs. Postoperative care costs were predicted based on previous literature, Eskildsen noted. Researchers used multivariate regression to identify the clinical and demographic factors they used for risk stratification.

Results showed an increased TJA cost among patients over 65 years of age.

“Every year over the age of 65 showed an increased cost of $121” for these procedures, Eskildsen said. “Therefore, a patient over 70 years old had an approximately $600 increased cost compared to a patient who was 65.”

Eskildsen reported there was a $1,769 increase in cost of the surgery for every increase in ASA class and the procedure cost was $6,223 greater for patients who underwent hip fracture surgery. Patients with MS-DRG 469, which is an MCC modifier for acute medical complications, had an increased cost of $5,665 for their procedures and non-white patients had a higher cost vs. white patients.

“We also, importantly, did not find any association between cost and BMI or gender,” Eskildsen said.

Importance of risk adjustment

Eskildsen told Healio.com/Orthopedics CMS should increase reimbursement for the MS-DRG 469 modifier, but he noted CMS should eventually phase out the policy because it essentially rewards complications.

“A better approach would be to risk-adjust for all comorbidities independently, which would reward providers who care for challenging patients, not those who experience complications,” he said.

Risk adjustment is “particularly imperative with bundled payments” so all patients receive treatment regardless of risk status, according to Eskildsen.

“Risk adjustment has always been important, but it is particularly imperative with bundled payments,” Eskildsen told Healio.com/Orthopedics. “Under traditional fee-for-service, surgeons were relatively insulated from adverse incentives because they received similar payment regardless of the case, while hospitals saw more variation in reimbursement. With bundled payments, surgeons share payments with the hospital, so financial incentives may be more likely to impact their patient selection and potentially create barriers to care for certain patients,” he said. – by Casey Tingle

Reference:

Clement RC, et al. Paper #332. Presented at: American Academy of Orthopaedic Surgeons Annual Meeting. March 14-18, 2017; San Diego.

For more information:

Scott M. Eskildsen, MD, can be reached at UNC Health Care, 101 Manning Dr., Chapel Hill, NC 27514; email: scott.eskildsen@unchealth.unc.edu.

Disclosure: Eskildsen reports no relevant financial disclosures.

 

To prevent cherry picking of patients who need total joint arthroplasty, a presenter urged CMS to adjust bundled payments upward for several patient demographic factors.

“Based on our results, total joint arthroplasty TJA bundled payments should be adjusted upward for age, [American Society for Anesthesiologists] ASA class, hip fractures, non-white race and medical comorbidities and complications,” Scott M. Eskildsen, MD, an orthopedic surgery resident at the UNC School of Medicine, said. “Given the way bundled payments are given by preoperative payment, future bundled adjustments should not use postop factors, such as major complications/comorbid conditions] MCCs and should only use preop factors such as demographics,” he said.

Upward adjustment needed

For this study, Eskildsen and his colleagues collected financial data for Medicare patients who underwent 1,493 unilateral TJAs during a 2-year period. To represent appropriate adjustment levels, they used an in-hospital accounting system to identify variable hospital costs. Postoperative care costs were predicted based on previous literature, Eskildsen noted. Researchers used multivariate regression to identify the clinical and demographic factors they used for risk stratification.

Results showed an increased TJA cost among patients over 65 years of age.

“Every year over the age of 65 showed an increased cost of $121” for these procedures, Eskildsen said. “Therefore, a patient over 70 years old had an approximately $600 increased cost compared to a patient who was 65.”

Eskildsen reported there was a $1,769 increase in cost of the surgery for every increase in ASA class and the procedure cost was $6,223 greater for patients who underwent hip fracture surgery. Patients with MS-DRG 469, which is an MCC modifier for acute medical complications, had an increased cost of $5,665 for their procedures and non-white patients had a higher cost vs. white patients.

“We also, importantly, did not find any association between cost and BMI or gender,” Eskildsen said.

