An analysis of costs for nearly 4,000 patients who underwent hip or knee joint replacement at a health system that has participated in three separate bundled payment programs shows that the payment model is associated with “substantial hospital savings and reduced Medicare payments,” with no sacrifice in patient outcomes.

The procedures were conducted at San Antonio, Texas-based Baptist Health System between July 2008 and June 2015. Starting in June 2009, the health system participated in the Centers for Medicare and Medicaid Services’ Acute Care Episode demonstration, then in Model 2 of CMS’ Bundled Payments for Care Initiative (BPCI), both of which were voluntary programs, and is currently participating in the mandatory Comprehensive Care for Joint Replacement model, which CMS launched last April.  

During the period evaluated, the average Medicare cost per episode of care decreased a statistically significant 20.8 percent (from $26,785 to $21,208) for the 3,738 episodes with no complications. For the 204 episodes with complications, the average Medicare cost per episode still declined 13.8 percent (from $38,537 to $33,216). Moreover, there was a slight reduction in readmissions and emergency department visits, and a significant decrease in episodes with a prolonged length of stay. 

Most of the hospital savings resulted from lower spending on implants and supplies. The majority of savings in post acute care came from reductions in inpatient rehabilitation and skilled nursing facility spending. The study authors noted that the reductions in post acute care spending occurred only after post acute care was included as part of the episode of care in the BPCI model.

The study results were published online Jan. 3 by JAMA Internal Medicine.

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