Bundled Payments for Joint Replacement Brings Better Outcomes, Lower Costs in NYU Pilot

The average cost per episode dropped $6708 from the first year of the pilot to the third year.

Using bundled payments for joint replacements cut readmissions and costs in a 3-year pilot study, according to results reported this week by NYU Langone Medical Center.

NYU’s Department of Orthopaedic Surgery saw reductions in overall length of stay, fewer admissions for follow-up care, and lower readmission rates at the 30-day, 60-day, and 90-day marks. The results were presented Wednesday at the American Academy of Orthopaedic Surgeons 2016 meeting in Orlando, Florida.1

Reducing hospital stays an associated costs of hip and knee replacement has been a major priority of Medicare, in an effort to rein in costs of the most common surgeries in the program. More than 400,000 procedures were performed in 2014 at a cost of $7 billion, with costs ranging from $16,500 to $33,000.2 As the number of Americans over age 65 increases, the number of procedures is expected to rise 670% by 2030, according to the study’s authors.

In November 2015, CMS finalized a bundled payment model for these surgeries with its Comprehensive Care for Joint Replacement model, set to take effect April 1, 2016. This model will involve hospitals in 67 markets. They will be required to meet quality and savings markets; if they exceed them, they can be eligible for bonuses, but if they fall short, they could have to repay Medicare part of their fee.2

Unlike traditional fee-for-service models, physicians and hospitals caring for joint replacement patients are given a set free from Medicare for the entire course of treatment. The hospital and its providers must then complete services within 90 days—and take on the risk for any complications that occur throughout the course of care, such as infections or readmissions.

To test evidence-based procedures that went into this policy, CMS selected NYU Langone as a pilot site for the Bundled Payment for Care Improvement initiative. To get the program running, “Key stakeholders and physicians across all areas of NYU Langone had to work together to create new protocols and guidelines to standardize care and ensure all patients had the necessary resources before a surgery takes place, and once at home to ensure the most optimal recovery possible,” said Richard Iorio, MD, lead author of the study and professor of orthopaedic surgery at NYU Langone.

NYU Langone was selected as a pilot site in 2011. In the first year, researchers selected 721 Medicare patients undergoing total joint replacement. For comparative purposes, 785 were identified in the third year. Over this period:

· The average length of stay dropped 3.58 days, to 2.96 days.

· Discharges to inpatient rehab or other care centers fell from 44% to 28%.

· Readmissions at 30 days decreased from 7% to 5%; at 60 days, the share fell from 11% to 6.1%; at 90 days, the share dropped from 13% to 7.7%.

· The average cost per episode fell from $34,249 to $27,541 from the first year to the third year. Most of these savings came from keeping patients out of inpatient rehabilitation centers. This single cost fell from $6228 at baseline to $742 in the third quarter of 2014.

The authors now want to explore how modifications to the bundled payment strategies—one that delays surgery to address known issues in high-risk patients with morbid obesity, uncontrolled diabetes, cognitive issues, and stroke risk—would affect patient outcomes.


1. Bundled payment improve care for Medicare patients undergoing joint replacement [press release]. Orlando, FL: Eureka Alert; March 2, 2016; http://www.eurekalert.org/pub_releases/2016-03/nlmc-bpi030116.php

2. CMS finalizes bundled payment initiative for hip and knee replacement [press release]. Washington, DC: HHS Newroom; November 16, 2015; http://www.hhs.gov/about/news/2015/11/16/cms-finalizes-bundled-payment-initiative-hip-and-knee-replacements.

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