What Are the Cost Drivers for the Major Bowel Bundled Payment Care Improvement Initiative?

BACKGROUND: The Bundled Payments for Care Improvement initiative links payments for service beneficiaries during an episode of care (limited to 90 days from index surgery discharge). OBJECTIVE: The purpose of this study was to identify drivers of costs/payments for the major bowel Bundled Payments for Care Improvement initiative. DESIGN: Discharges from the Medicare Standard Analytic Files of hospitals participating in the major bowel bundle of the Bundled Payments for Care Improvement initiative were analyzed. SETTINGS: The study was conducted at 4 tertiary care centers. PATIENTS: All patients in diagnostic related groups of 329, 330, or 331 treated at eligible facilities between September 1, 2012, and September 30, 2014, were included. MAIN OUTCOME MEASURES: We calculated all costs/payments for the bundled period, that is, 3 days before surgery, the index hospitalization including surgery, and the 90-day postoperative period. We then determined costs for laparoscopic versus open procedures using International Classification of Diseases, Ninth Revision, procedure codes for each of the diagnostic related groups, as well as in aggregate. Last, we calculated differential impact of cost drivers on overall total episode costs. RESULTS: In the cohort of hospitals participating in the major bowel Bundled Payments for Care Improvement initiative, open procedures ($45,073) cost 1.6 times more than laparoscopic. For the lowest complexity diagnostic related group (331), performance of the procedure with open techniques was the largest total episode cost driver, because use of postdischarge services remained low. In the highest complexity diagnostic related group (329), readmission costs, skilled nursing facilities costs, and home health services costs were the greatest cost drivers after hospital services. LIMITATIONS: The analyses are limited by the retrospective nature of the study. CONCLUSIONS: These results indicate that efforts to safely perform open procedures with laparoscopic techniques would be most effective in reducing costs for lower complexity diagnostic related groups, whereas efforts to impact readmission and postdischarge service use would be most impactful for the higher complexity diagnostic related groups.