The Truven Health Blog

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Joint Replacement Post-Acute Care and Readmissions: Variations Represent Opportunity to Improve Bundled Cost

By Truven Staff

In our continuing research at Truven Health AnalyticsTM into bundled payments for commercially-insured total joint replacement (TJR) patients, we’ve uncovered some additional insights this month. The research is based on simulated bundles that include the entire episode of care from surgery through 90 days post-discharge; the data is from the Truven Health MarketScan® commercial claims database, analyzed across U.S. Census divisions.

Length-of-Stay Finding

We found significant variation in the effect of anchor hospitalization length of stay on total bundled costs. The average impact varied from $313 per additional day in the anchor facility (after initial day of hospitalization) or 1 percent of the base price in the East North Central division, to $1,944 or 6.2 percent of the base price in the Pacific division.


Post-Acute Care Impact

We also found differences in average bundled cost across regions for post-acute care services, from $3,907 to $5,292 — a difference of nearly $1,400. In addition, the study identified significant variation in the average bundled cost by type of post-acute care received by patients (for instance, home health services versus a skilled nursing facility). The highest average patient cost was for care at a rehabilitation facility — the option that also had the greatest variability in cost across divisions.

And About Those Readmission Rates …

We also found that patients with multiple types of post-acute care had higher readmission rates. The combinations of rehab facility and home health, and skilled nursing and rehab, had similar readmission rates at 10.5 percent and 9.2 percent, respectively. What’s not known is whether these patients were at higher risk of readmission prior to discharge, or if the risk increased during post-acute care. We hope to tackle that question in future research.

So What’s the Key Takeaway?

All of this analysis points to the importance of discharge planning and directing patients to the appropriate care option when the goal is to reduce bundled costs for TJR, while maintaining high levels of quality and patient outcomes. While costs associated with post-acute care and readmissions were only a fraction of the total bundled costs for the commercial population, they were subject to substantial variability — representing perhaps an important opportunity to better manage results.


For more insights from this study, you can download the new research brief, Bundled Pricing for Total Joint Replacements in the Commercially Insured Population: Cost Variation Insights by Bundled Care Components, here.


Bob Kelley
Senior Research Fellow
Advanced Analytics



Makeup of TJR Bundled Costs in Commercially Insured Differs From Medicare Population Bundles

By Truven Staff

As part of the Truven Health AnalyticsTM continuing research series into total joint replacement (TJR) bundled costs for commercially insured patients (age 45 to 64), we’ve found that readmissions make up a small percentage of average total bundled costs — 2.1 percent (just $760 on average per patient). That appears to be true no matter what region of the U.S. patients are located.

The average percentage of total bundled costs due to post-acute care is also fairly low, although higher than readmissions, at 12.7 percent. The average percentage among U.S. Census divisions ranges from 10.8 percent (Mountain Division) to 14.5 percent (East South Central), which shows a bit more cost variability than readmissions.


Our simulated commercial bundles included inpatient hospitalization, post-acute care, and readmission costs.


Here’s a very quick look at what we found:

These findings are in contrast to projections for Medicare’s older population. For example, additional Truven Health analysis of simulated TJR bundles for one large hospital showed that 21 percent of the Medicare total bundled cost was for post-acute care compared to less than 8 percent in the commercially insured bundles — with almost 14 percent versus 4 percent for skilled nursing facility costs alone.


Of course, it’s not unexpected that an older, 65+ Medicare population would have a higher likelihood of serious comorbid conditions and a greater need for post-surgical support. However, the Centers for Medicare & Medicaid Services predict that most of the cost-savings for the Medicare population and its new Comprehensive Care for Joint Replacement (CJR) Model will originate from improvements in post-acute care and readmissions costs after reducing cost variation through bundling.


The savings opportunities appear to be far less obvious in the commercial population.


For more details on our data, methodology, and other findings, you can download the complete research brief, Bundled Pricing for Total Joint Replacements (TJRs) in the Commercially Insured Population: Geographic Variation and Cost-Driver Insights.


Our next brief will cover an analysis of the impact of length of stay and post-acute care decisions on bundled commercial costs for TJR patients. If you’d like to be alerted via email when that brief is released, you can provide us with your information via

Bob Kelley
Senior Research Fellow, Advanced Analytics




Why Bundled Payments Should Be on Your Mind

By Truven Staff

By now, every healthcare provider and payer has heard of the new Centers for Medicare & Medicaid Services (CMS) bundled payment model that will launch on April 1, 2016.

The model will test bundled pricing based on regional averages for total joint replacements (TJRs) for complete episodes of care from the initial hospitalization through 90 days post-discharge. TJRs, or hip and knee replacements, were chosen for this pilot program because they’re not only common surgeries, but also ones known for costs that can vary by more than $15,000 depending on geographic region of the country, according to CMS. The goal of its Comprehensive Care for Joint Replacement Model, then, is to encourage hospitals and post-inpatient providers to work together to improve coordination and lower the costs of Medicare-paid TJRs.

But bundled payments should be on the radar of every provider and payer — not just those involved with Medicare. The fact is, bundled pricing pilots are well underway in private insurers’ financial strategies, too — affecting another large swath of providers along the way.

So it’s on the radar. Now what should you do?

The first step is to figure out where you stand today and analyze how bundled pricing may play out for your business.

For instance, whether you are a payer or a provider, you’ll need to know the current variations by geographic region and by your individual markets for every cost included in the potential bundles — such as inpatient, physician, rehabilitation, readmissions, and more. You’ll want to know how those costs vary by provider type, too — and understand what’s causing those pricing variations.

Providers can use this information to develop ways to close any gaps between their pricing and current market averages. Understanding those gaps may lead to efficiency needs or care quality improvements.

Commercial payers may need to do some predictive modeling on how to structure potential bundled pricing in a way that can reduce costs without affecting patient outcomes.

And both payers and providers may be interested in seeking additional partnerships for episodes of care, or renegotiating existing partnerships.

Bundled pricing is complex. But the benefits could very well outweigh the work necessary to succeed when they become a new industry norm.

At Truven Health, we’re working on a comprehensive research series on bundled pricing for TJRs in the commercially insured population. We’re using simulated bundles based on recent claims data — looking at those cost variations and drivers. We’ll be sharing those in the first quarter of 2016. 

Bob Kelley
Truven Health Senior Research Fellow, Advanced Analytics