A 12 minute read
January 10, 2017

As the most common surgical procedure for Medicare beneficiaries, total joint replacement is a key focus of quality improvement and cost control efforts. Since April 2016, roughly 800 hospitals have been required to participate in CMS’ Comprehensive Joint Replacement (CJR) Program, which aims to reduce the overall cost for hip and knee replacement episodes, including post-acute care. CMS identifies episodes as 90-day periods of care for patients within diagnosis-related groups (DRGs) 469 and 470, which are codes for lower extremity joint replacement with or without complications, respectively. While the results have not yet been publicly released, episodic data from Definitive Healthcare reveals some insights on costs, readmissions, and spending distribution at hospitals that performed the most total joint replacement procedures under Medicare in previous years. Compared to the national average, these hospitals generally have higher acute-care spending and overall episode costs for total joint replacements without complications, and lower figures for replacements with complications. Nearly all of the hospitals have far superior readmission rates for both DRGs.

Total joint replacements without complications (DRG 470) are far more common than those with complications (DRG 469), and the top 10 hospitals reported over 25,000 episodes for the combined years of 2014 and 2015. The CJR program also accounts for patients within the DRG that suffer hip fractures, which significantly add to the cost and complexity of the episode, but they were much rarer and only totaled about 1,100. Overall, the top 10 hospitals’ average episode costs were $783 higher than the national average. For the acute-care portion of the episode, they spent an average of $620 more. Accordingly, most hospitals had longer average length of stays. However, the top 10 hospitals’ median readmission rate was 7.6 percent, significantly less than the national average of 10.2, which suggests that the higher costs and longer stays don’t necessarily reflect worse care. It is also possible that patients’ post-acute care was exceptional.

Top 10 Hospitals for DRG 470, Without Hip Fracture, 2014-2015

Hospital Spending Per Episode Readmission Rate (%) Length of Stay Anchor Hospital Percent Cost Hospital Cost
Hospital for Special Surgery  $26,333  25.8 4.3  62.4 $16,425
New England Baptist Hospital $22,715  7.5 4.1 62.1 $14,114
Christiana Hospital $20,128  7.9 3.6 71.1 $14,311
Virtua Voorhees Hospital  $17,214  18.5  2.8  61.5 $10,586
Mayo Clinic Hospital Rochester  $23,445  3.9  3.9  75.2  $17,628
Evanston Hospital  $22,689  3.7  4.1 57.5  $13,054
Florida Hospital Orlando  $17,706  6.8  3.5  64.2  $11,360
Beaumont Hospital Royal Oak  $21,319  7.2  3.7  62.7  $13,375
Hoag Orthopedic Hospital Irvine  $19,925  7.6  3.3  64.0  $12,755
McBride Clinic Orthopedic Hospital  $16,319  13.6  4.1  62.0  $10,125
National Average  $19,996 10.2  3.7  63.8  $12,753 

Source: Definitive Healthcare

When hip fractures are incorporated into the episode, readmissions and costs rise substantially. Again, the average episode starting at the top 10 hospitals cost more than the national average, but the difference was less than $300. The hospital spending portion of the episode was also higher, with an average difference of about $1,400. Even though hip fractures drove up costs for hospitals, acute-care spending often accounted for less than half of the total spending for each episode. In some cases, spending at skilled nursing facilities exceeded that of the hospital stay, which is attributable to the long recovery time associated with hip fractures. The average readmission rate for the hospitals was 33.8 percent, comparable to the national rate of 34.9 percent.

Top 10 Hospitals for DRG 470, With Hip Fracture, 2014-2015

Hospital Spending Per Episode Readmission Rate (%) Length of Stay Anchor Hospital Percent Cost Hospital Cost
 Hospital for Special Surgery  $34,071  37.7 6.9 51.6 $17,565
 New England Baptist Hospital  $37,179  45.0  5.6 38.7  $14,377
 Christiana Hospital  $39,544  39.4  6.2 37.6  $14,849
 Virtua Voorhees Hospital  $39,583  48.6 6.3 32.0  $12,667
 Mayo Clinic Hospital Rochester  $38,776  12.6 6.7 47.3  $18,333
 Evanston Hospital  $37,281  17.0  6.0  44.8  $16,699
 Florida Hospital Orlando  $34,439  23.3  6.2  45.1  $15,547
 Beaumont Hospital Royal Oak  $35,633  29.8  6.7  39.5  $14,079
 Hoag Orthopedic Hospital Irvine  $35,921  29.2  4.2  36.9  $13,242
 McBride Clinic Orthopedic Hospital  $29,751  45.7  5.2  35.0  $10,402
 National Average  $35,937  34.9  5.8  37.1  $13,342

