Truven Examines Scope and Drivers in Bundled Commercial Spend for Lower Joint Replacement

By Clive Riddle, March 4, 2016

Truven Health Analytics has just released a twelve page research brief:  Bundled Pricing for Total Joint Replacements in the Commercially Insured Population: Cost Variation Insights by Bundled Care Components, which follows up on their recently released eight page brief on this same topic: Geographic Variation and Cost-Driver Insights.

Truven “found that the primary drivers of cost variation for major lower joint replacement are tied to hospital cost and length of stay. For facility costs, the study attributes up to $1,944 per additional day in total cost variation. That variation is independent of professional costs. The study builds on previous research that found more than $10,000 in commercial bundled spend variation for the same surgeries based on geography.”

Truven shares these key findings:

• The increase in facility cost only (removing professional cost) for each additional day a patient is hospitalized after the procedure varies from $313 per day in the East North Central region to $1,944 per day in the Pacific region, a difference of more than $1,600.
• On average, the cost to treat a patient at a rehab facility was $10,600 per patient, versus $5,300 per patient at a skilled nursing facility, and $1,300 using home health services. And, the cost for rehab facilities varied widely by region, with the cost per patient in the Pacific totaling close to $22,500 compared with roughly $7,000 per patient in New England.
• The cost per bundle for readmissions varied from $538 in the East South Central to $918 in the West South Central division. This lower cost in the East South Central resulted from both a low rate of readmission (3.3 percent) and a low cost per discharge ($16,340).

In their most recent brief, Truven notes that “in our previous research, we estimated the marginal impact of one extra day in the hospital after a TJR to be about $880 per day across all geographic divisions.  To further analyze that finding, we used a mixed effects regression model, with fixed average professional costs, to quantify the increase in facility cost only for each additional day a patient remains hospitalized after the procedure…. The average impact varied from $313 or 1 percent of the base price per additional day in the anchor facility after initial day of hospitalization in the East North Central division, to $1,944 or 6.2 percent of the base price in the Pacific. That’s a difference of more than $1,600.”

Bob Kelley, senior research fellow, advanced analytics, at Truven Health Analytics tells us “as providers and payers begin to consider bundled payment programs for these procedures, it is increasingly important to understand the cost implications of each additional inpatient day, as well as post-acute care and readmissions. Once claims-based, actual patterns are recognized and understood, guidelines and standard best practices can be put in place to guide discharge planning and post-acute care based on patient risk for readmission and other factors contributing to a successful recovery.”