Association of Skilled Nursing Facility Participation in a Bundled Payment Model With Institutional Spending for Joint Replacement Surgery

Question What are the outcomes associated with bundled payment models for joint replacement surgery, in which skilled nursing facilities (SNFs) bear financial risk for all care across a 90-day episode beginning with facility admission? Findings In this difference-in-difference analysis of 80 648 Medicare patients undergoing lower extremity joint replacement from 2013-2017, the Medicare Bundled Payments for Care Improvement model 3 was associated with a statistically significant decrease in mean institutional spending of $1008 (a combination of postacute care and hospital Medicare-allowed payments) on patients of SNFs receiving bundled payment compared with control SNFs. Meaning SNF-based bundled payments may have the potential to lower spending for lower extremity joint replacement. Importance Medicare recently concluded a national voluntary payment demonstration, Bundled Payments for Care Improvement (BPCI) model 3, in which skilled nursing facilities (SNFs) assumed accountability for patients' Medicare spending for 90 days from initial SNF admission. There is little evidence on outcomes associated with this novel payment model. Objective To evaluate the association of BPCI model 3 with spending, health care utilization, and patient outcomes for Medicare beneficiaries undergoing lower extremity joint replacement (LEJR). Design, Setting, and Participants Observational difference-in-difference analysis using Medicare claims from 2013-2017 to evaluate the association of BPCI model 3 with outcomes for 80 648 patients undergoing LEJR. The preintervention period was from January 2013 through September 2013, which was 9 months prior to enrollment of the first BPCI cohort. The postintervention period extended from 3 months post-BPCI enrollment for each SNF through December 2017. BPCI SNFs were matched with control SNFs using propensity score matching on 2013 SNF characteristics. Exposures Admission to a BPCI model 3-participating SNF. Main Outcomes and Measures The primary outcome was institutional spending, a combination of postacute care and hospital Medicare-allowed payments. Additional outcomes included other categories of spending, changes in case mix, admission volume, home health use, length of stay, and hospital use within 90 days of SNF admission. Results There were 448 BPCI SNFs with 18 870 LEJR episodes among 16 837 patients (mean [SD] age, 77.5 [9.4] years; 12 173 [72.3%] women) matched with 1958 control SNFs with 72 005 LEJR episodes among 63 811 patients (mean [SD] age, 77.6 [9.4] years; 46 072 [72.2%] women) in the preintervention and postintervention periods. Seventy-nine percent of matched BPCI SNFs were for-profit facilities, 85% were located in an urban area, and 85% were part of a larger corporate chain. There were no systematic changes in patient case mix or episode volume between BPCI-participating SNFs and controls during the program. Institutional spending decreased from $17 956 to $15 746 in BPCI SNFs and from $17 765 to $16 563 in matched controls, a differential decrease of 5.6% (-$1008 [95% CI, -$1603 to -$414]; P < .001). This decrease was related to a decline in SNF days per beneficiary (from 26.2 to 21.3 days in BPCI SNFs and from 26.3 to 23.4 days in matched controls; differential change, -2.0 days [95% CI, -2.9 to -1.1]). There was no significant change in mortality or 90-day readmissions. Conclusions and Relevance Among Medicare patients undergoing lower extremity joint replacement from 2013-2017, the BPCI model 3 was significantly associated with a decrease in mean institutional spending on episodes initiated by admission to SNFs. Further research is needed to assess bundled payments in other clinical contexts. This study compares mean levels of institutional spending for Medicare beneficiaries after lower extremity joint replacement at skilled nursing facilities (SNFs) participating vs not participating in Medicare's bundled payment program, before vs after implementation of the program.