Bundled Payments Big Success, According to Study

Will bundled payments do for the costs of joint and hip replacement surgeries what Centers for Medicare and Medicaid Services (CMS) wants them to do? According to the results from a three-year pilot study conducted by New York University’s Langone Medical Center, they will and they do.

Last year CMS put together a bundled payment model for these surgeries to begin on April 1, 2016. Hospitals in 67 markets would be involved and required to meet specified savings. If they exceeded them, according to The American Journal of Managed Care (AJMC.com) writer Mary Caffrey, they would be eligible for bonuses. If they fell short, they would have to repay Medicare part of their fee.

To test the procedures and assumptions that went into this policy, CMS selected NYU Langone to be a pilot site for the Bundled Payment for Care Improvement initiative.

Caffrey quotes Richard Iorio, M.D., lead author of the study and professor of orthopedic surgery at NYU Langone, explaining how they went about the task. “Key stakeholders and physicians across all areas of NYU Langone had to work together to create new protocols and guidelines to standardize care and ensure all patients had the necessary resources before a surgery takes place, and once at home to ensure the most optimal recovery possible.”

So how did it all work out? The study’s investigators reported that the average length of stay dropped from 3.58 days, to 2.96 days. Discharges to inpatient rehab or other care centers fell from 44% to 28%. Readmissions at 30 days decreased from 7% to 5%; from 11% to 6.1% at 60 days and from 13% to 7.7% at 90 days.

According to Caffrey, “the average cost per episode fell from $34, 249 to $27, 541 from the first year to the third year. Most of these savings came from keeping patients out of inpatient rehabilitation centers. This single cost fell from $6, 228 at baseline to $742 in the third quarter of 2014.”

Medicare officials have long looked for a way to reduce the length of hospital stays and the associated costs of hip and knee replacement. In 2014 surgeons performed more than 400, 000 procedures with costs ranging from $16, 500 to $33, 000. The total dollars spent was more than $7 billion. As the number of Americans over age 65 increases, physicians expect that the number of procedures will rise 670% by 2030, according to the study’s authors.