Newtown, CT – September 23, 2016
A few months ago we indicated that we would call out those who advance theories as facts to promote a specific agenda, and here goes – Earlier this week CMS released a Lewin report evaluating the second year of BPCI implementation. That was also accompanied by the release of a paper in JAMA looking more specifically at the effects of the pilot on joint replacement procedures and an associated commentary by Elliott Fisher raising doubts on the validity of the pilot. Let’s start first with the BPCI evaluation by Lewin and remind ourselves that the design of the pilot has some serious flaws that we have repeatedly pointed out and continue to do so. These include a lack of adjusting for patient severity of illness, an inclusion of all kinds of unrelated costs during the post-discharge period, and a continuous rebasing of the target price to punish the good performers. Some of these flaws, in particular the first two, make it incredibly difficult to say whether the pilot is actually working. That’s all the more true for some of the episodes that have relatively low sample sizes because few hospitals are focusing on them. The JAMA paper, which was also authored by Lewin researchers and others, focuses on the one clinical episode that has a very large sample, significant participation of hospitals, and the researchers did some adjustment for patient illness and characteristics. The conclusion is that the cost of the episodes decreased more than for the comparison group. Good news? Not according to those who are deeply concerned that the drift towards bundled payments will take away from their desire to see the world move to total cost of care payment models.
What this means to you – Elliott Fisher actually turned the numbers upside down to conclude that the hospitals participating in the BPCI pilot were less efficient than the comparison group because they had more episodes, and that these additional episodes were simply “manufactured” to increase margin opportunity. This feeds into the well known myth – and it is a myth, not a proven fact – that episode of care payment will simply increase the volume of episodes and increase costs. There is, of course, another very logical and free-market reason for the increase of joint replacement procedure volume at the BPCI-participating hospitals, namely that market share shifted because the surgeons had (and have) a gain-sharing opportunity. Put simply, if you’re a surgeon in a city in which some hospitals are participating in BPCI and offering gain sharing, and some hospitals are not, and the gain sharing can significantly boost your per-patient revenue, what would you do? The answer is simple, but Elliott Fisher refuses to consider it and instead makes up the story that these hospitals and surgeons just forced Medicare patients to get joint replacements they didn’t need. Forget the fact that there’s no indication that patients were healthier in the pilot sites, and forget the fact that there is no evidence that the overall volume of joint replacements has significantly increased in some regions and not others. But that’s what you’re always asked to do by those who advance pseudo-scientific arguments as facts…ignore reality for their alternative views of the world. We won’t let them get away with it even if JAMA does.