Association of Hospital Participation in a Medicare Bundled Payment Program With Volume and Case Mix of Lower Extremity Joint Replacement Episodes

Abstract

Importance: Medicare's Bundled Payments for Care Improvement (BPCI) initiative for lower extremity joint replacement (LEJR) surgery has been associated with a reduction in episode spending and stable-to-improved quality. However, BPCI may create unintended effects by prompting participating hospitals to increase the overall volume of episodes paid for by Medicare, which could potentially eliminate program-related savings or prompt them to shift case mix to lower-risk patients.

Objective: To evaluate whether hospital BPCI participation for LEJR was associated with changes in overall volume and case mix.

Design, setting, and participants: Observational study using Medicare claims data and a difference-in-differences method to compare 131 markets (hospital referral regions) with at least 1 BPCI participant hospital (n = 322) and 175 markets with no participating hospitals (n = 1340), accounting for 580 043 Medicare beneficiaries treated before (January 2011-September 2013) and 462 161 after (October 2013-December 2015) establishing the BPCI initiative. Hospital-level case-mix changes were assessed by comparing 265 participating hospitals with a 1:1 propensity-matched set of nonparticipating hospitals from non-BPCI markets.

Exposures: Hospital BPCI participation.

Main outcomes and measures: Changes in market-level LEJR volume in the before vs after BPCI periods and changes in hospital-level case mix based on demographic, socioeconomic, clinical, and utilization factors.

Results: Among the 1 717 243 Medicare beneficiaries who underwent LEJR (mean age, 75 years; 64% women; and 95% nonblack race/ethnicity), BPCI participation was not significantly associated with a change in overall market-level volume. The mean quarterly market volume in non-BPCI markets increased 3.8% from 3.8 episodes per 1000 beneficiaries before BPCI to 3.9 episodes per 1000 beneficiaries after BPCI was launched. For BPCI markets, the mean quarterly market volume increased 4.4% from 3.6 episodes per 1000 beneficiaries before BPCI to 3.8 episodes per 1000 beneficiaries after BPCI was launched. The adjusted difference-in-differences estimate between the market types was 0.32% (95% CI, -0.06% to 0.69%; P = .10). Among 20 demographic, socioeconomic, clinical, and utilization factors, BPCI participation was associated with differential changes in hospital-level case mix for only 1 factor, prior skilled nursing facility use (adjusted difference-in-differences estimate, -0.53%; 95% CI, -0.96% to -0.10%; P = .01) in BPCI vs non-BPCI markets.

Conclusions and relevance: In this observational study of Medicare beneficiaries who underwent LEJR, hospital participation in Bundled Payments for Care Improvement was not associated with changes in market-level lower extremity joint replacement volume and largely was not associated with changes in hospital case mix. These findings may provide reassurance regarding 2 potential unintended effects associated with bundled payments for LEJR.

Figure 1.. Mean Share of Lower Extremity Joint Replacement Surgery Episodes in Bundled Payments for Care Improvement Markets Performed by Participating Hospitals

Abbreviations: BPCI, Bundled Payments for Care Improvement program by Medicare. This graph plots the mean share of 964 939 total beneficiaries who underwent LEJR episodes performed by 322 hospitals participating in BPCI in 131 BPCI markets. The numerator represents the number of LEJR episodes performed by hospitals participating in BPCI in a quarter and the denominator is the total number of LEJR episodes performed in the quarter. The error bars indicate the 25% and 75% percentiles rather than standard deviation due to skewness, and the mean share rather than median is shown because less than half of markets have a nonzero share for many quarters. Prior to 2013 quarter 4 there was no BPCI participation.

Figure 2.. Changes in Lower Extremity Joint Replacement Surgery Market Volume per 1000 Beneficiaries From Bundled Payments for Care Improvement (BPCI) Participation in BPCI Markets vs Non-BPCI Markets, 2011-2015

The total number of beneficiaries in the sample who underwent lower extremity joint replacement (LEJR) from 2011-2015 was 1 717 243 across the 175 non-BPCI markets comprising 1558 non-BPCI hospitals and 131 BPCI markets comprising 1955 hospitals (of which 322 participated in BPCI for LEJR). The LEJR corresponds to Medicare severity-–diagnosis related group 469 and 470, major joint replacement or reattachment of lower extremity with and without major complications or comorbidities. We plotted estimated (1) LEJR volume per 1000 beneficiaries in non-BPCI markets; (2) LEJR volume per 1000 beneficiaries in BPCI markets if BPCI did not exist, which reflects secular trends in volume plus the influence of BPCI on episode spending but without any potential changes on overall LEJR volume; and (3) LEJR volume per 1000 beneficiaries in BPCI markets observed under BPCI, which reflects observed LEJR volume in BPCI that is composed of secular trends in volume plus the influence of BPCI on procedural volume (eMethods 1 in Supplement 1). The lack of difference in LEJR volume between LEJR volume in BPCI markets if BPCI did not exist and LEJR volume in BPCI markets observed under BPCI scenarios is illustrated (estimate of 0.3%, P = .10).

Figure 3.. Changes in Case Mix at BPCI-Participant Hospitals vs Matched Non-BPCI Hospitals Before and After BPCI

There were 212 922 beneficiaries who underwent lower extremity joint replacement (LEJR) surgery at the 265 matched Bundled Payments for Care Improvement (BPCI) hospitals and 212 951 beneficiaries at the 265 matched non-BPCI hospitals. The association between BPCI participation and the change in probability of a beneficiary with each characteristic receiving LEJR surgery between hospital types and between periods is estimated with a separate difference-in-differences linear probability regression model (ordinary least squares). The estimate for each patient characteristic indicates the difference in the probability comparing the before and after changes at BPCI vs non-BPCI hospitals. The propensity matching model is described in detail in eMethods 2 in the Supplement. ^aRace was broken out as black vs others because of existing disparities in access to LEJR among black patients specifically. Other race/ethnicity includes white, Asian, Hispanic, North American Native, and other as defined by Medicare. ^bDual eligible indicates eligibility for both the Medicare and Medicaid programs as an indicator of low socioeconomic status. ^cThe variables low-median income level zip code and low-education level zip code are binary variables indicating that a beneficiary resides in a zip code with a median income in the bottom quartile of median zip code income nationally or with a proportion of residents with less than a high school education that is in the top quartile among zip codes nationally, respectively. ^dSee the Methods section for definition of complexity. ^eEvidence of chronic complications.