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BMC Health Serv Res. 2019 Nov 21;19(1):877. doi: 10.1186/s12913-019-4729-2.

Variation in expenditure for common, high cost surgical procedures in a working age population: implications for reimbursement reform.

Author information

1
Centre for Surgery and Public Health, Brigham and Women's Hospital, 1620 Tremont Street, 1 Brigham Circle, Boston, MA, 02120, USA.
2
F. Edward Hebert School of Medicine, Uniformed Services University of the Health Sciences, 4301 Jones Bridge Road, Bethesda, MD, 20184, USA. Tracey.koehlmoos@usuhs.edu.
3
Heller Graduate School, Brandeis University, 415 South St., Waltham, MA, 02354, USA.
4
Perelman School of Medicine, University of Pennsylvania, Philadelphia, PA, USA.
5
Division of General Internal Medicine and Center for Surgery and Public Health, Brigham and Women's Hospital and Harvard Medical School, Boston, USA.
6
Centre for Surgery and Public Health, Brigham and Women's Hospital, Boston, USA.
7
Department of Surgery, F. Edward Hebert School of Medicine, Uniformed Services University of the Health Sciences, 4301 Jones Bridge Road, Bethesda, MD, 20814, USA.
8
Henry M Jackson Foundation for the Advancement of Military Medicine, Inc., Bethesda, MD, USA.
9
Department of Orthopaedic Surgery Center for Surgery and Public health Brigham and Women's Hospital Harvard Medical School, Boston, USA.
10
(Health Policy) Harvard Medical School, Center for Surgery and Public Health, Boston, USA.

Abstract

BACKGROUND:

In the move toward value-based care, bundled payments are believed to reduce waste and improve coordination. Some commercial insurers have addressed this through the use of bundled payment, the provision of one fee for all care associated with a given index procedure. This system was pioneered by Medicare, using a population generally over 65 years of age, and despite its adoption by mainstream insurers, little is known of bundled payments' ability to reduce variation or cost in a working-age population. This study uses a universally-insured, nationally-representative population of adults aged 18-65 to examine the effect of bundled payments for five high-cost surgical procedures which are known to vary widely in Medicare reimbursement: hip replacement, knee replacement, coronary artery bypass grafting (CABG), lumbar spinal fusion, and colectomy.

METHODS:

Five procedures conducted on adults aged 18-65 were identified from the TRICARE database from 2011 to 2014. A 90-day period from index procedure was used to determine episodes of associated post-acute care. Data was sorted by Zip code into hospital referral regions (HRR). Payments were determined from TRICARE reimbursement records, they were subsequently price standardized and adjusted for patient and surgical characteristics. Variation was assessed by stratifying the HRR into quintiles by spending for each index procedure.

RESULTS:

After adjusting for case mix, significant inter-quintile variation was observed for all procedures, with knee replacement showing the greatest variation in both index surgery (107%) and total cost of care (75%). Readmission was a driver of variation for colectomy and CABG, with absolute cost variation of $17,257 and $13,289 respectively. Other post-acute care spending was low overall (≤$1606, for CABG).

CONCLUSIONS:

This study demonstrates significant regional variation in total spending for these procedures, but much lower spending for post-acute care than previously demonstrated by similar procedures in Medicare. Targeting post-acute care spending, a common approach taken by providers in bundled payment arrangements with Medicare, may be less fruitful in working aged populations.

KEYWORDS:

Bundled payments; CABG; Colectomy; Lumbar spinal fusion; Military medicine; TRICARE; Total hip replacement; Total knee replacement; Value-based care

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