A. Kelsall1, A. Ghaferi2 1University Of Michigan,Medical School,Ann Arbor, MI, USA 2University Of Michigan,Department Of Surgery,Ann Arbor, MI, USA
Introduction: Bundled payments are gaining momentum as a cost-containment measure that will have sweeping impacts on the provision of surgical care. Despite evidence that private payers are increasingly interested in bundled payment models, research on surgical episode cost variation for common procedures, such as bariatric surgery, has largely focused on Medicare beneficiaries and excluded the commercially-insured population. In this context, we examined hospital-level variation in bariatric surgery episode cost for commercially-insured patients in Michigan.
Methods: Using data from a state-wide collaboration between a major commercial insurer and hospitals in Michigan, we retrospectively identified patients undergoing bariatric surgery procedures- sleeve gastrectomy (sleeve) or Roux-en-Y gastric bypass (RYGB)- from January 2009 through October 2014. We included in the analysis only those hospitals that performed a minimum of 30 procedures during the study period (N=9035 procedures, 31 hospitals). We calculated price- and risk-adjusted payments from index admission to 30 days post-discharge. We divided hospitals into quintiles based on average episode cost and examined variation in four components of episode cost, namely index hospitalization, professional fees, post-acute care, and readmissions.
Results: We found the average risk and price-adjusted payment for a bariatric surgery episode was $12,246. The highest-cost quintile averaged $1,519 (12%) more per episode than the lowest quintile. Index hospitalization accounted for the largest share of episode payments (73% and 80% for RYGB and sleeve, respectively) and explained much of the variation between top and bottom quintiles (58.3% for RYGB, 35% for sleeve) (fig. 1). Professional fees accounted for a significant proportion of episode payments (19.4% and 13.4% for RYGB and sleeve procedures, respectively) and drove a roughly proportional share of variation between highest and lowest cost quintiles. Readmission and post-discharge payments accounted for disproportionate shares of the variation between quintiles. For example, in sleeve procedures, post-discharge payments accounted for 3.9% of total episode payments, but explained 22.6% of variation between highest and lowest cost quintiles.
Conclusion: Our findings demonstrate substantial variation in bariatric surgery episode costs in the commercially-insured population. While index hospitalization accounted for the largest share of episode costs, variation in other cost components (i.e., readmissions and post-discharge payments) explained a share of variation disproportionate to their contribution to overall cost, suggesting they are potential targets for quality and efficiency-improvement efforts under bundled payment models.
