Hospital performance in a statewide commercial insurer episode-based incentive program.

OBJECTIVES: To evaluate hospital performance and behaviors in the first 2 years of a statewide commercial insurance episode-based incentive pay-for-performance (P4P) program. STUDY DESIGN: Retrospective cohort study of price- and risk-standardized episode-of-care spending from the Michigan Value Collaborative claims data registry. METHODS: Changes in hospital-level episode spending between baseline and performance years were estimated during the program years (PYs) 2018 and 2019. The distribution and hospital characteristics associated with P4P points earned were described for both PYs. A difference-in-differences (DID) analysis compared changes in patient-level episode spending associated with program implementation. RESULTS: Hospital-level episode spending for all conditions declined significantly from the baseline year to the performance year in PY 2018 (-$671; 95% CI, -$1113 to -$230) but was not significantly different for PY 2019 ($177; 95% CI, -$412 to $767). Hospitals earned a mean (SD) total of 6.3 (3.1) of 10 points in PY 2018 and 4.5 (2.9) of 10 points in PY 2019, with few significant differences in P4P points across hospital characteristics. The highest-scoring hospitals were more likely to have changes in case mix index and decreases in spending across the entire episode of care compared with the lowest-scoring hospitals. DID analysis revealed no significant changes in patient-level episode spending associated with program implementation. CONCLUSIONS: There was little evidence for overall reductions in spending associated with the program, but the performance of the hospitals that achieved greatest savings and incentives provides insights into the ongoing design of hospital P4P metrics.

Assessment of Patterns of Atherectomy Use.

Background Atherectomy has become the fastest growing catheter-based peripheral vascular intervention performed in the United States, and overuse has been linked to increased reimbursement, but the patterns of use have not been well characterized. Methods and Results We used Blue Cross Blue Shield of Michigan Preferred Provider Organization and Medicare fee-for-service professional claims data from the Michigan Value Collaborative for patients undergoing office-based laboratory atherectomy in 2019 to calculate provider-specific rates of atherectomy use, reimbursement, number of vessels treated, and number of atherectomies per patient. We also calculated the rate that each provider converted a new patient visit to an endovascular procedure within 90 days. Correlations between parameters were assessed with simple linear regression. Providers completing ≥20 office-based laboratory atherectomies and ≥20 new patient evaluations during the study period were included. A total of 59 providers performing 4060 office-based laboratory atherectomies were included. Median professional reimbursement per procedure was $4671.56 (interquartile range [IQR], $2403.09-$7723.19) from Blue Cross Blue Shield of Michigan and $14 854.49 (IQR, $9414.80-$18 816.33) from Medicare, whereas total professional reimbursement from both payers ranged from $2452 to $6 880 402 per year. Median 90-day conversion rate was 5.0% (IQR, 2.5%-10.0%), whereas the median provider-level average number of vessels treated per patient was 1.20 (IQR, 1.13-1.31) and the median provider-level average number of treatments per patient was 1.38 (IQR, 1.26-1.63). Total annual reimbursement for each provider was directly correlated with new patient-procedure conversion rate (R2=0.47; P<0.001), mean number of vessels treated per patient (R2=0.31; P<0.001), and mean number of treatments per patient (R2=0.33; P<0.001). Conclusions A minority of providers perform most procedures and are reimbursed substantially more per procedure compared with most providers. Procedural conversion rate, number of vessels, and number of treatments per patient represent potential policy levers to curb overuse.

High Socioeconomic Deprivation and Coronary Artery Bypass Grafting Outcomes: Insights From Michigan.

BACKGROUND: Cardiovascular outcomes are worse among individuals from areas with limited socioeconomic resources. This study evaluated the relationship between high socioeconomic deprivation and isolated coronary artery bypass grafting (CABG) outcomes. METHODS: We linked statewide Society of Thoracic Surgeons Adult Cardiac Surgery Database data to Medicare Fee-for-Service records for 10 423 Michigan residents undergoing isolated CABG between January 2012 and December 2018. High socioeconomic deprivation was defined as residing in the highest decile of the ZIP Code-level area deprivation index (ADI). Multivariable logistic regression estimated the relationship between top ADI decile and major morbidity, in-hospital mortality, and operative mortality. Survival analyses evaluated long-term survival comparing patients in the top vs not in the top ADI decile. RESULTS: A total of 1036 patients were in the top decile of ADI (ADI >82.4), and they were more likely to be female, Black, and have a higher predicted risk of mortality. Patients in the top ADI decile had significantly higher rates of major morbidity (17.4% vs 11.4%; adjusted odds ratio, 1.26; 95% CI, 1.04-1.54; P = .021) and in-hospital mortality (3.2% vs 1.3%, adjusted odds ratio, 1.84; 95% CI, 1.18-2.86, P = .007) but not operative mortality. The adjusted hazard of mortality was 16% higher for patients residing in the top ADI decile (95% CI, 1.01-1.33; P = .032). CONCLUSIONS: Isolated CABG patients residing in the highest areas of socioeconomic deprivation differed with respect to demographic and clinical characteristics and experienced worse short- and long-term outcomes compared with those not in the top ADI decile.