Source: Definitive Healthcare

For the top 10 hospitals that treated the most patients within DRG 469, total joint replacement with complications, the facilities performed better than the national average in nearly every metric, for both patients with and without hip fractures. The most notable difference lies in readmission rates. For patients without hip fractures, the median rate for the top 10 was 19.3 percent, well below the 31.8 percent national average. The gap was even wider for patients with hip fractures, at 27.1 versus 51.5 percent. In terms of spending, episodic costs were substantially lower than the national average in both categories, with an average difference of about $4,000 and $2,600 for episodes with and without hip replacements respectively. One possible explanation for the difference is that given their large volume of complex cases compared to other hospitals, they may have a higher level of expertise involving total joint replacement patients with major complications.

Top 10 Hospitals for DRG 469, Without Hip Fracture, 2014-2015

Hospital Spending Per Episode Readmission Rate (%) Length of Stay Anchor Hospital Percent Cost Hospital Cost
Florida Hospital Orlando $33,826 19.7 8.0 54.4 $18,386
Mission Hospital Memorial $31,747 10.9 6.1 54.7 $17,351
Mayo Clinic Hospital Rochester $47,275 18.9 7.4 62.3 $29,435
Baptist Health Louisville $27,108 11.1 6.5 62.5 $16,952
NCH Baker Hospital $27,297 29.3 6.2 53.1 $14,491
Carilion Roanoke Memorial Hospital $31,522 21.1 6.2 57.3 $18,071
Sanford Medical Center Fargo $31,831 16.7 7.4 63.4 $20,179
Parkwest Medical Center $20,637 12.7 5.7 68.2 $14,080
Hartford Hospital $37,916 25.8 7.4 63.6 $24,122
Oroville Hospital $41,907 31.1 6.3 54.1 $22,686
National Average  $35,751 31.8 6.7 54.6 $21,105

Source: Definitive Healthcare

Top 10 Hospitals for DRG 469, With Hip Fracture, 2014-2015

Hospital Spending Per Episode Readmission Rate (%) Length of Stay Anchor Hospital Percent Cost Hospital Cost
Florida Hospital Orlando $44,271 35.6 9.5 43.9 $19,447
Mission Hospital Memorial $41,546 26.1 7.8 44.6 $18,540
Mayo Clinic Hospital Rochester $54,285 19.0 8.2 52.4 $28,420
Baptist Health Louisville $36,107 14.3 8.8 46.0 $16,620
NCH Baker Hospital $42,731 53.6 9.0 40.2 $17,191
Carilion Roanoke Memorial Hospital $42,412 36.1 9.1 46.3 $19,623
Sanford Medical Center Fargo $37,763 5.7 9.4 53.0 $20,002
Parkwest Medical Center $32,081 28.0 7.8 48.3 $15,495
Hartford Hospital $60,054 21.2 10.3 44.6 $26,803
Oroville Hospital $59,672 32.5 7.7 43.2 $25,804
National Average $49,183 51.5 8.9 42.9 $21,105

Source: Definitive Healthcare

An important caveat about comparing hospital spending metrics in the CJR to national averages is that the figures are not adjusted for patient risk or local spending levels. While the CJR does adjust hospital targets based upon individual and regional historical spending levels, it does not account for patient morbidities. Inadequate risk adjustment has become a common criticism of CMS programs, and the CJR is no exception. A September 2016 study published in Health Affairs found that when patients’ individual risk factors were applied to outcomes and spending, hospitals with high volumes of complex cases had substantially different performance scores under the program, with many earning incentive payments that would have been penalized under CMS’ existing rules. CMS has previously said that patients are sufficiently risk adjusted under the current system because it accommodates the two DRGs and the existence of hip fractures.

Even without the spending or risk adjustments, the data suggests that providers must keep working on ways to control episodic care. While a large portion of an episode’s spending can occur after discharge, especially in cases involving hip fractures, hospitals can still do much to reduce costs. A recent article in Modern Healthcare outlined how one hospital lowered costs through a dedicated patient training effort, revised best practices, and streamlined implant procedures. The facility was able to reduce length of stay by over half a day and cut discharges to SNFs or rehab centers by nearly 75 percent. Such improvement may not be easy, but it’s increasingly necessary as CMS continues to push ahead with its value-based reimbursement goals.

Definitive Healthcare has the most up-to-date, comprehensive and integrated data on over 7,700 hospitals, 1.4 million physicians, and numerous other healthcare providers. We offer detailed information on all major CMS programs as well as clinical and financial metrics for health system, hospitals, long term care facilities, and more.

For more information on the top CJR hospitals, download our featured report.

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