The statements contained in this document are solely those of the authors and do not necessarily reflect the views or policies of CMS. The authors assume responsibility for the accuracy and completeness of the information contained in this document. The Bundled Payments for Care Improvement (BPCI) initiative was introduced to reduce healthcare costs while maintaining quality. We examined data from a healthcare system comprised of five hospitals that elected to participate in the BPCI Major Joint Replacement of the Lower Extremity Model 2 initiative beginning July 1, 2015. We compared one hospital that did 439 BPCI hip cases to the four other hospitals that did 459 cases. Stratifying the data by hospital volume, we sought to determine if costs decreased during the BPCI period, how the savings were achieved, and if savings resulted in financial rewards for participation. The Medicare data included the target cost for each episode (based on historical data from 2009–2012 for each hospital that was adjusted quarterly) and actual Part A and Part B spending for 90 days. Using 1,574 primary hip replacements, we analyzed the costs associated with the anchor hospitalization, inpatient rehabilitation, skilled nursing facilities, home health, outpatient physical therapy and readmission to compare the 898 hips done during the 16-month BPCI initiative period with the 676 hips done during the 1-year period preceding BPCI participation. Owing to the nonparametric distribution of the cost data, a Mann-Whitney U test was used to compare the higher volume hospital with the four lower volume hospitals.Background
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