Hospital and Operator Variation in Cardiac Rehabilitation Referral and Participation After Percutaneous Coronary Intervention: Insights From Blue Cross Blue Shield of Michigan Cardiovascular Consortium.

BACKGROUND: Despite its established benefit and strong endorsement in international guidelines, cardiac rehabilitation (CR) use remains low. Identifying determinants of CR referral and use may help develop targeted policies and quality improvement efforts. We evaluated the variation in CR referral and use across percutaneous coronary intervention (PCI) hospitals and operators. METHODS: We performed a retrospective observational cohort study of all patients who underwent PCI at 48 nonfederal Michigan hospitals between January 1, 2012 and March 31, 2018 and who had their PCI clinical registry record linked to administrative claims data. The primary outcomes included in-hospital CR referral and CR participation, defined as at least one outpatient CR visit within 90 days of discharge. Bayesian hierarchical regression models were fit to evaluate the association between PCI hospital and operator with CR referral and use after adjusting for patient characteristics. RESULTS: Among 54 217 patients who underwent PCI, 76.3% received an in-hospital referral for CR, and 27.1% attended CR within 90 days after discharge. There was significant hospital and operator level variation in in-hospital CR referral with median odds ratios of 3.88 (95% credible interval [CI], 3.06-5.42) and 1.64 (95% CI, 1.55-1.75), respectively, and in CR participation with median odds ratios of 1.83 (95% CI, 1.63-2.15) and 1.40 (95% CI, 1.35-1.47), respectively. In-hospital CR referral was significantly associated with an increased likelihood of CR participation (adjusted odds ratio, 1.75 [95% CI, 1.52-2.01]), and this association varied by treating PCI hospital (odds ratio range, 0.92-3.75) and operator (odds ratio range, 1.26-2.82). CONCLUSIONS: In-hospital CR referral and 90-day CR use after PCI varied significantly by hospital and operator. The association of in-hospital CR referral with downstream CR use also varied across hospitals and less so across operators suggesting that specific hospitals and operators may more effectively translate CR referrals into downstream use. Understanding the factors that explain this variation will be critical to developing strategies to improve CR participation overall.

Clinical and Economic Outcomes of Enhanced Recovery Dissemination in Michigan Hospitals.

OBJECTIVE: To evaluate real-world effects of enhanced recovery protocol (ERP) dissemination on clinical and economic outcomes after colectomy. SUMMARY BACKGROUND DATA: Hospitals aiming to accelerate discharge and reduce spending after surgery are increasingly adopting perioperative ERPs. Despite their efficacy in specialty institutions, most studies have lacked adequate control groups and diverse hospital settings and have considered only in-hospital costs. There remain concerns that accelerated discharge might incur unintended consequences. METHODS: Retrospective, population-based cohort including patients in 72 hospitals in the Michigan Surgical Quality Collaborative clinical registry (N = 13,611) and/or Michigan Value Collaborative claims registry (N = 14,800) who underwent elective colectomy, 2012 to 2018. Marginal effects of ERP on clinical outcomes and risk-adjusted, price-standardized 90-day episode payments were evaluated using mixed-effects models to account for secular trends and hospital performance unrelated to ERP. RESULTS: In 24 ERP hospitals, patients Post-ERP had significantly shorter length of stay than those Pre-ERP (5.1 vs 6.5 days, P < 0.001), lower incidence of complications (14.6% vs 16.9%, P < 0.001) and readmissions (10.4% vs 11.3%, P = 0.02), and lower episode payments ($28,550 vs $31,192, P < 0.001) and postacute care ($3,384 vs $3,909, P < 0.001). In mixed-effects adjusted analyses, these effects were significantly attenuated-ERP was associated with a marginal length of stay reduction of 0.4 days (95% confidence interval 0.2-0.6 days, P = 0.001), and no significant difference in complications, readmissions, or overall spending. CONCLUSIONS: ERPs are associated with small reduction in postoperative length of hospitalization after colectomy, without unwanted increases in readmission or postacute care spending. The real-world effects across a variety of hospitals may be smaller than observed in early-adopting specialty centers.