Importance of risk adjustment

Eskildsen told Healio.com/Orthopedics CMS should increase reimbursement for the MS-DRG 469 modifier, but he noted CMS should eventually phase out the policy because it essentially rewards complications.

“A better approach would be to risk-adjust for all comorbidities independently, which would reward providers who care for challenging patients, not those who experience complications,” he said.

Risk adjustment is “particularly imperative with bundled payments” so all patients receive treatment regardless of risk status, according to Eskildsen.

“Risk adjustment has always been important, but it is particularly imperative with bundled payments,” Eskildsen told Healio.com/Orthopedics. “Under traditional fee-for-service, surgeons were relatively insulated from adverse incentives because they received similar payment regardless of the case, while hospitals saw more variation in reimbursement. With bundled payments, surgeons share payments with the hospital, so financial incentives may be more likely to impact their patient selection and potentially create barriers to care for certain patients,” he said. – by Casey Tingle

Reference:

Clement RC, et al. Paper #332. Presented at: American Academy of Orthopaedic Surgeons Annual Meeting. March 14-18, 2017; San Diego.

For more information:

Scott M. Eskildsen, MD, can be reached at UNC Health Care, 101 Manning Dr., Chapel Hill, NC 27514; email: scott.eskildsen@unchealth.unc.edu.

Disclosure: Eskildsen reports no relevant financial disclosures.

 

    Perspective

    Amol S. Navathe

    In this interesting study, Eskildsen and colleagues consider the importance of risk adjustment in Medicare’s mandatory joint replacement bundle program — The Comprehensive Care for Joint Replacement Model — and orthopedic bundles more broadly. They utilize detailed hospital cost accounting data to highlight the substantial variation in the cost of bundled episodes based on attributes of patients and their surgeries. It is notable that compared to elective surgeries, hip fracture cases are costlier, a finding that demonstrates how diagnosis-related groups do not always capture homogeneous groups of procedures. The fact that higher ASA class is associated with higher costs is perhaps not surprising but illustrates a challenge in implementing orthopedic bundles without clinical data beyond what is captured in claims. While bundles work by providing a fixed price for procedures with some degree of cost variation, the increases driven by hip fractures and ASA class represent important potential adjustments to prevent hospitals from avoiding patients with higher-risk clinical characteristics.

    Joshua M. Liao, MD

    Future work should explore several issues. First, clinical episodes will always inevitably have some variability, so analyses should compare local and national figures to evaluate the broader presence of variability in episode costs. Second, given the small numbers of non-white patients in this study, further work is needed to evaluate the impact of patient race on procedure costs given the concerns about racial disparities in TJA. Third, future analyses should evaluate utilization measures, such as readmissions and emergency visits, to evaluate their impact on episode costs. Finally, hip fracture is distinct from elective conditions in ways not only related to cost, for example in terms of established quality metrics, such as complication rates. Patient-reported outcomes that have been used for elective procedures may not apply analogously to hip fracture cases. 

    • Amol S. Navathe, MD, PhD
    • Assistant professor, medicine and Health policy
      Perelman School of Medicine
      Senior fellow, Leonard Davis Institute of Health Economics
      The Wharton School, University of Pennsylvania
      Philadelphia
      – Joshua M. Liao, MD
      Assistant professor of medicine, University of Washington School of Medicine
      Associate medical director of contracting & value-based care, UW Medicine
      Director of value and systems science
      UW Medicine Center for Scholarship in Patient Care Quality and Safety
      Adjunct senior fellow, Leonard Davis Institute of Health Economics
      The Wharton School, University of Pennsylvania
      Philadelphia

    Disclosures: Navathe reports he serves as an advisor to Navvis and Company, Navigant Inc., Lynx Medical, Indegene Inc. and Sutherland Global Services; receives an honorarium from Elsevier Press; and receives research funding from HMSA and Oscar Health Insurance. Liao reports no relevant financial disclosures