Bundled payments demonstrated savings
by Dr. Michael Cantor
March 5, 2018

When a patient leaves the hospital, the default discharge destination should be back to their home, even if they require rehabilitation. Unfortunately, many patients are unnecessarily sent to post-acute care (PAC) facilities. The good news is that clinical practices are evolving, and potentially avoidable PAC facility stays are being replaced with home rehabilitation. There are also financial incentives, such as bundled payment programs, which emphasize better clinical outcomes at a lower cost. Home rehabilitation services are less expensive than inpatient and produce similar results. Additionally, new technologies, such as remote physical therapy and robotic-assisted rehabilitation, also promise to improve the quality of rehabilitation in the home.

Why are so many patients discharged to PAC facilities?

One significant factor is that sending a patient home from the hospital is more complicated than discharging them to a facility, where they will have easy access to rehabilitation teams, nurses, doctors, meals and a safe environment. There are also financial considerations for the hospital.

Medicare pays hospitals a fixed amount for each admission, regardless of the length of stay. This incentivizes hospitals to discharge patients quicker and sicker, since the sooner the patient leaves, the less it costs the hospital to provide services for that admission. Discharging to PAC facilities allows for earlier discharge of patients who are well enough to leave the hospital, but not yet able care for themselves at home.

During the past 15 years, there has been significant growth in the use of PAC facilities. One study of Medicare expenditures found that between 2004–2011, the average hospital length of stay fell by more than half a day, but that the average length of stay in post-acute care facilities rose by more than a day. During that same time, hospital spending went up an average of about $260 million per year, but post-acute care facility spending went up about $800 million per year. And these are averages—studies of geographic variation in Medicare spending found that post-acute care costs, driven largely by use of post-acute care facilities, explained almost 75 percent of differences in spending levels after controlling for variation in costs of labor and facilities. Much of this seems to be based on variation in management rather than the clinical needs of patients.

Hip and knee joint replacement and The BPCI Initiative

Hip and knee joint replacement surgeries are among the most common procedures performed on Medicare patients, who are often sent to PAC facilities for rehabilitation.

A few years ago, the Medicare program implemented the Bundled Payments for Care Improvement (BPCI) initiative, where hospitals could choose up to 48 diagnoses to get paid a fixed amount for a “bundle” of services, including inpatient and post-acute costs. Many of the hospitals participating in BPCI chose to accept bundled payments for hip and knee replacements. Analysis of the first two years of the BPCI program demonstrated that hip and knee replacements were one of the few diagnoses where hospitals were able to save costs and make money. How did the hospitals reduce costs?

The most successful hospitals sent fewer joint replacement patients to inpatient post-acute care facilities and used more home health services. Despite the reduction in PAC facility costs, there was no significant increase in emergency department visits, readmissions or other adverse outcomes, and functional status after the procedure was comparable for those that went home from the hospital and those that received inpatient rehabilitation. Bottom line: For hip and knee replacement patients, sending many of those patients directly home for rehabilitation reduced costs and did not reduce quality of care.

Not only did the BPCI evaluation demonstrate that hip and knee replacement patients rehabilitated at home have similar outcomes at lower prices, recent research is consistent with these results. One study followed more than 900 patients who lived alone and found there was no significant difference in outcomes for patients discharged directly home after joint replacement.

Costs for patients discharged home were lower compared to those admitted to PAC facilities, even though they tended to use home health services more. Similarly, a randomized controlled trial of knee replacement patients found that for uncomplicated procedures in otherwise healthy patients, inpatient rehabilitation did not provide better results than home rehabilitation.

Making the most of prehabilitation

Of course, discharging patients home after a joint replacement requires some changes in current practices to be effective. Successful joint replacement programs typically have a prehabilitation phase, where patients attend classes prior to their surgery and learn what to expect after they are being discharged home and may have pre-surgical physical therapy. Home health services are also arranged prior to surgery, so that physical therapy is scheduled, and any equipment is delivered in advance.

For some hip replacement patients, new surgical techniques and better organization of services are making it possible for them to be discharged home immediately after surgery and not even stay in the hospital overnight. Increasing use of the anterior approach for hip replacement, which cuts through less muscle tissue during the procedure, appears to reduce the need for hospitalization, decreases complications and speeds time to functional improvement. In some centers, patients who have gone through prehabilitation have their hips replaced in an ambulatory surgery center and are discharged directly home the same day.

Improvements in rehabilitation technologies promise to make access to rehabilitation at home easier and less expensive and could improve outcomes.

Currently available technology allows patients to have video visits with a physical therapist, who can evaluate the patient’s progress and level of function by reviewing data from motion-detecting devices using technology familiar to anyone who has played video games that use motion sensors for athletic, dancing or other games. Not only do these devices allow for patients to go through many more repetitions of the desired movements, but they also accurately measure and record the actual range of motion for many more repetitions than a physical therapist can observe.

Robots have also been used to support physical therapy, and robotic rehabilitation devices for the home setting are likely to come to market in the very near future.

It is time for patients needing post-acute rehabilitation to go home and avoid admission to PAC facilities. The current trend that is already accomplishing this will only accelerate as financial incentives change and new technologies emerge.