Early Lessons on Bundled Payment at an Academic Medical Center

Orthopaedic care is shifting to alternative payment models. We examined whether New York University Langone Medical Center achieved savings under the Centers for Medicare and Medicaid Services Bundled Payments for Care Improvement initiative.

This study was a difference-in-differences study of Medicare fee-for-service patients hospitalized from April 2011 to June 2012 and October 2013 to December 2014 for lower extremity joint arthroplasty, cardiac valve procedures, or spine surgery (intervention groups), or for congestive heart failure, major bowel procedures, medical peripheral vascular disorders, medical noninfectious orthopaedic care, or stroke (control group). We examined total episode costs and costs by service category.

We included 2,940 intervention episodes and 1,474 control episodes. Relative to the trend in the control group, lower extremity joint arthroplasty episodes achieved the greatest savings: adjusted average episode cost during the intervention period decreased by $3,017 (95% confidence interval [CI], -$6,066 to $31). For cardiac procedures, the adjusted average episode cost decreased by $2,999 (95% CI, -$8,103 to $2,105), and for spinal fusion, it increased by $8,291 (95% CI, $2,879 to $13,703). Savings were driven predominantly by shifting postdischarge care from inpatient rehabilitation facilities to home. Spinal fusion index admission costs increased because of changes in surgical technique.

Under bundled payment, New York University Langone Medical Center decreased total episode costs in patients undergoing lower extremity joint arthroplasty. For patients undergoing cardiac valve procedures, evidence of savings was not as strong, and for patients undergoing spinal fusion, total episode costs increased. For all three conditions, the proportion of patients referred to inpatient rehabilitation facilities upon discharge decreased. These changes were not associated with an increase in index hospital length of stay or readmission rate.

Opportunities for savings under bundled payment may be greater for lower extremity joint arthroplasty than for other conditions.