title: Variation in Medicare Payments for Colorectal Cancer Surgery.
abstract: OBJECTIVE
  Colorectal cancer (CRC) is the second most expensive cancer in the United States. Episode-based bundled payments may be a strategy to decrease costs. However, it is unknown how payments are distributed across hospitals and different perioperative services.
  
  
  METHODS
  We extracted actual Medicare payments for patients in the fee-for-service Medicare population who underwent CRC surgery between January 2004 and December 2006 (N = 105,016 patients). Payments included all service types from the date of hospitalization up to 1 year later. Hospitals were ranked from least to most expensive and grouped into quintiles. Results were case-mix adjusted and price standardized using empirical Bayes methods. We assessed the contributions of index hospitalization, physician services, readmissions, and postacute care to the overall variation in payment.
  
  
  RESULTS
  There is wide variation in total payments for CRC care within the first year after CRC surgery. Actual Medicare payments were $51,345 per patient in the highest quintile and $26,441 per patient in the lowest quintile, representing a difference of Δ = $24,902. Differences were persistent after price standardization (Δ = $17,184 per patient) and case-mix adjustment (Δ = $4,790 per patient). Payments for the index surgical hospitalization accounted for the largest share (65%) of payments but only minimally varied (11.6%) across quintiles. However, readmissions and postacute care services accounted for substantial variations in total payments.
  
  
  CONCLUSIONS
  Medicare spending in the first year after CRC surgery varies across hospitals even after case-mix adjustment and price standardization. Variation is largely driven by postacute care and not the index surgical hospitalization. This has significant implications for policy decisions on how to bundle payments and define episodes of surgical CRC care.
authors.affiliation: Center for Healthcare Outcomes and Policy, University of Michigan, Ann Arbor, MI; and Enterprise Support Services, Dartmouth-Hitchcock Health System, Lebanon, NH.
authors.forename: Zaid M
authors.initials: ZM
authors.lastname: Abdelsattar
authors.affiliation: Center for Healthcare Outcomes and Policy, University of Michigan, Ann Arbor, MI; and Enterprise Support Services, Dartmouth-Hitchcock Health System, Lebanon, NH.
authors.forename: John D
authors.initials: JD
authors.lastname: Birkmeyer
authors.affiliation: Center for Healthcare Outcomes and Policy, University of Michigan, Ann Arbor, MI; and Enterprise Support Services, Dartmouth-Hitchcock Health System, Lebanon, NH wongsl@umich.edu.
authors.forename: Sandra L
authors.initials: SL
authors.lastname: Wong
mesh_terms: D015179:Colorectal Neoplasms / Q000191:economics* / Q000601:surgery; D005260:Female; D005102:Health Expenditures; D006801:Humans; D008297:Male; D006278:Medicare / Q000191:economics*; D014481:United States