Early Experiences With Bundled Payments for Care Improvement for Major Bowel Surgery.

BACKGROUND: Bundled Payment (BP) models are becoming more common in surgery. We share our early experiences with Bundled Payments for Care Improvement for major bowel surgery. METHODS: Patients undergoing major bowel surgery between January and October 2021 were identified using Medicare Severity-Diagnosis Related Group (MS-DRG) codes. Major drivers of cost in a BP model are reported and compared to the Fee-For-Service (FFS) payment model. RESULTS: A total of 202 cases (173 FFS vs 29 BP) were analyzed. The mean BP cost per Clinical Episode was $28,340. Eleven patients (38%) in the BP model had costs greater than the Target Price. The drivers of cost in the BP model were 59% acute care facility, 17% physician services, 9% post-acute care facilities, 8% other, and 7% readmissions. Clinical Episode of care costs varied considerably by MS-DRG case complexity. Robotic surgery increased costs by 35% (mean increase $3724, P < .01). The 90-day readmission rate was 17% for a mean cost of $11,332 per readmission. Three patients (10%) were discharged to a skilled nursing facility at an average cost of $11,009, while fifteen patients (52%) received home health services at a mean cost of $2947. Acute care facility costs were similar in the BP vs FFS groups (mean difference $1333, P = .22). CONCLUSIONS: Patients undergoing major bowel surgery are a heterogeneous population. Physicians are ideally positioned to deliver high-value, patient-centered care and are crucial to the success of a BP model. The post-acute care setting is a key component of improving efficiency and quality of care.

Analysis of 10-year trends in Medicare Physician Fee Schedule payments in surgery.

BACKGROUND: Medicare expenditures have steadily increased over the decades, and yet Medicare Physician Fee Schedule payments for individual services have declined. We examine trends in Medicare Physician Fee Schedule payments for office visits, inpatient visits, and surgical procedures. METHODS: The Medicare Physician Fee Schedule Look-Up Tool was queried for payment data for office visits, inpatient visits, and surgical procedures between 2013 and 2023. All data were adjusted for inflation using the Consumer Price Index. Trends in payments were calculated for 5 common procedures in each surgical specialty. Trends in aggregate national health expenditures were compared to Medicare Physician Fee Schedule payments for physician services from 2013 to 2021. RESULTS: The Consumer Price Index increased by 29.3% from 2013 to 2023. Inflation-adjusted per-visit Medicare Physician Fee Schedule payments decreased by 12.2% for outpatient office visits, 19.1% for inpatient visits, and 22.8% for surgical procedures from 2013 to 2023. This varied by surgical specialty: vascular (-25.8%), endocrine (-22.0%), general surgery (-27.0%), thoracic (-19.2%), surgical oncology (-22.1%), breast (-22.4%), urology (-2.2%), neurosurgery (-22.8%), obstetrics/gynecology (-19.9%), and orthopedics (-24.7%). Adjusted for inflation, national health expenditures increased by 33.9% for physician services from 2013 to 2021. In comparison, Medicare Physician Fee Schedule payments over the same time period 2013 to 2021 increased by 1.3% for outpatient office visits but decreased by 10.6% for inpatient visits and 9.8% for surgical procedures. CONCLUSION: Controlling rising national health expenditures is important and necessary, but 10 years of declining Medicare Physician Fee Schedule payments on a per-procedure basis in surgery would suggest that this strategy alone may not achieve those goals and could ultimately threaten access to quality surgical care. Surgeons must advocate for permanent payment reforms.

Are we ready for bundled payments for major bowel surgery?

