Risk-Adjusted Cost Performance for 90-Day Total Hip Arthroplasty Episodes: Comparing US Hospitals Nationwide Before CJR.

Background: We characterize variation in total hip arthroplasty (THA) episode payments in the United States. Medicare population immediately preceding implementation of the comprehensive care for joint replacement (CJR) bundled care model and propose a model for ongoing evaluation of hospital performance.

Methods: We identified THA episodes in Medicare part A 2014-2016 (n = 366,380) and compared 90-day episode payments across years and geographic regions. We fit hierarchical models that regressed episode payments on patient-level fixed and region-level and hospital-level random effects. Random effects estimates were used to characterize risk-adjusted hospital cost performance. We ranked hospitals (n = 3218) in each region by their cost performance estimate and constructed 95% confidence intervals to visualize high-performing and low-performing hospitals.

Results: Mean part A episode payments declined from 2014 to 2016 throughout the United States ($19,925-$17,775; P < .001), primarily attributable to decreased postacute care payments. Ninety-day readmission rates fell by a percentage point (from 7.9% to 6.8%; P < .001). We found significant variation in risk-adjusted episode payments, postacute care utilization, and readmission rates across regions, and ever greater variation at the hospital level.

Conclusion: Medicare part A payments decreased for THA episodes between 2014 and 2016. The time frame for this decrease is notable for preceding full implementation of CJR, thus suggesting a more universal embrace of value-based care principles before the start date of CJR. These decreases were primarily because of decreased postacute care utilization and possibly related to falling readmission rates. Yet, significant variation in hospital cost performance remains, even after risk adjustment.