title: 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 the costs of cardiac operations under a bundled payment scheme.
  
  
  METHODS
  All patients undergoing adult cardiac operations for which there was a Society of Thoracic Surgeons (STS) risk score over a 5-year period (2008 to 2013) at a tertiary care, university hospital were reviewed. Patients were stratified into five 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 with actual fiscal year 2013 costs.
  
  
  RESULTS
  Among the 2,514 patients analyzed, preoperative risk was strongly correlated with costs (p < 0.001) but was able to explain only 28% (R(2) = 0.28) of the variation in costs between individual patients. The use of bundling to diffuse and adjust for risk improved prediction to only 33% (R(2) = 0.33). Actual costs in 2013 were $21.6M compared with predicted costs of $19.3M (±$350K), which is well outside the forecast's 95% confidence interval.
  
  
  CONCLUSIONS
  Even among the most routine cardiac operations and with use of 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 reexamine whether individual practices or insurers are best suited to manage the residual financial risk.
authors.affiliation: Division of Thoracic & Cardiovascular Surgery, University of Virginia, Charlottesville, Virginia. Electronic address: kenan@virginia.edu.
authors.forename: Kenan W
authors.initials: KW
authors.lastname: Yount
authors.affiliation: Division of Thoracic & Cardiovascular Surgery, University of Virginia, Charlottesville, Virginia.
authors.forename: James M
authors.initials: JM
authors.lastname: Isbell
authors.affiliation: Darden School of Business, University of Virginia, Charlottesville, Virginia.
authors.forename: Casey
authors.initials: C
authors.lastname: Lichtendahl
authors.affiliation: Darden School of Business, University of Virginia, Charlottesville, Virginia.
authors.forename: Zachary
authors.initials: Z
authors.lastname: Dietch
authors.affiliation: Division of Thoracic & Cardiovascular Surgery, University of Virginia, Charlottesville, Virginia.
authors.forename: Gorav
authors.initials: G
authors.lastname: Ailawadi
authors.affiliation: Division of Thoracic & Cardiovascular Surgery, University of Virginia, Charlottesville, Virginia.
authors.forename: Irving L
authors.initials: IL
authors.lastname: Kron
authors.affiliation: Division of Thoracic & Cardiovascular Surgery, University of Virginia, Charlottesville, Virginia.
authors.forename: John A
authors.initials: JA
authors.lastname: Kern
authors.affiliation: Division of Thoracic & Cardiovascular Surgery, University of Virginia, Charlottesville, Virginia.
authors.forename: Christine L
authors.initials: CL
authors.lastname: Lau
mesh_terms: D000368:Aged; D006348:Cardiac Surgical Procedures / Q000191:economics*; D005240:Feasibility Studies; D018588:Fee-for-Service Plans / Q000191:economics*; D005260:Female; D005500:Follow-Up Studies; D017721:Hospital Costs; D006801:Humans; D007902:Length of Stay / Q000191:economics; D008297:Male; D012189:Retrospective Studies; D020379:Risk Adjustment; D013997:Time Factors; D014481:United States