What Drives Variation in Episode-of-care Payments for Primary TKA? An Analysis of Medicare Administrative Data

Abstract

Background Episode-of-care payments are defined as a single lump-sum payment for all services associated with a single medical event or surgery and are designed to incentivize efficiency and integration among providers and healthcare systems. A TKA is considered an exemplar for an episode-of-care payment model by many policymakers, but data describing variation payments between hospitals for TKA are extremely limited. Questions/purposes We asked: (1) How much variation is there between hospitals in episode-of-care payments for primary TKA? (2) Is variation in payment explained by differences in hospital structural characteristics such as teaching status or geographic location, patient factors (age, sex, ethnicity, comorbidities), and discharge disposition during the postoperative period (home versus skilled nursing facility)? (3) After accounting for those factors, what proportion of the observed variation remains unexplained? Methods We used Medicare administrative data to identify fee-for-service beneficiaries who underwent a primary elective TKA in 2009. After excluding low-volume hospitals, we created longitudinal records for all patients undergoing TKAs in eligible hospitals encompassing virtually all payments by Medicare for a 120-day window around the TKA (30 days before to 90 days after). We examined payments for the preoperative, perioperative, and postdischarge periods based on the hospital where the TKA was performed. Confounding variables were controlled for using multivariate analyses to determine whetherThe institution of one of the authors (PC) has received, during the study period, funding from the National Institutes of Health (K24 AR062133 and R01 AG033035). All ICMJE Conflict of Interest Forms for authors and Clinical Orthopaedics and Related Research 1 editors and board members are on file with the publication and can be viewed on request. Each author certifies that the institutional review board at the University of Iowa approved the human protocol for this investigation, that all investigations were conducted in conformity with ethical principles of research, and that informed consent for participation in the study was obtained. This work was performed at the University of Iowa, Iowa City, IA. Clinical Orthopaedics and Related Research ®A Publication of The Association of Bone and Joint Surgeons® differences in hospital payments could be explained by differences in patient demographics, comorbidity, or hospital structural factors. Results There was considerable variation in payments across hospitals. Median (interquartile range) hospital preoperative, perioperative, postdischarge, and 120-day payments for patients who did not experience a complication were USD 623 (USD 516-768), USD 13,119 (USD 12,668), USD 8020 (USD 6403-9933), and USD 21,870 (USD 19,041), respectively. Variation cannot be explained by differences in hospital structure. Median (interquartile range) episode payments were greater for hospitals in the Northeast (USD 26,291 [22,323

Cost Analysis of Medicare Patients with Varying Complexities Who Underwent Total Knee Arthroplasty

“…10 Findings from this current study is consistent with previously published literature on costs in TKA. [11][12][13][14][15][16][17][18] Cram et al 17 studied 167,186 patients from Medicare administrative databases who underwent primary TKAs in 2009 and found that mean Medicare payments for EOC increased from $19,633 for patients with 2 or fewer comorbidities to $27,578 for patients with 5 or more comorbidities (p < 0.0001). Li et al 12 also investigated Medicare payments for patients who underwent TKA in 2009.…”

Identifying high‐cost episodes in lower extremity joint replacement

“…4 Significant variation in spending for surgical procedures exists across US hospitals. 5 Variability in cost is explained by the post acute episode of care, 6,7 type of joint implant, 8 geographic region, 9 and type of medical center. 9 Age, [9][10][11][12][13] disease severity, 6,10,14-16 socioeconomic status and social determinants of health, 9,[17][18][19] and medical comorbidities are associated with increased LEJR costs.…”

“…5 Variability in cost is explained by the post acute episode of care, 6,7 type of joint implant, 8 geographic region, 9 and type of medical center. 9 Age, [9][10][11][12][13] disease severity, 6,10,14-16 socioeconomic status and social determinants of health, 9,[17][18][19] and medical comorbidities are associated with increased LEJR costs. 9,11,[20][21][22][23][24][25] In an attempt to reduce cost variability, the Centers for Medicare & Medicaid Services (CMS) issued the Comprehensive Care for Joint Replacement (CJR) 26 rule mandating bundled payment for LEJR in 67 geographic areas.…”

What Factors are Associated With 90-day Episode-of-care Payments for Younger Patients With Total Joint Arthroplasty?

“…Total joint arthroplasty (TJA) has been identified as a procedure with substantial variations in inpatient and postacute care costs [3,10,28,33,39]. Consequently, several private and public payers have been testing alternative payment models in an effort to reduce costs, improve value, and emphasize quality in patients' transition from surgery to recovery [14,16,40].…”

“…As such, various bundled payments for TJA are increasing among private payers, such as insurance providers and employers [14,16,40]. Consequently, hospitals considering participating in such initiatives and involved in the TJA care cycle have sought to evaluate their specific service-component cost differences across each TJA episode of care and factors associated with episode payments [5,10,17].…”