Episode of Care Payments in Total Joint Arthroplasty and Cost Minimization Strategies

Trends in Revenue, Cost, and Contribution Margin for Total Joint Arthroplasty 2011-2021

BACKGROUND

Regulatory change has created a growing demand to decrease the hospital costs associated with primary total joint arthroplasty (TJA). Concurrently, the removal of lower extremity TJA from the in-patient only list has affected hospital reimbursement. The purpose of this study is to investigate trends in hospital revenue versus costs in primary TJA.

METHODS

We retrospectively reviewed all patients who underwent primary TJA from June 2011 to May 2021 at our institution. Patient demographics, revenue, total cost, direct cost, and contribution margin were collected. Changes over time as a percentage of 2011 numbers were analyzed. Linear regression analysis was used to determine overall trend significance and develop projection models.

RESULTS

Total knee arthroplasty (TKA) insured by government-managed/Medicaid (GMM) plans showed a significant upward trend (P = .013) in total costs. Direct costs of TKA across all insurance providers (P = .001 and P < .001) and total hip arthroplasty (THA) for Medicare (P = .009) and GMM (P = .001) plans demonstrated significant upward trends. Despite this, 2011-2021 modeling found no significant change in contribution margin for TKA and THA covered under all insurance plans. However, models based on 2018-2021 financial data demonstrated a significant downward trend in contribution margin across Medicare (P < .001) and GMM (P < .001) insurers for both TKA and THA.

CONCLUSION

Physician-led innovation in cost-saving strategies has maintained contribution margin over the past decade. However, the increase in direct costs seen over the past few years could lead to negative contribution margins over time, if further efficiency and cost-saving measures are not developed.

LEVEL III EVIDENCE

Retrospective Cohort Study.

Impact of Diabetes on 90-Day Episodes of Care After Elective Total Joint Arthroplasty Among Medicare Beneficiaries

BACKGROUND

In an effort to improve quality and reduce costs, reimbursement for total knee arthroplasty (TKA) and total hip arthroplasty (THA) in the United States is being based on the value of care provided, with adjustments for some qualifying comorbidities, including diabetes in its most severe form and excluding many diabetes codes. The aims of this study were to examine the effects of diabetes on elective TKA or THA complications and readmission risks among Medicare beneficiaries.

METHODS

Complication (n = 521,230) and readmission (n = 515,691) data were extracted from Medicare files in 2013 and 2014. Diabetes status (no diabetes, controlled-uncomplicated diabetes, controlled-complicated diabetes, and uncontrolled diabetes) was identified with ICD-9 (International Classification of Diseases, 9th Revision) codes. TKA or THA complications and readmission odds based on diabetes status were estimated using logistic regression and adjusted for sociodemographic and clinical characteristics, including comorbidities.

RESULTS

Compared with no diabetes, the odds ratio (OR) of TKA complications was significantly higher for uncontrolled diabetes (1.29, 95% confidence interval [CI] = 1.06 to 1.57). The OR of THA complications was significantly higher for controlled-complicated diabetes (1.45, 95% CI = 1.17 to 1.80). The OR of readmission was significantly higher for all diabetes groups (1.21 to 1.48 for TKA, 1.20 to 1.70 for THA).

CONCLUSIONS

Readmission odds were higher in all diabetes categories. The uncontrolled-diabetes group had the greatest TKA readmission and complication odds. The controlled-complicated diabetes group had the greatest THA readmission and complication odds. The findings suggest that including diabetes and associated systemic complications in cost adjustments in alternative payment models for arthroplasty should be considered.

LEVEL OF EVIDENCE

Prognostic Level III. See Instructions for Authors for a complete description of levels of evidence.

Decompression With or Without Fusion for Lumbar Stenosis: A Cost Minimization Analysis

STUDY DESIGN

Retrospective database review.

OBJECTIVE

Compare 1-year episode of care costs between single-level decompression and decompression plus fusion for lumbar stenosis.

SUMMARY OF BACKGROUND DATA

Lumbar stenosis is the most common indication for surgery in patients over 65. Medicare direct hospital costs for lumbar surgery reached $1.65 billion in 2007. Despite stenosis being a common indication for surgery, there is debate as to the preferred surgical treatment. Cost-minimization analysis is a framework that identifies potential cost savings between treatment options that have similar outcomes. We performed a cost-minimization analysis of decompression versus decompression with fusion for lumbar stenosis from the payer perspective.

