Shouldn’t Bundled Payments Be Adjusted for Risk? New Study

Clearly, Ms. Jones in Room 210—a 55-year-old triathlete—isn’t the same as Ms. Smith in Room 211, a sedentary 55-year-old with diabetes and congestive heart failure. But are we seeing enough risk adjustment under alternative payment models?

New work published in the April 15, 2021 edition of the Journal of the American Academy of Orthopaedic Surgeons addresses that question.

The study, “Risk Adjustment for Episode-of-Care Costs After Total Joint Arthroplasty: What is the Additional Cost of Individual Comorbidities and Demographics?” was conducted at the Rothman Orthopaedic Institute at Thomas Jefferson University in Philadelphia, Pennsylvania.

P. Maxwell Courtney, M.D., an assistant professor of orthopedic surgery at the Rothman Orthopaedic Institute at Thomas Jefferson University explained the “backstory” of this work to OTW, “Bundled payment programs for hip and knee replacement continue to grow in popularity. Medicare and other insurers will pay one lump sum for all care from the date of surgery to 90 days postoperatively, including readmissions, physical therapy, skilled nursing facility, and medications.”

“Unfortunately, patients who are older with more medical comorbidities who cost more may face issues with access to arthroplasty care as providers may be financially disincentivized from caring for them under current bundled payment models.”

Using data from 6,537 consecutive primary total hip arthroplasties (THAs) and total knee arthroplasties (TKAs)—4,835 Medicare and 1,702 private payer patients—the researchers set out to determine the numbers related to individual medical comorbidities and demographics after primary TJA.

“The mean 90-day episode-of-care cost for Medicare and private payers was $19,555 and $30,020, respectively,” wrote the authors. “Among Medicare patients, comorbidities that significantly increased episode-of-care costs included heart failure ($3,937), stroke ($2,604), renal disease ($2,479), and diabetes ($1,368). Demographics that significantly increased costs included age ($221 per year), body mass index ($106 per point), and unmarried marital status ($1,896). Among private payer patients, cardiac disease ($4.765), body mass index ($149 per point) and age ($119 per year) were associated with increased costs.”

Patients and physicians Can Lose Out

“Not surprisingly,” commented Dr. Courtney to OTW, “sicker patients cost more. But a wide variability in costs exists among patients in our model. Compared to a healthy 65-year-old male, a 75-year-old female with heart disease who lives alone with a BMI [body mass index] of 35 will be expected to have $10,000 higher episode-of-care costs.”

“Surgeons and hospitals should not be financially penalized in these value-based care models for caring for more complex patients with medical comorbidities. Fortunately, Centers for Medicare and Medicaid Services has heard our comments from the American Association of Hip and Knee Surgeons and is working on incorporating risk adjustment into some of their bundled payment programs.”