Spending On Care After Surgery Driven By Choice Of Care Settings Instead Of Intensity Of Services

Abstract

The rising popularity of episode-based payment models for surgery underscores the need to better understand the drivers of variability in spending on postacute care. Examining postacute care spending for fee-for-service Medicare beneficiaries after three common surgical procedures in the period 2009-12, we found that it varied widely between hospitals in the lowest versus highest spending quintiles for postacute care, with differences of 129 percent for total hip replacement, 103 percent for coronary artery bypass grafting (CABG), and 82 percent for colectomy. Wide variation persisted after we adjusted for the intensity of postacute care. However, the variation diminished considerably after we adjusted instead for postacute care setting (home health care, outpatient rehabilitation, skilled nursing facility, or inpatient rehabilitation facility): It decreased to 16 percent for hip replacement, 4 percent for CABG, and 21 percent for colectomy. Health systems seeking to improve surgical episode efficiency should collaborate with patients to choose the highest-value postacute care setting.

Keywords: Cost of Health Care; Health Policy; Health Services; Hospitals; Quality Of Care.

EXHIBIT 2

Components of average total PAC payment, by hospital-level, risk-adjusted, total 90-day PAC quintiles for THR, CABG, and colectomy SOURCE/NOTES: SOURCE – Author’s analysis of Medicare data. NOTES - Hospitals are placed into quintiles based on their condition-specific, price-standardized total PAC spending. This spending is then displayed as a total of four components: outpatient rehabilitation (OP Rehab), home health (HH), skilled nursing facility (SNF) and inpatient rehabilitation facility (IRF). [Table: see text]