The Impact of Medicare Bundled Payments

Study Overview
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Brief Summary
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Bundled payments (BP) are a key part of Medicare's shift away from the traditional fee-for-service (FFS) payment model. The investigators propose to study a nationwide randomized-controlled trial (RCT) of bundled payments for knee and hip replacements that was designed and implemented by CMS and launched in April 2016. Randomization was conducted at the Metropolitan Statistical Area (MSA) level with 67 MSAs and about 800 hospitals assigned to the treatment group. The investigators will examine the impact of bundled payments on Medicare spending, utilization, and quality. Study findings should be directly relevant for the design of payments for knee and hip replacements, two common and expensive medical procedures. Average impacts, as well as variation in impact across types of providers and markets may also shed light on economic mechanisms, which should be relevant for bundled payment initiatives under consideration for other medical services.

Official Title
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The Impact of Medicare Bundled Payments: Evidence From a Nationwide Randomized Evaluation for Lower Extremity Joint Replacement

Conditions
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Arthroplasty, Replacement

Intervention / Treatment
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* Other: Bundled payments for knee and hip replacement


Participation Criteria
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Eligibility Criteria
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Inclusion Criteria: Acute care hospital paid under the inpatient prospective payment system (IPPS) Hospital admission for major joint replacement or reattachment of lower extremity with and without major complications or comorbidities (MS-DRG 469 and 470) Exclusion Criteria: MSA exclusion criteria: MSAs with low volume of LEJR MSAs with high take-up of BPCI MSAs with large share of LEJR in Maryland hospitals Hospital exclusion criteria: Hospitals participating in certain models of BPCI. Patient exclusion criteria (the episode is cancelled if any of the following occurs during the episode): Patient not covered by both Medicare Parts A and B Patient eligibility for Medicare is due to end stage renal disease (ESRD) Patient is in a managed care plan Patient is in a United Mine Workers of America Plan Medicare is not the primary payer for the patient Patient dies during the episode Patient is re-admitted to an ACH for one of the two CJR DRGs during the episode Patient initiates an LEJR episode under BPCI during the episode Payments and services that occur in the episode that are excluded are: hemophilia clotting factors new technology add-on payments transitional pass-through payment for medical devices payments from certain incentive programs otherwise included payments that exceed two standard deviations of the regional mean services unrelated to the index admission as defined by CMS (including certain inpatient hospital stays, Part B services, and per beneficiary per month (PBPM) payments).
Sexes Eligible for Study
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All

Accepts Healthy Volunteers
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No

Study Plan
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How is the study designed?
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Design Details

Primary Purpose: Health Services Research
Allocation: Randomized
Intervention Model: Parallel Assignment
Masking: None (Open Label)


Arms and Interventions

| Participant Group/Arm | Intervention/Treatment |
| --- | --- |
| Experimental: Experimental<br>Bundled payments for knee and hip replacement | Other: Bundled payments for knee and hip replacement<br>* The bundled payment model holds acute care hospitals (ACHs) financially responsible for the spending and quality of an entire episode of care for two types of hospital admissions: MS-DRG 469 and 470. An episode begins with an ACH stay that results in a discharge in one of the two DRGs, and ends 90 days after discharge. Before each performance year begins, hospitals receive target prices from CMS, determined by historical hospital and regional episode expenditures. Hospitals are eligible for reconciliation payment from CMS if they spend less than the target prices for an episode, provided that they met an acceptable quality standard. Conversely, they are responsible for paying the difference if they spend more than the target prices.<br>|
| No Intervention: Control<br>No intervention | |

What is the study measuring?
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Primary Outcome Measures

| Outcome Measure | Measure Description | Time Frame |
| --- | --- | --- |
| Share of LEJR admissions discharged to institutional Post-Acute Care (PAC) | Share of lower extremity joint replacement (LEJR) index admissions discharged to institutional post-acute care facilities (i.e. skilled nursing facilities (SNF), long term care hospitals (LTCH) or inpatient rehabilitation facilities (IRF)). LEJR index admissions are eligible admissions at acute care hospitals (ACH) that result in a discharge in either DRG 469 or 470. | At hospital discharge up to 3 days | 

Secondary Outcome Measures

| Outcome Measure | Measure Description | Time Frame |
| --- | --- | --- |
| Share of LEJR admissions discharged to any Post Acute Care (PAC) | Share of LEJR index admissions discharged to any PAC, which includes Institutional Post Acute Care (SNF, LTCH, IRF) plus home health agency. LEJR index admissions are eligible admissions at acute care hospitals (ACH) that result in a discharge in either DRG 469 or 470. | At hospital discharge up to 3 days | 
| Number of days in Institutional PAC during episode | number of days in institutional PAC facilities (sum of length of stays in SNF, LTCH and IRF) | Begins with index admission and ends 90 days post-discharge from index admission | 
| Total covered Medicare payments during episode | Total covered Medicare payments are defined as the total amount of Medicare Part A and part B Fee-for-Service (FFS) payments that are included in the bundle. Note that, as defined, total covered Medicare payments are the payments that would be made in the absence of Bundled Payments (i.e. payments that would occur under FFS Medicare). These are counterfactual for the treatment MSAs. If the data become available, the investigators plan to also look at actual payments made during the episode (which would include any reconciliation payments or repayments to or from hospitals in the treatment MSAs). | Begins with index admission and ends 90 days post-discharge from index admission | 
| Total covered Medicare payments for Institutional PAC during episode |  | Begins with index admission and ends 90 days post-discharge from index admission | 
| Total covered Medicare payments for any PAC during episode |  | Begins with index admission and ends 90 days post-discharge from index admission | 
| Total beneficiary payments owed out of pocket during episode |  | Begins with index admission and ends 90 days post-discharge from index admission |