Context Payers, policy makers, and professional organizations have launched a variety of initiatives aimed at improving hospital quality with inpatient surgery. Despite their obvious benefits for patients, the likely impact of these efforts on healthcare costs is uncertain. In this context, we examined relationships between hospital outcomes and expenditures in the US Medicare population. Patients and methods Using the 100% national claims files, we identified all US hospitals performing coronary artery bypass (CABG), total hip replacement (THR), abdominal aortic aneurysm (AAA) repair, or colectomy procedures between 2005 and 2007. For each procedure, we ranked hospitals by their risk- and reliability-adjusted outcomes (complication and mortality rates, respectively) and sorted them into quintiles. We then examined relationships between hospital outcomes and risk-adjusted, 30-day episode payments. Results There was a strong, positive correlation between hospital complication rates and episode payments for all procedures. With CABG, for example, hospitals in the highest complication quintile had average payments that were $5,353 per patient higher than at hospitals in the lowest quintile ($46,024 vs. $40,671, p<0.001). Payments to hospitals with high complication rates were also higher for colectomy ($2,719 per patient), AAA repair ($5,279) and hip replacement ($2,436). Higher episode payments at lower quality hospitals were attributable in large part to higher payments for the index hospitalization, though 30-day readmissions, physician services, and post-discharge ancillary care also contributed. Despite the strong association between hospital complication rates and payments, hospital mortality was not associated with expenditures. Conclusions Medicare payments around episodes of inpatient surgery are substantially higher at hospitals with high complications. These findings suggest that local, regional, and national efforts aimed at improving surgical quality may ultimately reduce costs as well as improve outcomes.

Payers are considering bundled payments for inpatient surgery, combining provider reimbursements into a single payment for the entire episode. We found that current Medicare episode payments for certain inpatient procedures varied by 49–130 percent across hospitals sorted into five payment groups. Intentional differences in payments attributable to such factors as geography or illness severity explained much of this variation. But after adjustment for these differences, per episode payments to the highest-cost hospitals were higher than those to the lowest-cost facilities by up to $2,549 for colectomy and $7,759 for back surgery. Postdischarge care accounted for a large proportion of the variation in payments, as did discretionary physician services, which may be driven in turn by variations in surgeons’ practice styles. Our study suggests that bundled payments could yield sizable savings for payers, although the effect on individual institutions will vary because hospitals that were relatively expensive for one procedure were often relatively inexpensive for others. More broadly, our data suggest that many hospitals have considerable room to improve their cost efficiency for inpatient surgery and should look for patterns of excess utilization, particularly among surgical specialties, other inpatient specialist consultations, and various types of postdischarge care.

Background Aiming to align provider incentives toward improving quality and efficiency, the Center for Medicare and Medicaid Services is considering broader bundling of hospital and physician payments around episodes of inpatient surgery. Decisions about bundled payments would benefit from better information about how payments are currently distributed among providers of different perioperative services and how payments vary across hospitals. Study design Using the national Medicare database, we identified patients undergoing one of 4 inpatient procedures in 2005 (coronary artery bypass, hip fracture repair, back surgery, and colectomy). For each procedure, price-standardized Medicare payments from the date of admission for the index procedure to 30 days post discharge were assessed and categorized by payment type (hospital, physician, and post-acute care) and sub-type. Results Average total payments for inpatient surgery episodes varied from $26,515 for back surgery to $45,358 for CABG. Hospital payments accounted for the largest share of total payments (60-80%, depending on procedure), followed by physician payments (13-19%) and post-acute care (7-27%). Overall episode payments for hospitals in the lowest and highest payment quartiles differed by $16,668 for CABG, $18,762 for back surgery, $10,615 for hip fracture repair, and $12,988 for colectomy. Payments to hospitals accounted for the largest share of variation in payments. Among specific types of payments, those associated with 30-day readmissions, and post-acute care varied most substantially across hospitals. Conclusions Fully bundled payments for inpatient surgical episodes would need to be dispersed among many different types of providers. Hospital payments—both overall and for specific services—vary considerably and might be reduced by incentives for hospitals and physicians to improve quality and efficiency.

