Coronary artery bypass grafting bundled payment proposal will have significant financial impact on hospitals

Investigators for the Virginia Cardiac Services Quality Initiative

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

Objectives The Centers for Medicare and Medicaid Services plans to institute a 5-year trial of bundled payments for coronary artery bypass grafting through 90 days after discharge. To investigate the impact, we reviewed actual inpatient costs for patients undergoing bypass surgery relative to the target price. Methods A total of 13,276 Medicare patients with estimated cost data underwent isolated coronary artery bypass grafting from 2008 to 2015 in 18 hospitals over 8 Medicare-defined regions within the Commonwealth of Virginia. Actual 2015 inpatient costs were compared with estimated target prices for each year of the pilot, based on the previous 3 years and stratified by Diagnosis-Related Group. Results The mean 2015 cost per patient was $50,394 with high variation (range, $27,862-$74,169). On average, hospitals would receive a refund of $17,682 in year 1, but then owe Medicare increasing amounts up to $367,985 in year 5. If 2015 were the final year of the pilot, 13 of the 18 hospitals (72%) would have owed Medicare for cost overruns averaging $614,270 (range, $67,404-$2,102,292). Costs were below the target price at 5 of 18 hospitals, and the Centers for Medicare and Medicaid Services would have paid them an extra $272,355 on average (range, $88,628-$567,429). Conclusions Hospitals will face immediate financial pressure due to average cost increases of 3.6% per year and an automatic reduction in payment. As regional pricing is phased in, hospitals can expect to owe Medicare increasing amounts. The net effect is shifting of financial risks to hospitals, which could restrict access to care for higher-risk patients.

Original languageEnglish (US)
Pages (from-to)182-188
Number of pages7
JournalJournal of Thoracic and Cardiovascular Surgery
Volume155
Issue number1
DOIs
StatePublished - Jan 2018
Externally publishedYes

Fingerprint

Coronary Artery Bypass
Costs and Cost Analysis
Medicare
Centers for Medicare and Medicaid Services (U.S.)
Inpatients
Diagnosis-Related Groups
Pressure

Keywords

  • alternative payment models
  • bundled payments
  • CABG
  • health care economics

ASJC Scopus subject areas

  • Surgery
  • Pulmonary and Respiratory Medicine
  • Cardiology and Cardiovascular Medicine

Cite this

Coronary artery bypass grafting bundled payment proposal will have significant financial impact on hospitals. / Investigators for the Virginia Cardiac Services Quality Initiative.

In: Journal of Thoracic and Cardiovascular Surgery, Vol. 155, No. 1, 01.2018, p. 182-188.

Research output: Contribution to journalArticle

Investigators for the Virginia Cardiac Services Quality Initiative. / Coronary artery bypass grafting bundled payment proposal will have significant financial impact on hospitals. In: Journal of Thoracic and Cardiovascular Surgery. 2018 ; Vol. 155, No. 1. pp. 182-188.
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abstract = "Objectives The Centers for Medicare and Medicaid Services plans to institute a 5-year trial of bundled payments for coronary artery bypass grafting through 90 days after discharge. To investigate the impact, we reviewed actual inpatient costs for patients undergoing bypass surgery relative to the target price. Methods A total of 13,276 Medicare patients with estimated cost data underwent isolated coronary artery bypass grafting from 2008 to 2015 in 18 hospitals over 8 Medicare-defined regions within the Commonwealth of Virginia. Actual 2015 inpatient costs were compared with estimated target prices for each year of the pilot, based on the previous 3 years and stratified by Diagnosis-Related Group. Results The mean 2015 cost per patient was $50,394 with high variation (range, $27,862-$74,169). On average, hospitals would receive a refund of $17,682 in year 1, but then owe Medicare increasing amounts up to $367,985 in year 5. If 2015 were the final year of the pilot, 13 of the 18 hospitals (72{\%}) would have owed Medicare for cost overruns averaging $614,270 (range, $67,404-$2,102,292). Costs were below the target price at 5 of 18 hospitals, and the Centers for Medicare and Medicaid Services would have paid them an extra $272,355 on average (range, $88,628-$567,429). Conclusions Hospitals will face immediate financial pressure due to average cost increases of 3.6{\%} per year and an automatic reduction in payment. As regional pricing is phased in, hospitals can expect to owe Medicare increasing amounts. The net effect is shifting of financial risks to hospitals, which could restrict access to care for higher-risk patients.",
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AB - Objectives The Centers for Medicare and Medicaid Services plans to institute a 5-year trial of bundled payments for coronary artery bypass grafting through 90 days after discharge. To investigate the impact, we reviewed actual inpatient costs for patients undergoing bypass surgery relative to the target price. Methods A total of 13,276 Medicare patients with estimated cost data underwent isolated coronary artery bypass grafting from 2008 to 2015 in 18 hospitals over 8 Medicare-defined regions within the Commonwealth of Virginia. Actual 2015 inpatient costs were compared with estimated target prices for each year of the pilot, based on the previous 3 years and stratified by Diagnosis-Related Group. Results The mean 2015 cost per patient was $50,394 with high variation (range, $27,862-$74,169). On average, hospitals would receive a refund of $17,682 in year 1, but then owe Medicare increasing amounts up to $367,985 in year 5. If 2015 were the final year of the pilot, 13 of the 18 hospitals (72%) would have owed Medicare for cost overruns averaging $614,270 (range, $67,404-$2,102,292). Costs were below the target price at 5 of 18 hospitals, and the Centers for Medicare and Medicaid Services would have paid them an extra $272,355 on average (range, $88,628-$567,429). Conclusions Hospitals will face immediate financial pressure due to average cost increases of 3.6% per year and an automatic reduction in payment. As regional pricing is phased in, hospitals can expect to owe Medicare increasing amounts. The net effect is shifting of financial risks to hospitals, which could restrict access to care for higher-risk patients.

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