A Penn Medicine analysis of the bundled payment model for hip and knee surgeries suggests that cost savings are more likely when the surgeries are performed in larger hospitals that perform more of these procedures.

“Our findings suggest that many hospitals do well even when required to take part in bundled payments, though certain types of hospitals are better positioned than others,” says Amol S. Navathe, MD, PhD, an assistant professor of Medical Ethics and Health Policy at Penn Medicine, and lead author of the study, published recently in JAMA.

In the study, researchers from the Perelman School of Medicine at the University of Pennsylvania examined results for the first year of participation in the Comprehensive Care for Joint Replacement (CHR) program, using data from Medicare claims and the American Hospital Association.

CHR is a bundled payment program from the Centers for Medicare and Medicaid Services. All hospitals are required to participate in the program based on their location in one of 67 selected urban markets.

Participating hospitals receive normal Medicare reimbursements for hip and knee replacements, but later get a bonus if they beat CMS’s quality and cost targets for the care delivered— the full “bundle” of care including joint replacement surgery, associated hospitalization expenses, and post-discharge care for up to 90 days. If a hospital fails to meet cost and quality targets, it is on the hook to repay CMS to cover at least part of that gap, explains a media release from Perelman School of Medicine at the University of Pennsylvania.

Per the study, of the 799 hospitals that participated in the CHR program in that year, 382 made their targets and received bonus payments, and 417 didn’t.

Navathe and colleagues looked for characteristics that distinguished the 382 hospitals that met their targets (“savings hospitals”) from those that didn’t. They found that the former were more likely to be large hospitals with more than 400 beds (24.0% versus 14.9%). The savings hospitals also handled a greater load of patients, averaging more Medicare-covered procedures (6,242 versus 4,362) during the prior year, and more joint-replacement procedures (217 versus 133). Savings hospitals, moreover, were far less likely than non-savings hospitals (2.1% versus 23.2%) to be defined by CMS as “low-volume” hospitals.

Savings hospitals were more likely to be non-profit (69.6% versus 53.4%) and major teaching hospitals (13.0% versus 7.3%), and were more likely to have an integrated post-acute care service (55.8% versus 40.0%), the release explains.

Savings hospitals’ costs per case before starting in the bundled payment program averaged $22,145, which was $1,003 lower than the non-savers’ baseline average when “risk-adjusting” for the different severities of cases.

Nearly all the savings hospitals were rated as delivering good (52.6%) or excellent (39.3%) care quality. Data on care quality for the non-savings hospitals were unavailable.

The researchers intend that their analysis will be useful in guiding not only CMS but also those on the health care organization side, the release continues.

“It’s important for doctors, health care organizations, and policymakers to understand how different hospitals fared in the first year of CJR, as this will lead to better policy and better results long term,” says study senior author Ezekiel J. Emanuel, MD, PhD, chair of Medical Ethics and Health Policy at Penn, in the release.

[Source(s): Perelman School of Medicine at the University of Pennsylvania, Newswise]