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Original Investigation
September 4, 2018

Association of Hospital Participation in a Medicare Bundled Payment Program With Volume and Case Mix of Lower Extremity Joint Replacement Episodes

Author Affiliations
  • 1Corporal Michael J. Crescenz VA Medical Center, Philadelphia, Pennsylania
  • 2Department of Medical Ethics and Health Policy, Perelman School of Medicine, University of Pennsylvania, Philadelphia
  • 3Leonard Davis Institute of Health Economics, University of Pennsylvania, Philadelphia
  • 4Department of Medicine, University of Washington School of Medicine, Seattle
  • 5The Wharton School of Business, University of Pennsylvania, Philadelphia
  • 6Division of General Internal Medicine, Perelman School of Medicine, University of Pennsylvania, Philadelphia
JAMA. 2018;320(9):901-910. doi:10.1001/jama.2018.12345
Key Points

Question  Is hospital participation in Medicare’s Bundled Payments for Care Improvement (BPCI) program for lower extremity joint replacement (LEJR) associated with changes in overall procedural volume, case mix, or both?

Findings  In this observational study involving 1 717 243 Medicare beneficiaries who underwent LEJR, hospital participation in the BPCI initiative was not associated with changes in overall market-level LEJR volume (adjusted difference-in-differences estimate, 0.32%) and largely was not associated with changes in hospital case mix, with only 1 of 20 case-mix characteristics associated with a lower likelihood of undergoing LEJR at a BPCI-participating hospital.

Meaning  The lack of associations between Bundled Payments for Care Improvement program participation and changes in volume or the majority of patient case-mix factors may provide reassurance about 2 potential unintended effects of voluntary bundled payments for lower extremity joint replacement.

Abstract

Importance  Medicare’s Bundled Payments for Care Improvement (BPCI) initiative for lower extremity joint replacement (LEJR) surgery has been associated with a reduction in episode spending and stable-to-improved quality. However, BPCI may create unintended effects by prompting participating hospitals to increase the overall volume of episodes paid for by Medicare, which could potentially eliminate program-related savings or prompt them to shift case mix to lower-risk patients.

Objective  To evaluate whether hospital BPCI participation for LEJR was associated with changes in overall volume and case mix.

Design, Setting, and Participants  Observational study using Medicare claims data and a difference-in-differences method to compare 131 markets (hospital referral regions) with at least 1 BPCI participant hospital (n = 322) and 175 markets with no participating hospitals (n = 1340), accounting for 580 043 Medicare beneficiaries treated before (January 2011-September 2013) and 462 161 after (October 2013-December 2015) establishing the BPCI initiative. Hospital-level case-mix changes were assessed by comparing 265 participating hospitals with a 1:1 propensity-matched set of nonparticipating hospitals from non-BPCI markets.

Exposures  Hospital BPCI participation.

Main Outcomes and Measures  Changes in market-level LEJR volume in the before vs after BPCI periods and changes in hospital-level case mix based on demographic, socioeconomic, clinical, and utilization factors.

Results  Among the 1 717 243 Medicare beneficiaries who underwent LEJR (mean age, 75 years; 64% women; and 95% nonblack race/ethnicity), BPCI participation was not significantly associated with a change in overall market-level volume. The mean quarterly market volume in non-BPCI markets increased 3.8% from 3.8 episodes per 1000 beneficiaries before BPCI to 3.9 episodes per 1000 beneficiaries after BPCI was launched. For BPCI markets, the mean quarterly market volume increased 4.4% from 3.6 episodes per 1000 beneficiaries before BPCI to 3.8 episodes per 1000 beneficiaries after BPCI was launched. The adjusted difference-in-differences estimate between the market types was 0.32% (95% CI, −0.06% to 0.69%; P = .10). Among 20 demographic, socioeconomic, clinical, and utilization factors, BPCI participation was associated with differential changes in hospital-level case mix for only 1 factor, prior skilled nursing facility use (adjusted difference-in-differences estimate, −0.53%; 95% CI, −0.96% to −0.10%; P = .01) in BPCI vs non-BPCI markets.

Conclusions and Relevance  In this observational study of Medicare beneficiaries who underwent LEJR, hospital participation in Bundled Payments for Care Improvement was not associated with changes in market-level lower extremity joint replacement volume and largely was not associated with changes in hospital case mix. These findings may provide reassurance regarding 2 potential unintended effects associated with bundled payments for LEJR.

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