In Texas Health System, Bundled Payments Saved More Than $5K per Joint Replacement

Ryan Black

“If such approaches are successfully implemented on a broad scale with similar results, the magnitude of savings would be substantial.”

Medicare expenditures for joint replacement have increased by about 5% in recent years, but bundled payments could be a way to reverse that trend. In the Baptist Health System (BHS) in San Antonio, Texas, participation in a series of CMS bundle programs cut the costs by more than 20% over the course of 7 years.

A report in JAMA Internal Medicine followed BHS’s Medicare reimbursement totals from July 2008 to June 2015. During that time, the system participated in a pair of distinct initiatives: The Acute Care Episodes (ACE) model from 2009 until 2012 and the Bundled Payments for Care Improvement (BPCI) program. The study also considered the preceding and intervening periods that surrounded BHS’s participation.

Nearly 4,000 patient cases of major joint replacement of the lower extremity (MJRLE) were documented in the work, and average savings were over $5,000. In 3,738 cases without complications, costs fell from an average of $26,785 per episode to $21,208; in the 204 patients who experienced complications the average dropped from $38,537 to $33,216.

Outcomes are hard to define, but other patient metrics were promising. The percentage of patients requiring a prolonged length of stay fell steadily from the first year of formal participation in ACE through the last studied year in BPCI, from nearly 25% to less than 10%. The number of patients requiring emergency room visits or readmissions wavered little, both hovering in the mid-single digits throughout.

A bulk of the savings, the authors note, came from a widespread reduction in the cost of orthopedic implants (by $1,920) over time, and BHS dramatically outpaced the national average on that front (30% compared to 15.5%). But much of the later savings came in postacute care: Spending on services like inpatient rehabilitation and skilled nursing facilities fell by $2443. The BPCI program included postacute care in the bundle, while ACE only accounted for physician professional fees and hospital facility fees.

The models were voluntary, and the study’s lead author, University of Pennsylvania’s Amol Navathe, MD, PhD, told Healthcare Analytics News in a previous interview that urban hospitals (like BHS) are most inclined to join them. The success in this 1 system, however, could serve other hospitals considering participation.

“This study can help guide other organizations in care redesign,” Navathe and his colleagues wrote. “If such approaches are successfully implemented on a broad scale with similar results, the magnitude of savings that could accrue to Medicare—and possibly private payers—would be substantial.”

CMS has wavered slightly in its pursuit of bundled payment programs. The Comprehensive Care for Joint Replacement (CJR) model, launched in 2016 and based on BPCI, made bundled payments mandatory in 67 urban areas across the country, and a corresponding program for cardiac interventions was also launched. Under a new administration, the mandatory aspect of CJR has been scrapped in many areas, while other mandatory bundled payment programs being cancelled entirely.

Bundled payments still have vocal support, however. In response to the cancellation of cardiologic bundled payment programs, a pair of cardiologists wrote a recent commentary (also in JAMA) calling the decision, “a step in the wrong direction for pursuing a healthcare system that focuses on value and not volume."