Effect of statewide reduction in extended care facility use after joint replacement on hospital readmission.

BACKGROUND: Extended care facility use is a primary driver of variation in hospitalization-associated health care payments and is increasingly a focus for savings under episode-based payment. However, concerns remain that extended care facility limits could incur rising readmissions, emergency department use, or other costs. We analyzed the effects of a statewide value improvement initiative to decrease extended care facility use after lower extremity arthroplasty on extended care facility use, readmission, emergency department use, and payments. METHODS: We performed a retrospective cohort study using complete claims from the Michigan Value Collaborative for patients undergoing lower extremity joint replacement. We compared the change in extended care facility use before (2012-2013) and after (2016-2017) the aforementioned statewide initiative with 90-day postacute care, readmission, and emergency department rates and payments using t tests. RESULTS: Of the patients included, 68,537 underwent total knee arthroplasty; 27,131 underwent total hip arthroplasty. Statewide, extended care facility use and postacute care payments decreased (extended care facility: 27.5% before vs 18.1% after, payments: $4,999 vs $3,832, P < .0001) without increased readmission rates (8.0% vs 7.6%, P = .10) or payments ($1,087 vs $1,026, P = .14). Emergency department use increased (7.8% vs 8.9%, P < .0001). Per hospital, there was no association between extended care facility use change and readmission rate change (r = 0.05). Hospital change in extended care facility use ranged from +2.3% (no extended care facility decrease group) to -16.6% (large extended care facility decrease group) and was associated with lower total episode payments without differences in change in readmission rate/payments or emergency department use. CONCLUSION: Despite decreased use of extended care facilities, there was no compensatory increase in readmission rate or payments. Reducing excess use of extended care facilities after joint replacement may be an important opportunity for savings in episode-based reimbursement.

Drivers of variation in 90-day episode payments after mechanical thrombectomy for acute ischemic stroke.

BACKGROUND: Although mechanical thrombectomy for acute ischemic stroke from a large vessel occlusion is now the standard of care, little is known about cost variations in stroke patients following thrombectomy and factors that influence these variations. METHODS: We evaluated claims data for 2016 to 2018 for thrombectomy-performing hospitals within Michigan through a registry that includes detailed episode payment information for both Medicare and privately insured patients. We aimed to analyze price-standardized and risk-adjusted 90-day episode payments in patients who underwent thrombectomy. Hospitals were grouped into three payment terciles for comparison. Statistical analysis was carried out using unpaired t-test, Chi-square, and ANOVA tests. RESULTS: 1076 thrombectomy cases treated at 16 centers were analyzed. The average 90-day episode payment by hospital ranged from $53 046 to $81,767, with a mean of $65 357. A $20 467 difference (35.1%) existed between the high and low payment hospital terciles (P<0.0001), highlighting a significant payment variation across hospital terciles. The primary drivers of payment variation were related to post-discharge care which accounted for 38% of the payment variation (P=0.0058, inter-tercile range $11,977-$19,703) and readmissions accounting for 26% (P=0.016, inter-tercile range $3,315-$7,992). This was followed by professional payments representing 20% of the variation (P<0.0001, inter-tercile range $7525-$9,922), while index hospitalization payment was responsible for only 16% of the 90-day episode payment variation (P=0.10, inter-tercile range $35,432-$41,099). CONCLUSIONS: There is a wide variation in 90-day episode payments for patients undergoing mechanical thrombectomy across centers. The main drivers of payment variation are related to differences in post-discharge care and readmissions.

Determinants of Value in Coronary Artery Bypass Grafting.

