Joint Replacement Costs With Medicare Bundled Payment Models

Results of nearly 4000 major lower extremity joint replacements were assessed for cost and quality of care.

Bundled payment models can significantly decrease Medicare costs in lower extremity joint replacement surgeries, according to research published in JAMA Internal Medicine.1

Amol S. Navathe, MD, PhD, of the division of health policy at the Perelman School of Medicine at the University of Pennsylvania, and colleagues conducted an observational study of 3942 patients who underwent lower extremity joint replacement. The goal was to assess changes in quality, internal hospital costs, and post-acute care after Medicare’s launch of mandatory Comprehensive Care for Joint Replacement bundled payment models at approximately 800 urban hospitals. Claims and internal cost data were collected from the Baptist Health System, which had participated in voluntary Acute Care Episode (ACE) and Bundled Payments for Care Improvement (BPCI) projects.

High Yield Data Summary

  • Over time, the average Medicare payment per joint replacement decreased.

The joint replacements analyzed took place between 2008 and 2015. Of the 3942 surgeries, 5.2% had complications. Over time, the average Medicare payment for major lower extremity joint replacement without complication declined by 20.8% — from $26,785 in 2008 to $21,208 in 2015 (P <.001). While Medicare payment decreases were not statistically significant during the ACE period  (P =.62), they were significant during the BPCI period (P <.11).  Similar decreases in Medicare payment were noted in procedures with complications, although the decline was lower (13.8%).

No statistically significant changes in readmission rates or emergency department (ED) visits were noted, although the percentage of episodes with readmissions decreased over time from 6.4% to 5% (P  =.16), and the percentage of ED visits decreased from 7.4% to 6.5% (P =.98).

Summary and Clinical Applicability

“This study outlines how one bundling participant achieved hospital and post-hospital discharge savings while reducing Medicare payments — all without compromising quality,” said Dr Navathe in a press release.2 “The results offer guidance for both providers and a new administration considering decisions that will impact the health of patients and communities nationwide.”

Study Limitations

  • Comparison groups were not included
  • The use of multiple periods (pre-ACE, ACE, and BPCI) limits confounding factors
  • The analysis conducted was descriptive rather than causal
  • Quality analysis does not include patient-reported outcomes


Dr Emanuel is a frequent paid event speaker at numerous conventions, committee meetings, and professional healthcare gatherings, and is a venture partner with Oak HC/FT. Dr Navathe reports serving as an advisor to Navvis and Company, Navigant Inc., Lynx Medical, Indegene Inc., and Sutherland Global Services. Dr Navathe also reports receiving an honorarium from Elsevier Press and grant funding from Oscar Health Insurance and the Hawaii Medical Services Association.

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  1. Navathe AS, Troxel AB,  Liao JM, et al. Cost of joint replacement using bundled payment models [published online January 3]. JAMA Intern Med. doi: 10.1001/jamainternmed.2016.8263
  2. Medicare bundled-payments model cut joint replacement costs by more than 20 percent, Penn study shows [news release]. Philadelphia, PA: Penn Medicine. Published January 3, 2017. Accessed January 3, 2017.

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