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Bundled Payment Program Lowers Medicare Costs for Joint Replacements

October 3rd, 2016

FALLS CHURCH, VA – Does the Bundled Payments for Care Improvement (BPCI) program reduce Medicare payments without a decline in quality of care for patients receiving lower extremity joint replacements at participating hospitals?

That was the question addressed in a recent article in the Journal of the American Medical Association, focusing on BPCI-participating hospitals that are accountable for total episode payments, i.e., the hospitalization and Medicare-covered services during the 90 days after discharge.

The BPCI initiative was launched in 2013 by the Centers for Medicare & Medicaid Services (CMS) to test whether linking payments for services provided during an episode of care can reduce Medicare payments while maintaining or improving quality.

CMS invited hospitals, physician group practices, post-acute care providers such as skilled nursing facilities and home health agencies, and other entities to participate in BPCI, which holds them accountable for Medicare payments for services provided during an episode of care initiated by a hospitalization.

Similar to other alternative payment models, BPCI is designed to reward clinicians and facilities that deliver care more efficiently and effectively, according to background information in the article.

For the study, led by researchers from The Lewin Group in Falls Church, VA, the change in outcomes for Medicare fee-for-service beneficiaries who primarily had hip or knee replacements at a BPCI-participating hospital was estimated.

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Overall, there were 29,441 lower extremity joint replacement episodes in the baseline period, which began in October 2011 and continued through September 2012. The intervention phase from October 2013 through June 2015 involved 31,700 episodes at 176 BPCI-participating hospitals. Beneficiaries with the same surgical procedure were matched with 768 comparison hospitals in the baseline period and 841 in the intervention period.

Results indicate that, on average, Medicare payments for a lower extremity joint replacement hospitalization and the 90-day post-discharge period declined $1,166 more for Medicare beneficiaries with episodes initiated in a BPCI-participating hospital than for beneficiaries in a comparison hospital.

Researchers determined that the lower Medicare payments were primarily due to reduced use of institutional post-acute care. Claims-based quality measures, including unplanned readmissions, ED visits, and mortality, however, were not statistically different between the BPCI and comparison populations, the study authors pointed out.

“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,” study authors concluded. “Further studies are needed to assess longer-term follow-up as well as patterns for other types of clinical care.”