Background Over 180 000 coronary artery bypass grafting (CABG) procedures are performed annually, accounting for $7 to $10 billion in episode expenditures. Assessing tradeoffs between spending and quality contributing to value during 90-day episodes has not been conducted but is essential for success in bundled reimbursement models. We, therefore, identified determinants of variability in hospital 90-day episode value for CABG. Methods Medicare and private payor admissions for isolated CABG from 2014 to 2016 were retrospectively linked to clinical registry data for 33 nonfederal hospitals in Michigan. Hospital composite risk-adjusted complication rates (≥1 National Quality Forum-endorsed, Society of Thoracic Surgeons measure: deep sternal wound infection, renal failure, prolonged ventilation >24 hours, stroke, re-exploration, and operative mortality) and 90-day risk-adjusted, price-standardized episode payments were used to categorize hospitals by value by defining the intersection between complications and spending. Results Among 2573 total patients, those at low- versus high-value hospitals had a higher percentage of prolonged length of stay >14 days (9.3% versus 2.4%, P=0.006), prolonged ventilation (17.6% versus 4.8%, P<0.001), and operative mortality (4.8% versus 0.6%, P=0.001). Mean total episode payments were $51 509 at low-compared with $45 526 at high-value hospitals (P<0.001), driven by higher readmission ($3675 versus $2177, P=0.005), professional ($7462 versus $6090, P<0.001), postacute care ($7315 versus $5947, P=0.031), and index hospitalization payments ($33 474 versus $30 800, P<0.001). Among patients not experiencing a complication or 30-day readmission (1923/2573, 74.7%), low-value hospitals had higher inpatient evaluation and management payments ($1405 versus $752, P<0.001) and higher utilization of inpatient rehabilitation (7% versus 2%, P<0.001), but lower utilization of home health (66% versus 73%, P=0.016) and emergency department services (13% versus 17%, P=0.034). Conclusions To succeed in emerging bundled reimbursement programs for CABG, hospitals and physicians should identify strategies to minimize complications while optimizing inpatient evaluation and management spending and use of inpatient rehabilitation, home health, and emergency department services.

Sources of Hospital Variation in Postacute Care Spending After Cardiac Surgery.

BACKGROUND: Postacute care is a major driver of cardiac surgical episode spending, but the sources of variation in spending have not been explored. The objective of this study was to identify sources of variation in postacute care spending within 90-days of discharge following coronary artery bypass grafting (CABG) and aortic valve replacement (AVR) and the relationship between postacute care spending and other postdischarge utilization. METHODS AND RESULTS: A retrospective analysis was conducted of public and private administrative claims for Michigan residents insured by Medicare fee-for-service and Blue Cross Blue Shield of Michigan/Blue Care Network commercial and Medicare Advantage plans undergoing CABG (n=11 208) or AVR (n=6122) in 33 nonfederal acute care Michigan hospitals between January 1, 2015 and December 31, 2018. Postacute care use was present in 9662 (86.2%) CABG episodes and 4242 (69.3%) AVR episodes, with respective mean (SD) 90-day spending of $4398±$6124 and $3465±$5759. Across hospitals, mean postacute care spending ranged from $3280 to $8186 for CABG and $2246 to $7710 for AVR. Inpatient rehabilitation and skilled nursing facility care accounted for over 80% of the variation spending between low and high postacute care spending hospitals. At the hospital-level, postacute care spending was modestly correlated across procedures and payers. Spending associated with readmissions, emergency department visits, and outpatient facility care was significantly different between low and high postacute care spending hospitals in CABG and AVR episodes. CONCLUSIONS: There was wide hospital variation in postacute care spending after cardiac surgery, which was primarily driven by differential use and intensity in facility-based postacute care. Optimizing facility-based postacute care after cardiac surgery offers unique opportunities to reduce potentially unwarranted care variation.

Spending On Postacute Care After Hospitalization In Commercial Insurance And Medicare Around Age Sixty-Five.

Postacute care costs are the primary determinant of episode spending around hospitalization. Yet there is little evidence that greater spending on postacute care improves readmission rates or functional recovery. Recent Medicare payment reform evaluations have suggested that postacute care spending is responsive to episode-based incentives. However, it remains unknown whether Medicare payment policies are responsible for excess postacute care spending, compared with that of commercial payers. In a population-based, statewide collaborative of Michigan hospitals, we used regression discontinuity design among propensity-weighted, age-adjusted cohorts to compare postacute care spending between patients with commercial insurance and those with Medicare around age sixty-five. Spending was 68-230 percent greater among fee-for-service Medicare beneficiaries than among similar commercially insured people across varied medical and surgical conditions. Despite greater spending, there were no differences in readmission rates. These findings suggest that postacute care utilization is highly sensitive to payer influence, and there may be an opportunity for additional savings in Medicare without sacrificing quality.

Drivers of Variation in 90-Day Episode Payments After Percutaneous Coronary Intervention.

