How quality post-surgery care can achieve value in bundled payment models

Medicare costs were lower when beneficiaries received surgeries at hospitals with lower mortality rates and higher patient satisfaction scores, according to a study published in the journal Health Affairs, which may illustrate the importance of post-acute care for bundled payment models.  

The study, led by Thomas C. Tsai, MD, MPH, surgeon at Brigham and Women’s Hospital and health policy researcher at Harvard University, focused on five major surgeries: coronary artery bypass grafting (CABG), pulmonary lobectomy, endovascular repair of abdominal aortic aneurysm, colectomy, and hip replacement. It then measured the costs of their post-surgical care after 30 and 90 days.

Tsai and his coauthors found that on average, Medicare spent $2,700 less in the first 30 days after surgery for beneficiaries who had their procedures performed at high-quality hospitals, with similar savings seen at the 90-day mark.

“The difference in Medicare spending between low- and high-quality hospitals was driven primarily by post-acute care, which accounted for 59.5 percent of the difference in 30-day episode spending, and readmissions, which accounted for 19.9 percent,” the study said. “These findings suggest that efforts to achieve value through bundled payment should focus on improving care at low-quality hospitals and reducing unnecessary use of post-acute care.”

The post-acute care services driving the savings included skilled nursing, inpatient rehabilitation, and home health programs. Those same components are a part of bundled payment models being tested by CMS, like the Bundled Payments for Care Improvement program, so the study may be used to illustrate how bundled payment can affect the quality of care.

“At least for major surgical procedures such as the ones we examined, our findings offer reassurance that provider organizations can accomplish both goals: improving acute surgical care and reducing longer-term spending,” Tsai and his coauthors wrote. “We found that high-quality inpatient surgical care was associated with less spending on post-acute care and fewer readmissions, compared to low-quality inpatient surgical care. This relationship suggests that improving the quality of care in the acute care setting may prove to be an important mechanism for achieving value in bundled-payment models.”

While the findings suggest there are financial advantages to episode-based bundled payment, the study concluded by cautioning results will depend on “whether alternative payment models such as bundled payment provide large enough financial incentives to motivate the health care system to improve both the quality of acute inpatient care and the coordination of post-acute care."