Bundled Payments in Cardiac Surgery: Is Risk Adjustment Sufficient to Make It Feasible?

Abstract

Background Policymakers have proposed risk-adjusted bundled payment as the single-most promising method of linking reimbursement to value rather than to quantity of service. Our objective was to assess the relationship between risk and cost to develop a model for forecasting cardiac surgery costs under a bundled payment scheme. Methods All patients undergoing adult cardiac surgery operations for which there was a Society of Thoracic Surgeons (STS) risk score over a 5-year period (2008–2013) at a tertiary care, university hospital were reviewed. Patients were stratified into 5 groups based on preoperative risk as a basis for negotiating risk-adjusted bundles. A multivariable regression model was developed to analyze the relationship between risk and log-transformed costs. Monte Carlo simulation was performed to validate the model by comparing predicted to actual FY2013 costs. Results Among the 2514 patients analyzed, preoperative risk was strongly correlated with costs (p<0.001) but was only able to explain 28% (R2=0.28) of the variation in costs between individual patients. Using bundling to diffuse and adjust for risk improved prediction to only 33% (R2=0.33). Actual costs in 2013 were $21.6M compared to predicted costs of $19.3M (±$350K), which is well outside the forecast’s 95% confidence interval. Conclusion Even among the most routine cardiac surgery operations using the most widely validated surgical risk score available, much of the variation in costs cannot be explained by preoperative risk or surgeon. Consequently, policymakers should re-examine whether individual practices or insurers are best suited to manage the residual financial risk.

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“…A previous study found that approximately 28% of hospital costs could be accounted for with the Society of Thoracic Surgeons' predicted risk of mortality estimate. 8 Using charge data instead of cost data for hospitals from a nearby mid-Atlantic state, this study found that only approximately 10% of the variation between hospitals was linked to patient acuity and risk. Neither method is perfect, and the exact number is unknown, but this study helps confirm that only a small minority of cost variation is due to patient risk profiles.…”