METHODS

An administrative claims database of privately insured patients (Humana) identified patients who underwent decompression (n = 5349) or decompression with fusion (n = 8540) for lumbar stenosis with and without spondylolisthesis and compared overall costs. All patients were identified and costs identified for a 1-year period. Complication rates and costs were described using summary statistics.

RESULTS

Mean treatment costs at 1 year after surgery were higher for patients who underwent decompression and fusion compared to patients who underwent decompression alone ($20,892 for fusion vs. $6329 for decompression; P < 0.001). Facility costs (P < 0.001), surgeon costs (P < 0.001), and physical therapy costs (P < 0.001) were higher in the fusion group. Cost differences related to infection or durotomy reached significance (P < 0.04). No difference in cost was identified for supplies.

CONCLUSION

Decompression had significantly lower costs for the treatment of lumbar stenosis, including treatment for postoperative complications. If cost minimization is the primary goal, decompression is favored for surgical treatment of lumbar stenosis. Other factors including shared decision-making directed toward patient's values, patient-reported outcomes, and preferences should also be recognized as drivers of healthcare decisions.

LEVEL OF EVIDENCE

3.

Short-term functional recovery after total joint arthroplasty is unaffected by bundled payment participation

Background

Bundled payment models for lower extremity total joint arthroplasty (TJA) aim to improve value by decreasing costs via efficient care pathways. It is unclear how such models affect patient-centered outcomes such as functional recovery. We aimed to determine whether participation in bundled payment for TJA negatively affects patients’ functional recovery.

Methods

All patients, regardless of payer, undergoing elective TJA between July 2014 and December 2016 were identified retrospectively and categorized into prebundle (n = 680) and postbundle (n = 1216) cohorts. Mixed-effects linear regression and Wald postests were used to test for differences in patients’ functional recovery during the hospital period and over 12 months after TJA between cohorts. We also used multivariate regression to test for differences in hospital length of stay (LOS) and postacute care (PAC) facility use between cohorts.

Results

Compared with the prebundle cohort, patients in the postbundle cohort demonstrated a small and nonmeaningful difference in the trajectory of functional recovery in the hospital [χ²(3) = 31.3, P < .01] and no difference in the 12 months after TJA [χ²(3) = 3.9, P = .28]. They had a 0.4-day shorter hospital LOS (95% confidence interval: −0.5, −0.3) and decreased odds for PAC facility use (adjusted odds ratio = 0.3; 95% confidence interval: 0.2, 0.4).

Conclusions

Participation in bundled payment for TJA was not associated with significant changes in patients’ functional recovery, an important patient-centered outcome. For the postbundle cohort, hospital LOS and PAC facility use were decreased, consistent with previous studies describing cost-saving strategies in bundled payment. These findings support the need for an ongoing study of the long-term sustainability of these value-based payment models.

Trends in Medicare Reimbursement for Orthopedic Procedures: 2000 to 2016

Understanding trends in reimbursement is critical to the financial sustainability of orthopedic practices. Little research has examined physician fee trends over time for orthopedic procedures. This study evaluated trends in Medicare reimbursements for orthopedic surgical procedures. The Medicare Physician Fee Schedule was examined for Current Procedural Terminology code values for the most common orthopedic and nonorthopedic procedures between 2000 and 2016. Prices were adjusted for inflation to 2016-dollar values. To assess mean growth rate for each procedure and subspecialty, compound annual growth rates were calculated. Year-to-year dollar amount changes were calculated for each procedure and subspecialty. Reimbursement trends for individual procedures and across subspecialties were compared. Between 2000 and 2016, annual reimbursements decreased for all orthopedic procedures examined except removal of orthopedic implant. The orthopedic procedures with the greatest mean annual decreases in reimbursement were shoulder arthroscopy/decompression, total knee replacement, and total hip replacement. The orthopedic procedures with the least annual reimbursement decreases were carpal tunnel release and repair of ankle fracture. Rate of Medicare procedure reimbursement change varied between subspecialties. Trauma had the smallest decrease in annual change compared with spine, sports, and hand. Annual reimbursement decreased at a significantly greater rate for adult reconstruction procedures than for any of the other subspecialties. These findings indicate that reimbursement for procedures has steadily decreased, with the most rapid decrease seen in adult reconstruction. [Orthopedics. 2018; 41(2):95-102.].