BACKGROUND: Percutaneous coronary intervention (PCI) is a common and expensive procedure that has become a target for bundled payment initiatives. We described the magnitude and determinants of variation in 90-day PCI episode payments across a diverse array of patients and hospitals. METHODS AND RESULTS: We linked clinical registry data from PCIs performed at 33 Michigan hospitals to 90-day episodes of care constructed using Medicare fee-for-service and commercial insurance claims from January 2012 to October 2016. Payments were price standardized and risk adjusted using clinical and administrative variables in an observed-over-expected framework. Hospitals were stratified into quartiles based on average episode payments. Payment components between the highest and the lowest quartiles were compared with identified drivers of variation (ie, index hospitalization/procedure, readmissions, postacute care, and professional fees). Among 40 925 90-day PCI episodes, the average risk-adjusted 90-day episode payment by hospital ranged between $22 154 and $27 205 with a median of $24 696 (interquartile range, $24 190-$25 643). Hospitals in the lowest and the highest quartiles had average episode payments of $23 744 and $26 504, respectively (difference, $2760). Readmission payments were the primary driver of this variation (46.2%), followed by postacute care (22.6%). Readmissions remained the primary driver of variation in key subgroups, including inpatient and outpatient PCI, as well as PCI for acute myocardial infarction and nonacute myocardial infarction indications. CONCLUSIONS: Substantial hospital-level variation exists in 90-day PCI episode payments. Over half the variation between high- and low-payment hospitals was related to care after the index procedure, primarily because of readmissions and postacute care. Hospitals and policymakers should consider targeting these components when developing initiatives to reduce PCI-related spending.

Transcatheter Versus Surgical Aortic Valve Replacement Episode Payments and Relationship to Case Volume.

BACKGROUND: Transcatheter aortic valve replacement (TAVR) has increased in volume as an alternative to surgical aortic valve replacement (SAVR). Comparisons of total episode expenditures, although largely ignored thus far, will be key to the value proposition for payers. METHODS: We evaluated 6,359 Blue Cross Blue Shield of Michigan and Medicare fee-for-service beneficiaries undergoing TAVR (17 hospitals, n = 1,655) or SAVR (33 hospitals, n = 4,704) in Michigan between 2012 and 2016. Payments through 90 post-discharge days between TAVR and SAVR were price-standardized and risk-adjusted. Centers were divided into terciles of procedural volume separately for TAVR and SAVR, and payments were compared between lowest and highest terciles. RESULTS: Payments (± SD) were higher for TAVR than SAVR ($69,388 ± $22,259 versus $66,683 ± $27,377, p < 0.001), while mean hospital length of stay was shorter for TAVR (6.2 ± 5.6 versus 10.2 + 7.5 days, p < 0.001). Index hospitalization payments were $4,374 higher for TAVR (p < 0.001), whereas readmission and post-acute care payments were $1,150 (p = 0.001) and $739 (p = 0.004) lower, respectively, and professional payments were similar. For SAVR, high-volume centers had lower episode payments (difference: 5.0%, $3,255; p = 0.01) and shorter length of stay (10.0 ± 7.5 versus 11.1 ± 7.9 days, p = 0.002) than low volume centers. In contrast, we found no volume-payment relationship among TAVR centers. CONCLUSIONS: Episode payments were higher for TAVR, despite shorter length of stay. Although not a driver for TAVR, center SAVR volume was inversely associated with payments. These data will be increasingly important to address value-based reimbursement in valve replacement surgery.

Drivers of Payment Variation in 90-Day Coronary Artery Bypass Grafting Episodes.

