Prostatectomy may be prime target for bundled payments

As the federal government moves toward more bundled payments, radical prostatectomy may prove to be an early target because of the potential for overall savings. A new study reveals significant variation in the costs of the procedure, and the findings suggest it won’t be easy to drive down expenses across the board.

“Our data suggest that variation is driven by differences in professional, post-acute care, and readmission payments. However, because the drivers of higher cost episodes appear to differ across individual hospitals, there is unlikely to be a ‘one-size-fits-all’ solution for higher-cost facilities. Instead, hospital and health system leaders will need timely institution-specific spending data to target interventions appropriately,” said lead author Lindsey Herrel, MD, MS, a clinical lecturer at the University of Michigan, Ann Arbor.

Bundled payments are one of the federal government’s initiatives to boost the quality of health care and reduce its cost.

Traditionally, providers such as urologic surgeons and anesthesiologists are paid separately. “This approach can result in fragmented care with minimal coordination across providers and health care settings,” the Centers for Medicare & Medicaid Services says on its website (bit.ly/Bundledpaymentsinfo). “Payment rewards the quantity of services offered by providers rather than the quality of care furnished.”

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Via bundled payments, an insurer only pays a specific overall amount for a service like a joint replacement, forcing providers to cut costs if they want to avoid losing money.

“Radical prostatectomy may represent the most likely target for a bundled payment in urological surgery, as the Centers for Medicare & Medicaid Services focuses on high-volume surgical care in the Medicare population where reducing small amounts of variation in cost can result in large savings,” said Dr. Herrel, who worked on the study with James Michael Dupree, IV, MD, MPH, and colleagues.

The new study, presented at the AUA annual meeting in San Diego and subsequently published online in Urology (Aug. 2, 2016), aimed to offer insight into the costs of radical prostatectomy. The authors tracked the expense of the procedure from 2010-2012 at Michigan hospitals via the Michigan Value Collaborative.

Next: Several factors drive variation

Several factors drive variation

For 4,275 patients treated at 49 hospitals, the average 90-day cost of the procedure was $11,844. The highest and lowest cost quartiles were divided by a 19% ($2,259) gap.

“Variation in cost is driven by several factors including readmissions, post-acute care (eg, physical therapy, rehab), and professional service payments,” Dr. Herrel said.

Specifically, professional service payments accounted for 47% ($1,076) of the variation in the total cost. Why such a difference? For one, high-cost hospitals were more likely to perform additional bladder and urethral procedures (32.7% vs. 0.3%, p<.001) and pelvic lymphadenectomy (57.3% vs. 40.3%, p<.001) than low-cost hospitals.

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What’s next? “Our team is moving forward with analyses to understand the drivers of variation in total episode payments on a national scale for prostatectomy, nephrectomy, and cystectomy,” Dr. Herrel said. “Within our own institution and across the state of Michigan, we are using this information to improve the value of care we deliver for patients with urologic malignancies.”

Support for the Michigan Value Collaborative is provided by Blue Cross Blue Shield of Michigan as part of the Value Partnerships program. Dr. Herrel receives grant support from Blue Cross Blue Shield of Michigan.

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