Bundled Payments in Total Joint Replacement: Keeping Our Care Affordable and High in Quality

PURPOSE OF REVIEW

The purpose of this review was to evaluate the literature regarding bundle payment reimbursement models for total joint arthroplasty (TJA).

RECENT FINDINGS

From an economic standpoint, TJA are cost-effective, but they represent a substantial expense to the Centers for Medicare & Medicaid Services (CMS). Historically, fee-for-service payment models resulted in highly variable cost and quality. CMS introduced Bundled Payments for Care Improvement (BPCI) in 2012 and subsequently the Comprehensive Care for Joint Replacement (CJR) reimbursement model in 2016 to improve the value of TJA from the perspectives of both CMS and patients, by improving quality via cost control. Early results of bundled payments are promising, but preserving access to care for patients with high comorbidity burdens and those requiring more complex care is a lingering concern. Hospitals, regardless of current participation in bundled payments, should develop care pathways for TJA to maximize efficiency and patient safety.

Cost-minimization Analysis of the Management of Acute Achilles Tendon Rupture

BACKGROUND

Outcomes of nonsurgical management of acute Achilles tendon rupture have been demonstrated to be noninferior to those of surgical management. We performed a cost-minimization analysis of surgical and nonsurgical management of acute Achilles tendon rupture.

METHODS

We used a claims database to identify patients who underwent surgical (n = 1,979) and nonsurgical (n = 3,065) management of acute Achilles tendon rupture and compared overall costs of treatment (surgical procedure, follow-up care, physical therapy, and management of complications). Complication rates were also calculated. Patients were followed for 1 year after injury.

RESULTS

Average treatment costs in the year after initial diagnosis were higher for patients who underwent initial surgical treatment than for patients who underwent nonsurgical treatment ($4,292 for surgical treatment versus $2,432 for nonsurgical treatment; P < 0.001). However, surgical treatment required fewer office visits (4.52 versus 10.98; P < 0.001) and less spending on physical therapy ($595 versus $928; P < 0.001). Rates of rerupture requiring subsequent treatment (2.1% versus 2.4%; P = 0.34) and additional costs ($2,950 versus $2,515; P = 0.34) were not significantly different regardless whether initial treatment was surgical or nonsurgical. In both cohorts, management of complications contributed to approximately 5% of the total cost.

CONCLUSION

From the payer's perspective, the overall costs of nonsurgical management of acute Achilles tendon rupture were significantly lower than the overall costs of surgical management.

LEVEL OF EVIDENCE

III, Economic Decision Analysis.

Incidence, Risk Factors, and Clinical Implications of Pneumonia Following Total Hip and Knee Arthroplasty

BACKGROUND

The purpose of this study is to determine the incidence, risk factors, and clinical implications of pneumonia following total joint arthroplasty (TJA).

METHODS

The American College of Surgeons National Surgical Quality Improvement Program was used to conduct a retrospective cohort study of patients undergoing TJA. Independent risk factors for the development of pneumonia within 30 days of TJA were identified using multivariate regression. Mortality and readmission rates were compared between patients who did and did not develop pneumonia. Multivariate regression was used to adjust for all demographic, comorbidity, and procedural characteristics.

RESULTS

In total, 171,200 patients met inclusion criteria, of whom 66,493 (38.8%) underwent THA and 104,707 (61.2%) underwent TKA. Of the 171,200 patients, 590 developed pneumonia, yielding a rate of 0.34% (95% confidence interval = 0.32%-0.37%). Independent risk factors for pneumonia were chronic obstructive pulmonary disease, diabetes mellitus, greater age (most notably ≥80 years), dyspnea on exertion, dependent functional status, lower body mass index, hypertension, current smoker status, and male sex. The subset of patients who developed pneumonia following discharge had a higher readmission rate (82.1% vs 3.4%, adjusted relative risk [RR] = 16.6, P < .001) and a higher mortality rate (3.7% vs 0.1%, adjusted RR = 19.4, P < .001). Among 124 total mortalities, 22 (17.7%) occurred in patients who had developed pneumonia.

CONCLUSION

Pneumonia is a serious complication following TJA that occurs in approximately 1 in 300 patients. Approximately 4 in 5 patients who develop pneumonia are subsequently readmitted, and approximately 1 in 25 die. Given the serious implications of this complication, evidence-based pneumonia prevention programs including oral hygiene with chlorhexidine, sitting upright for meals, elevation of the head of the bed to at least 30°, aggressive incentive spirometry, and early ambulation should be considered for patients at greatest risk.