Truven Health finds $10,000 regional difference in bundled spending for joint replacement
Cost differences are essential to commercial payers interested in applying bundled payments, Truven says.
In a recent study, Truven Health Analytics found more than a $10,000 price variation in bundled spending for knee and hip replacement, depending on geography.
The costliest region in the study is the mid-Atlantic, where the procedure spending is more than 35 percent higher than in the East South Central region.
The cost differences are essential to commercial payers interested in applying bundled payments, according to Truven.
"They need to know the best way to define pricing for their business and predict what those definitions can do for patient care and the bottom line," said Bob Kelley, vice president, healthcare analytics at Truven Health Analytics and lead researcher on the study.
[Also: CMS sets spring launch for knee and hip bundled payment initiative]
Truven Health conducted research into the spending for knee and hip replacements ahead of the April 1 implementation of a new model for joint replacement. The Centers for Medicare and Medicaid Services' Comprehensive Care for Joint Replacement Model is aimed at improving care coordination while lowering the episode spending for a major lower joint replacement, from the initial hospitalization through 90 days post-surgery.
For this analysis, Truven Health researchers used claims data for 2012 and 2013 from the Truven Health MarketScan Commercial Database study sample of 84,648. They selected only patients treated for total knee and total hip replacement who were age 45 to 64 at the time of the procedure.
The study based episode length on the CMS final rule of 90 days post-hospital discharge.
The study found a significant difference between the bundled payment spending for these procedures in commercially insured populations, with six states in the middle Atlantic ranking highest for total bundled spend: Delaware, Maryland, New Jersey, New York, Pennsylvania, Virginia, Washington, D.C., and West Virginia.
[Also: HHS announces mandated bundled payments for hip, knee replacement ]
The lowest spending was found in the East South Central area that includes Alabama, Kentucky, Mississippi and Tennessee.
The price variations ranged from $29,825 in the least costly region to $40,431 in the most expensive, a 35 percent variation.
Readmissions and post-acute care make up relatively small percentages of average total bundled spending for these procedures, at 2.1 percent and 12.7 percent, respectively. That is in contrast to patterns seen among Medicare's older population, which spends far more on post-acute care.
"As providers gear up to adopt the new Medicare CJR model, they need to understand both the magnitude of spend variation by region and the drivers of those spends. And they need to know where they stand in relation to projected target pricing, so they can take action to close payment gaps," Kelley said.