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Importance Much of the enthusiasm for accountable care organizations is fueled by evidence that integrated delivery systems (IDSs) perform better on measures of quality and cost in the ambulatory care setting; however, the benefits of this model are less clear for complex hospital-based care. Objective To assess whether existing IDSs are associated with improved quality and lower costs for episodes of inpatient surgery. Design, Setting, and Patients We used national Medicare data (January 1, 2005, through November 30, 2007) to compare the quality and cost of inpatient surgery among patients undergoing coronary artery bypass grafting, hip replacement, back surgery, or colectomy in IDS-affiliated hospitals compared with those treated in a matched group of non–IDS-affiliated centers. Main Outcome Measures Operative mortality, postoperative complications, readmissions, and total and component surgical episode costs. Results Patients treated in IDS hospitals differed according to several characteristics, including race, admission acuity, and comorbidity. For each of the 4 procedures, adjusted rates for operative mortality, complications, and readmissions were similar for patients treated in IDS-affiliated compared with non–IDS-affiliated hospitals, with the exception that those treated in IDS-affiliated hospitals had fewer readmissions after colectomy (12.6% vs 13.5%, P=.03). Adjusted total episode payments for hip replacement were 4% lower in IDS-affiliated hospitals (P < .001), with this difference explained mainly by lower expenditures for postdischarge care. Episode payments differed by 1% or less for the remaining procedures. Conclusions The benefits of the IDSs observed for ambulatory care may not extend to inpatient surgery. Thus, improvements in the quality and cost-efficiency of hospital-based care may require adjuncts to current ACO programs.

BACKGROUND: Evidence-based guidelines recommend limited perioperative diagnostic imaging for new breast cancer diagnoses. For patients aged >65 years, conventional imaging use (mammography, plain radiographs, and ultrasound) has remained stable, whereas advanced imaging (computed tomography [CT], nuclear medicine scans [positron emission tomography/bone scans], and magnetic resonance imaging [MRI]) use has increased. In this study, the authors evaluated traditional and advanced imaging use among younger patients (aged 65 years) undergoing breast cancer surgery. INTRODUCTIONCancer care accounts for a substantial and increasing component of medical expenditure in the United States. 1 Breast cancer, the most commonly diagnosed malignancy among women in the United States, is associated with high initial and ongoing costs compared with other tumor types, and the use of advanced medical technology is a major contributing component to these costs. 1,2 Data from the Surveillance, Epidemiology, and End Results (SEER)/Medicare linked database demonstrate that, for patients aged >65 years, the use of conventional imaging (mammography, plain radiographs, and ultrasound [US]) associated with a breast cancer diagnosis has remained stable, whereas the use of advanced imaging, such as computed tomography (CT) scanning, positron emission tomography (PET) scanning, and magnetic resonance imaging (MRI) has increased. 3 Although this research describes compelling trends in imaging use for older Americans with breast cancer, 50% of women who receive treatment for breast cancer are aged <65 years at diagnosis. Population-level studies evaluating diagnostic imaging use in younger population are lacking and further study is warranted, because these women may have different preferences and patterns of use for diagnostic imaging. [4][5][6] Clinical practice guidelines for breast cancer management recommend limited diagnostic imaging evaluation in conjunction with initial therapy. The objective of traditional diagnostic imaging examinations is to estimate the extent of disease and identify subclinical disease in the affected and contralateral breast to guide local therapy. Advanced imaging technologies such as CT and PET scanning are used to detect metastatic disease, but they are only recommended for patients with higher stage disease (stage IIIA and above). 7 Breast imaging with MRI may have utility in select situations, such as screening high-risk populations in which a highly sensitive test may be desirable, 8 but its use for surgical planning in early stage breast cancer is controversial due to its high false-positive rate. 6,9 To understand patterns of diagnostic imaging use in younger women with breast cancer, we evaluated the use of traditional and advanced imaging for women undergoing breast cancer surgery in a commercial insurance database over a 4-year period.

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