Importance: Coronary artery bypass grafting (CABG) is scheduled to become a mandatory Medicare bundled payment program in January 2018. A contemporary understanding of 90-day CABG episode payments and their drivers is necessary to inform health policy, hospital strategy, and clinical quality improvement activities. Furthermore, insight into current CABG payments and their variation is important for understanding the potential effects of bundled payment models in cardiac care. Objective: To examine CABG payment variation and its drivers. Design, Setting, and Participants: This retrospective cohort study used Medicare and private payer claims to identify patients who underwent nonemergent CABG surgery from January 1, 2012, through October 31, 2015. Ninety-day price-standardized, risk-adjusted, total episode payments were calculated for each patient, and hospitals were divided into quartiles based on the mean total episode payments of their patients. Payments were then subdivided into 4 components (index hospitalization, professional, postacute care, and readmission payments) and compared across hospital quartiles. Seventy-six hospitals in Michigan representing a diverse set of geographies and practice environments were included. Main Outcomes and Measures: Ninety-day CABG episode payments. Results: A total of 5910 patients undergoing nonemergent CABG surgery were identified at 33 of the 76 hospitals; of these, 4344 (73.5%) were men and mean (SD) age was 68.0 (9.3) years. At the patient level, risk-adjusted, 90-day total episode payments for CABG varied from $11 723 to $356 850. At the hospital level, the highest payment quartile of hospitals had a mean total episode payment of $54 399 compared with $45 487 for the lowest payment quartile (16.4% difference, P < .001). The highest payment quartile hospitals compared with the lowest payment quartile hospitals had 14.6% higher index hospitalization payments ($34 992 vs $30 531, P < .001), 33.9% higher professional payments ($8060 vs $6021, P < .001), 29.6% higher postacute care payments ($7663 vs $5912, P < .001), and 35.1% higher readmission payments ($3576 vs $2646, P = .06). The drivers of this variation are diagnosis related group distribution, increased inpatient evaluation and management services, higher utilization of inpatient rehabilitation, and patients with multiple readmissions. Conclusions and Relevance: Wide variation exists in 90-day CABG episode payments for Medicare and private payer patients in Michigan. Hospitals and clinicians entering bundled payment programs for CABG should work to understand local sources of variation, with a focus on patients with multiple readmissions, inpatient evaluation and management services, and postdischarge outpatient rehabilitation care.

Validation of a claims-based algorithm to characterize episodes of care.

OBJECTIVES: Although hospitals face increasing pressure from payers to improve the efficiency of healthcare delivery beyond the index hospitalization, they often lack information on postdischarge events. The Michigan Value Collaborative (MVC) developed a claims-based algorithm to provide hospitals with data on events that occur to patients beyond the hospitalization. Herein, we discuss the validation of MVC's claims-based algorithm. STUDY DESIGN: Retrospective analysis of a claims-based algorithm's ability to identify specific medical events, such as index hospitalizations, 30-day readmissions, emergency department visits, skilled nursing facility admissions, home health visits, and rehabilitation services. The claims-based events were validated using a primary review at 63 hospitals. METHODS: We selected 1830 Blue Cross Blue Shield of Michigan episodes from MVC data and asked 63 Michigan hospitals to query their medical records for the presence or absence of specific events. We then calculated agreement statistics and improved our algorithm using feedback from hospitals. RESULTS: All 63 hospitals participated in the validation process and successfully identified 99% of episodes in their medical records. The initial agreement between our algorithm and medical records was moderate for 4 postdischarge events (kappa ranging from 0.62-0.78) and poor for rehabilitation services (0.16). Much of the disagreements occurred because hospitals could not identify postdischarge events occurring outside of their hospital systems. Other disagreements occurred because of hospital coding practices. Through this analysis, the claims-based algorithm was improved to better reflect real-world coding practice. CONCLUSIONS: Our findings suggest that the MVC claims-based algorithm identifies and classifies claims with high fidelity and outperforms medical records in the identification of postdischarge events. These findings provide important insight to policy makers, payers, and hospital administrators about the value of claims-based data for the implementation of episode-based programs.

Identifying Drivers of Episode Cost Variation With Radical Prostatectomy.

OBJECTIVE: To describe total and component radical prostatectomy (RP) episode costs across a diverse set of hospitals in Michigan, and examine drivers of variation in such payments. METHODS: We identified Medicare and private payer patients undergoing RP from 2012 to 2014 from the claims-based registry maintained by the Michigan Value Collaborative, a statewide consortium that provides hospitals with price-standardized and risk-adjusted 90-day episode costs for common medical and surgical procedures. We divided hospitals into quartiles based on mean total episode cost for RP. Total episode costs were further classified into 4 payment categories: index hospitalization, professional services, readmissions, and postacute care. Component payments were then compared across high-cost and low-cost hospitals. RESULTS: We identified 3077 patients undergoing RP in 42 hospitals. Mean 90-day total episode cost was $14,614, ranging from $13,043 to $16,749 across quartiles (28.4% difference, P < .001). Overall variation in total episode cost was divided nearly equally among readmissions (29%), postacute care (29%), and professional payments (26%). We noted significantly higher readmission ($1442 vs $288, P = .03) and postacute care payments at high-cost hospitals ($1686 vs $522, P = .002). CONCLUSION: Significant variation exists in 90-day total episode costs for RP, suggesting a potential target for bundled payments and other care improvement efforts. Focused efforts on reducing variation in readmissions and postacute care could improve cost-efficiency.