“Bundling” Joint Replacements to Cut Cost

Bundling is known as a good way to get a good price, be it for cable services or yard sale shopping. Is it good for medical care?

A new payment method began for Medicare on April 1. Rather than billing separately for every service as part of a joint replacement (hospital admission to physical therapy), the payment will be bundled. This is part of a mandatory 67 city five-year testing period going on nationwide. It only is for patients with traditional Medicare, not Medicare Advantage, and only for hip and knee replacements.

In the fee-for-service model, each provider is paid for their services. This creates an incentive to provide more care, but not necessarily the best care. CMS wants to hold hospitals responsible for patient outcomes and how costs are controlled. If a price is considered excessive, the hospital will be penalized. Target prices vary from hospital to hospital.

The new bundling model lacks a meaningful way to determine quality of care. This is pushing patients to the least expensive treatments, sending them home from the hospital rather than to a rehab center or other care center for therapy. The program would be better if it was voluntary, but would any hospital volunteer? A hip replacement requires one to two days of hospitalization, but the new model holds the hospital liable for 90 days of care.

Pittsburgh, one of the test cities, had some hospitals start bundling joint replacement costs two years ago. They have standardized procedures, educated and prepared patients pre-surgery, and have a close post-surgical follow-up. Pittsburgh Medical Center has cut its post-operative infection rate in half. The need for blood transfusions dropped from 10 to 1.1%. Educating the patients before and after surgery have improved quality of care and the patient’s experience.

The average costs for a joint replacement through Medicare is $16,500 to $33,000. The cost may seem reasonable (the patient never pays the actual bill), but the government has decided what treatments are provided and what services are to be bundled. At MediBid, the surgeon and patient work together to determine what treatments will be included and agree on the price ahead of time. Satisfied patients have paid approximately $21,000 for all-inclusive joint replacement surgery.
Twedt, Steve. “Medicare testing new payment model in the Pittsburgh region.” Business. Pittsburgh Post-Gazette, 31 Mar 2016. Web. 3 Apr 2016.

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