Post-Acute Care Costs by Market Affect Bundled Payment Models

May 18, 2017 - A recent study in Medical Care found that post-acute care variations by healthcare market significantly impacted total episode costs in 30-day hip and knee replacement bundled payment models, suggesting financial strategies should focus on high-utilizers or expensive post-acute care settings.

Researchers compared Medicare bundled payment model results between 2012 and 2013 at healthcare organizations in the High-Value Healthcare Collaborative (HVHC) and similar organizations in the same market. Through a 2012 CMS Innovation Challenge award, the collaborative offers patient engagement resources to participants as well as measures, outcomes, and costs data.

Previous research revealed that bundled payment model results varied across HVHC members. Members organizations had significantly different adjusted per-capita utilization rates as well as total episode and post-acute reimbursements. Post-acute care reimbursements also varied three-fold for both types of arthroplasty studied.

The most recent study aimed to determine if differences in bundled payment model results within the collaborative stemmed from care delivery variations across geographic settings.

Using the same data for 26 member and 92 non-member hospitals in 15 healthcare markets, researchers uncovered that most variations in bundled payment model costs emanated from the healthcare market in which a hospital resided rather than HVHC membership status.

Mean acute care costs for hip and knee replacement episodes were relatively the same across the healthcare markets analyzed. HVHC-member hospitals incurred $19,184 in mean unadjusted acute care costs for hip replacement episodes, whereas non-member hospitals reported $19,472.

For knee replacements, HVHC-member hospitals had mean adjusted costs of $19,171 versus $19,279 at non-member hospitals.

However, post-acute care variations dramatically differed depending on the healthcare market.

For hip replacement episodes, post-acute care costs across all healthcare settings varied 4.8-fold from $3,501 to $14,697.

Post-acute care costs for knee replacement episodes varied 4.3-fold from $3,579 to $15,378.

Although the data showed some variations in post-acute care costs based on HVHC membership status.

Post-acute care cost variations between HVHC-member and non-member hospitals were $7,394 in absolute terms for hip replacement episodes and $3,965 in absolute terms for knee replacement episodes.

Additionally, researchers reported significant variations in the number of surgeries performed, patient characteristics, and length of stay among member and non-member hospitals. The study revealed the following:

• HVHC-member hospitals had hip replacement episode volumes between 28 and 706 over the two-year period compared to the non-member hospital range between 20 and 2,499 episodes

• For knee replacement episode volumes, HVHC-member hospitals reported between 101 and 1,131 episodes versus 41 to 4,408 at non-member hospitals

• HVHC-member hospitals treated more patients with lower prognostic comorbidity scores and shorter length of stays

• Patients treated at HVHC-member hospitals tended to reside further from the care setting than those treated at non-member hospitals

Despite differences across collaborative and non-member hospitals, an adjusted analysis showed that variations based on membership status were not statistically significant.

“The results of our regression analysis revealed that, after adjusting for patient age, sex, Medicaid eligibility status, race, distance to care, year of arthroplasty, and Charlson score, HVHC-member status was not associated with shorter lengths of stay, different complication rates, or lower total or post-acute care costs for hip or knee replacement,” the study stated.

Instead, researchers attributed bundled payment model differences to post-acute care variations by healthcare market.

“Our findings confirmed that much of the variability in total episode costs is attributable to differences in post-acute care costs,” they wrote. “Although, other factors, such as differences in patient needs, could explain our findings, it is possible that regional differences in practice patterns (found even within healthcare delivery systems) drove cost differentials.”

Post-acute care variations continue to challenge healthcare organizations implementing value-based reimbursement models, especially bundled payments. The episodic payment structure imposes financial risk on healthcare organizations beyond the acute visit, meaning organizations should coordinate with post-acute care providers to ensure high care quality and lower healthcare costs.

However, post-acute care quality and costs substantially differ by the facility. For example, top-performing skilled nursing facilities reported an average Medicare length of stay of fewer than 24 days, while low-performing facilities averaged over 34 days.

The length of stay difference represented a $4,000-per-admission cost variation.

To succeed in bundled payment models, researchers advised healthcare stakeholders to focus interventions on healthcare market variations.

“As patient expectations about care patterns within an episode of care may help drive utilization, it may be difficult to mitigate regional differences in post-acute care costs; however, financial strategies that target high-utilizers or expensive post-acute care settings might be used to accelerate the mitigation of such differences,” they concluded.