Managing total knee replacement under value-based payments

To evaluate opportunity gaps and set outcome goals in knee replacement (KR) between a primary care group taking financial risk for managing its patients and 6 fee-for-service (FFS) orthopedic groups that serve their patients.

The opportunity gap analysis was a cross-sectional evaluation of the outcomes of interest on a risk-adjusted basis using orthopedic groups, the primary care group's patients, and regional comparisons. The impact evaluation was a historical cohort comparison tracking outcomes of interest over the time frame of the intervention.

Using risk-adjusted Medicare data, we defined opportunity gaps in the following outcomes: density of KR surgery, site of KR surgery, postacute care placement, and complications.

Opportunity gap analysis demonstrated the following variation on a regional basis: a 2-fold difference in density of KR, a 3-fold difference in outpatient surgery, and a 2.5-fold difference in institutional postacute care placement. In the impact evaluation comparing 2019 with 2021, the primary care group's patients had reduced density of KR surgeries from 15.5 per 1000 to 13.0 per 1000, an increase in outpatient surgery from 31.0% to 81.6%, and a reduction in institutional postacute care utilization from 16.0% to 6.1%. Less pronounced trends were seen in the region for all Medicare FFS patients. These results were achieved with stable complication rates, which had an observed/expected ratio of 0.61 in 2019 and 0.63 in 2021.

We achieved alignment of incentives through use of performance information with specific goals and promise of referrals to value-based partners. This approach resulted in improved value to patients with no evidence of harm and is translatable to other specialty care and markets.