Published 4/1/2015
Peter Pollack

Bundled Payments Could Impact Higher Risk Patients

Study data argue for addressing risk-stratification in bundled care systems

As the healthcare system transitions to a bundled payments model, the question arises: Will patients with more complex conditions or comorbidities be able to access the care they need, because their costs will be greater and their readmission rates will be higher?” asked L. Scott Levin, MD, FACS. “Is there a way to address this situation within the payment system by providing additional compensation for those who care for such patients?”

Dr. Levin’s paper—“How will financial incentives to provide total hip arthroplasty (THA) for more complex patients change with bundled payments?”—was presented at the AAOS Annual Meeting.

“Our population is aging, and health systems and physicians have historically been responsible for the health of any patient who comes to them,” he continued. “Comorbidities such as obesity, cardiovascular disease, diabetes, and so on increase the complexity of total joint replacement. Our study looked at patients who have higher comorbidities and a more complex case mix index. It’s no surprise that, due to their comorbidities, such patients have higher rates of complications and readmissions, yet we as providers are going to be judged not on how many times we admit a patient to the hospital after surgery, but on how many times we don’t.”

The researchers reviewed financial data for 558 Medicare-eligible patients aged 65 years or older who underwent primary unilateral THA at a five-hospital urban academic center during a 24-month period. They calculated expected Medicare reimbursement for each patient based on the appropriate Medicare Severity–Diagnosis Related Group (MS-DRG) weight, and compared it to contribution margin and profit under a hypothetical, “flat-rate,” bundled payment reimbursement system.

They estimated that THA patients with a comorbidity/complication modifier attached to their MS-DRG weight are $2,787 less profitable overall than their less complex counterparts. However, in a “flat-rate” bundled payment program, these relatively complex patients would be $11,150 less profitable than less complex THA patients—an $8,363 relative decrease in profit compared to the current system.

Dr. Levin argued that a true “flat rate” bundled payment system could reduce access to health care for patients who are deemed higher risk and therefore present hospitals with a greater financial challenge.

“This study told us what we already knew,” explained Dr. Levin, “yet it hasn’t changed our approach to patient care. But being armed with these data will help align us better with our health system. Instead of saying, ‘I think sicker patients cost us more,’ we now have objective information based on 2 years of data collection, and we can substantiate the differential to our system.

“We need to work with the U.S. Centers for Medicare & Medicaid Services and have a roundtable discussion with orthopaedic surgeons who can substantiate the additional work, the additional visits, and the higher complication rates seen with higher risk patients even in the best of hands. Rather than adopting a flat rate system, we need to risk-stratify patients and develop a bundled payment scale based on morbidities. That way, the practitioner and the health system won’t be driven by economics, but by the desire to care for patients.”

Dr. Levin’s coauthors are R. Carter Clement, BSE; Michael M. Kheir, BS; Peter B. Derman, MD, MBA; David N. Flynn, MD, MBA; Rebecca M. Speck; and Lee A. Fleisher, MD. One or more of the authors reported potential conflicts of interest; for complete information, visit www.aaos.org/disclosure

Peter Pollack is electronic content specialist for AAOS Now. He can be reached at ppollack@aaos.org