BACKGROUND: The Centers for Medicare & Medicaid Services (CMS) recently announced a new voluntary episode payment model for major bowel surgery. The purpose of this study was to examine the financial impact of bundled payments for major bowel surgery. METHODS: An institutional database was retrospectively queried for all patients who underwent major bowel surgery between July 2016 and June 2018. Procedures were categorized using MS-DRG coding: MS-DRG 329 (with MCC, major complications and comorbidity), MS-DRG 330 (with CC, complications and comorbidity), and MS-DRG 331 (without CC/MCC). RESULTS: A total of 745 patients underwent 798 procedures, with mean age 62.1 years and BMI 29.2 kg/m2. The median LOS was 4.0 days, with 12.5% of patients being discharged to a post-acute care facility for an average of 38.5 days. The mean hospital cost was $18,525. The mean payment to a post-acute care facility was $423 per day. The 90-day readmission rate was 8.6% at an average cost of $12,859 per readmission. Patients with major complications and comorbidity (MS-DRG 329) had higher CMS Hierarchical Condition Categories scores, longer LOS, higher costs, more required home health services or post-acute care facilities, and had higher 90-day readmissions. In a fee-for-service model, hospital reimbursements resulted in a negative margin of - 8.2% for MS-DRG 329, - 2.6% for MS-DRG 330, but a positive margin of 2.8% for MS-DRG 331. In a bundled payment model, the hospital would incur a loss of - 13.1%, - 11.1%, and - 1.9% for MS-DRG 329, 330, and 331, respectively. CONCLUSIONS: Patients undergoing major bowel surgery are often a heterogeneous population with varied pre-existing comorbid conditions who require a high level of complex care and utilize greater hospital resources. Further study is needed to identify areas of cost containment without compromising the overall quality of care.

Bundled Payments for Appendectomy: a Model of Financial Implications to Institutions.

BACKGROUND: Bundled payments are increasingly becoming common in surgery, yet little is known regarding their potential impact on reimbursements for patients presenting with acute appendicitis. This study examines the financial impact of bundled payments for acute appendicitis. METHODS: This was a retrospective review of all open or laparoscopic appendectomies between July 2014 and June 2017. Patients that were not candidates for surgery were not included in this review. RESULTS: Of the total 741 patients, 42.1% were diagnosed with complicated acute appendicitis. The median length of stay was 1 day (range, 0 to 21 days). The median hospital cost was $4183 (range, $2075 to $71,023). The 90-day readmission rate was 3.2%, with a mean cost of $5025 per readmission (range, $1595 to $10,795). Length of stay, hospital costs, and 90-day readmissions were significantly higher for complicated versus uncomplicated acute appendicitis. In our current fee-for-service model, hospital reimbursements resulted in margins of - 4.0% to 24.6% depending on the severity of disease. If we assume that bundled payments do not reimburse for readmissions, we estimate that our hospital would incur losses of - 5.7% for patients with acute appendicitis with localized peritonitis and - 20.2% for patients with acute appendicitis with generalized peritonitis. CONCLUSIONS: As bundled payments become more common, hospitals may incur significant losses for acute appendicitis under a model that does not reflect the heterogeneous nature of patients requiring appendectomies. These losses can range up to - 20.2% for complicated cases. Improving clinical outcomes by reducing readmissions may mitigate some of these anticipated losses.

Delayed operating room availability significantly impacts the total hospital costs of an urgent surgical procedure.

BACKGROUND: Financial pressures drive efforts to optimize hospital resource use, but inefficiencies occur in systems as volume nears total capacity. We examined how operating room use impacts efficiency and costs of treating an urgent surgical condition. METHODS: A retrospective review of patients who underwent appendectomy for appendicitis at a single hospital from 2004 to 2009 was performed. Patient demographics, operative characteristics, pathologic diagnoses, hospital time intervals, and costs were analyzed. Gap time (time from case booking to surgery start) was used to measure operating room availability. RESULTS: In all, 453 patients met inclusion criteria. Longer gap times were associated with increased hospital-based costs. A gap time of greater than 2 h was associated with 39% higher costs to the hospital, which could not be accounted for by any single cost center. The patients in the 2 groups had similar medical and surgical complexity, as well as similar clinical outcomes and hospital duration of stay. Gap times were greatest during peak elective operating room activity (7 am to 11 pm); however, the total hospital costs were not related to the time of day of the case. CONCLUSION: A short delay in operating room availability for urgent cases is associated with significantly increased total hospital costs. Our data suggest this finding is attributable to inefficient care when the operating room volume nears total capacity.