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Risk-Adjusted Cost Performance for 90-Day Total Knee Arthroplasty Episodes: Data and Methods for Comparing U.S.

Peter L Schilling¹, Jason He², Sarah Chen²

¹Department of Orthopaedic Surgery, University of California San Francisco, San Francisco, California.

The Journal of Bone and Joint Surgery. American Volume

|April 7, 2020

Summary

Total knee arthroplasty payments decreased before the CJR model due to reduced post-acute care and readmissions. Significant hospital cost performance variation persisted, highlighting the need for benchmarks.

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Area of Science:

Health Economics
Orthopedic Surgery
Healthcare Policy

Background:

Total knee arthroplasty (TKA) episode payments in the U.S. Medicare population exhibited variation prior to the Comprehensive Care for Joint Replacement (CJR) model implementation.
Characterizing this variation is crucial for establishing a baseline for evaluating new payment models.

Purpose of the Study:

To model and characterize the variation in total knee arthroplasty (TKA) episode payments within the U.S. Medicare population.
To establish a pre-Comprehensive Care for Joint Replacement (CJR) model baseline for TKA episode payments.
To assess hospital-level cost performance and identify variations across geographic regions.

Main Methods:

Analysis of Medicare Part A data (2014-2016) for 717,690 TKA episodes.
Hierarchical modeling to assess 90-day episode payments, accounting for patient, regional, and hospital factors.
Risk-adjusted hospital cost performance ranking and confidence interval construction to identify high and low performers.

Main Results:

Mean Medicare Part A TKA episode payments decreased from $18,665 to $16,978, driven by reduced post-acute care costs ($6,401 to $4,873).
Ninety-day TKA readmission rates declined significantly, from 7.2% to 5.8%.
Substantial variation in risk-adjusted episode payments, post-acute care utilization, and readmission rates persisted across regions and hospitals, with 13-31% of hospitals identified as low-performance outliers and 16-30% as high-performance outliers.

Conclusions:

Medicare Part A TKA episode payments decreased pre-CJR due to lower post-acute care utilization and hospital readmissions.
Significant variation in risk-adjusted hospital cost performance remains a key issue.
The study provides a baseline for evaluating alternative payment models and a methodology for hospital performance measurement against peers and national benchmarks.