Hospital characteristics and episode cost differences between participant and nonparticipant hospitals in Medicare's Transforming Episode Accountability Model (TEAM) bundle payment program.

BACKGROUND CONTEXT

Medicare's Transforming Episode Accountability Model (TEAM) is a mandatory 30-day bundled payment model intended to improve care coordination and cost reduction for specific surgical episodes, including 18 categories of inpatient and hospital outpatient spinal fusion procedures.

PURPOSE

To compare characteristics and episode costs of TEAM participant hospitals to nonparticipants, and to describe variation in hospital-specific episode costs for fusion procedures relative to their regional target prices.

STUDY DESIGN/SETTING

Cross sectional analysis of hospital characteristics, and retrospective cohort analysis of episode costs.

PATIENT SAMPLE

Medicare beneficiaries undergoing fusion procedures from 2016 to 2021 based on TEAM, which excludes Medicare Advantage, United Mine Workers, Maryland hospitals, and patients undergoing complex fusions (8+ vertebral levels, or fusion for primary diagnosis of spinal curvature, malignancy, infection). To emulate TEAM design, we retained patients with dual eligibility and Social Security Disability Insurance.

OUTCOME MEASURES

Thirty-day episode reimbursement for all inpatient, hospital outpatient, skilled nursing, home health agency, provider care (Part B), and durable medical equipment services.

METHODS

The 2023 American Hospital Association (AHA) Annual Survey was linked to Medicare's publicly available list of TEAM hospital participants. Differences in characteristics between TEAM participant and nonparticipant hospitals were reported using t-tests for continuous variables and chi-square for categorical variables. Medicare fee-for-service claims were used to summarize 30-day episode costs for each type of fusion procedure. A generalized linear regression (gamma distribution, log link) with a hospital-specific random effect parameter compared differences in mean episode costs between participant and nonparticipant hospitals, adjusting for fusion type, stratification, patient age, sex, race, year, comorbidity based on grouped total and select Hierarchical Condition Classifications (HCC), dual eligibility, social security disability entitlement, osteoporosis, osteoarthritis, surgical indication, and hospital characteristics.

RESULTS

At its launch, TEAM included 726 hospitals, including 10 voluntary participants. TEAM hospitals were significantly larger in terms of bed count, total admissions, Medicare discharges and total expenses, and were more likely to be Level I trauma centers, not-for-profit hospitals, teaching/academic affiliated, and to provide orthopedic services. Relative to nonparticipants, adjusted 30-day episode costs for TEAM participants were $1,590 greater (95%CI $682; $2,500; p=.001) combining all types of inpatient fusion (nonparticipant=$41,289; participant=$42,880). Relative to nonparticipants, TEAM participant costs ranged from $254 higher (95%CI $-4,978; $5,487; p=.144) for cervical fusion using combined anterior-posterior approach in patients with major complication or comorbidities (MCC), to $5,699 higher (95%CI $2,988; $8,409; p<.001) for 1-level, 1-column noncervical fusion with MCC. Outpatient fusion costs did not differ between participant and nonparticipant hospitals ($-131; 95%CI $-435; $173; p=.399)

CONCLUSION

Wide variation in episode costs for fusion procedures suggests that regional target prices will be a greater challenge for higher cost hospitals. TEAM participation appears to be concentrated among higher costs hospitals, reflecting additional resource utilization or greater patient severity that is not fully captured through adjustment. For example, selected hospitals may use more expensive implants, provide longer stay, care for more complex patients, and have greater postacute care intensity. Their higher costs are a disadvantage for achieving target prices, placing cost-reduction pressures on them to avoid financial penalties. However, hospitals selected for mandatory TEAM participation likely possess structural characteristics needed to achieve target prices in TEAM.