A Case for Risk Adjustment in Bundled Payment Models

    A study presented at the AAOS annual meeting identifies medical co-morbidities and orthopaedic-specific risk factors impacting the cost of a 90-day episode of care for total hip arthroplasty in the Medicare population.

    Absent risk adjustment in Medicare’s bundled payment models, total hip arthroplasty (THA) patients with medical co-morbidities and other risk factors could face serious issues with access to the care they need.

    Which co-morbidities and which orthopaedic-specific risk factors independently affect the 90-day episode of care for Medicare patients undergoing THA was the subject of a study from Rush University Medical Center that was presented at the 2018 Annual Meeting of the American Academy of Orthopaedic Surgeons.

    Using the Medicare 5% Limited Data Set, the study authors identified 27,293 patients who underwent primary THA between 2010 and 2014. Hip fracture patients were not included. The 90-day episode-of-care-costs were calculated from:

    • Part A or Part B reimbursement claims for the original inpatient stay
    • Surgeon’s fees
    • Readmission costs
    • Rehabilitation costs

    Then, the study authors used multivariate logistic regression analysis to determine the impact of the following on episode-of-care costs:

    • Patient demographics
    • Geographic location
    • 31 co-morbidities in the Elixhauser index
    • 8 orthopaedic-specific risk factors: rheumatoid arthritis, post-traumatic arthritis, infection, failed internal fixation, malnutrition, implant removal, avascular necrosis, hip dysplasia

    The median cost for a 90-day-episode of care in this study was $24,000 (interquartile range $18,500 to $33,900). Patients with the following Independent risk factors had at least a 10% increase in the episode-of-care costs:

    • Malnutrition (odds ratio [OR] 1.745, P<0.001)
    • Male gender (OR 1.443, P<0.001)
    • Age 75 or older (OR≥1.15, P<0.001)
    • Lower socio-economic status (OR 1.171, P<0.001)
    • Failed internal fixation (OR 1.312, P<0.001)
    • Hip dysplasia (OR 1.218, P=0.014)
    • Northeast geographic region (OR 1.211, P<0.001)
    • Neurologic disorder (OR 1.156, P<0.001)
    • African American race (OR 1.131, P<0.001)
    • Conversion THA (OR 1.118, P<0.001)
    • Electrolyte disorder (OR 1.193, P<0.001)
    • Avascular necrosis (OR 1.115, P<0.001)
    • Depression (OR 1.104, P<0.001)

    “The biggest value of our study was the inclusion of orthopaedic-specific risk factors,” said lead study author P. Maxwell Courtney, MD, who was a fellow in adult reconstruction at Rush at the time of this study. He’s now with The Rothman Institute.

    “The data are pretty clear: Obviously, sicker patients are going to utilize more resources. But we show that hip dysplasia, avascular necrosis, failed internal fixation, and conversion to a hip arthroplasty all have a pretty significant impact on episode of care costs following hip replacement.”

    It may be possible to preoperatively optimize patients with some risk factors – malnutrition, electrolyte disorders, and depression – and thus reduce their impact on the episode of care. But the rest, including the orthopaedic-specific risk factors, are non-modifiable. And that’s what concerns Dr. Courtney.

    “I fear that as bundled payment programs continue to become popular, these patients are going to face access to care problems as hospitals cherry-pick only the healthier patients, only the simpler cases,” he said.

    Patients with more risk factors will end up at tertiary care centers, which will not only stress the resources of those centers, but also will call into question access to care for more-complex patients. Will those centers be able to accommodate all the patients who need care? Will these patients be able to travel to where the tertiary care centers are located?

    This very well may be the future orthopaedic surgery is facing, unless joint replacement bundled payment models include built-in risk adjustment for reimbursement of complex Medicare patients, making care of high-risk patients possible at all hospitals.

    “The takeaway of this study is more directed toward policymakers,” Dr. Courtney said. “Both surgeons and facilities should be compensated for caring for these higher-risk patients who utilize more resources.”


    Courtney PM, Bohl DD, Lau E, Ong K. Jacobs JJ, Della Valle CJ. Risk Adjustment is Necessary in Medicare Bundled Payment Models for Total Hip Arthroplasty. (Paper 661). Presented at the 2018 Annual Meeting of the American Academy of Orthopaedic Surgeons, March 6-10, 2018, New Orleans, Louisiana.


    The study authors have no disclosures relevant to this presentation.