Defining the 90-day cost structure of lower extremity revascularization for alternative payment model assessment

Background: The U.S. healthcare system is undergoing a broad transformation from the traditional fee-for-service model to value-based payments. The changes introduced by the Medicare Quality Payment Program, including the establishment of Alternative Payment Models, ensure that the practice of vascular surgery is likely to face significant reimbursement changes as payments transition to favor these models. The Society for Vascular Surgery Alternative Payment Model taskforce was formed to explore the opportunities to develop a physician-focused payment model that will allow vascular surgeons to continue to deliver the complex care required for peripheral arterial disease (PAD). Methods: A financial analysis was performed based on Medicare beneficiaries who had undergone qualifying index procedures during fiscal year 2016 through the third quarter of 2017. Index procedures were defined using a list of Healthcare Common Procedural Coding (HCPC) procedure codes that represent open and endovascular PAD interventions. Inpatient procedures were mapped to three diagnosis-related group (DRG) families consistent with PAD conditions: other vascular procedures (codes, 252-254), aortic and heart assist procedures (codes, 268, 269), and other major vascular procedures (codes, 270-272). Patients undergoing outpatient or office-based procedures were included if the claims data were inclusive of the HCPC procedure codes. Emergent procedures, patients with end-stage renal disease, and patients undergoing interventions within the 30 days preceding the index procedure were excluded. The analysis included usage of postacute care services (PACS) and 90-day postdischarge events (PDEs). PACS are defined as rehabilitation, skilled nursing facility, and home health services. PDEs included emergency department visits, observation stays, inpatient readmissions, and reinterventions. Results: A total of 123,180 cases were included. Of these 123,180 cases, 82% had been performed in the outpatient setting. The Medicare expenditures for all periprocedural services provided at the index procedure (ie, professional, technical, and facility fees) were higher in the inpatient setting, with an average reimbursement per index case of $18,755, $34,600, and $25,245 for DRG codes 252 to 254, DRG codes 268 and 269, and DRG codes 270 to 272, respectively. Outpatient facility interventions had an average reimbursement of $11,458, and office-based index procedures had costs of $11,533. PACS were more commonly used after inpatient index procedures. In the inpatient setting, PACS usage and reimbursement were 58.6% ($5338), 57.2% ($4192), and 55.9% ($5275) for DRG codes 252 to 254, DRG codes 268 and 269, and DRG codes 270 to 272, respectively. Outpatient facility cases required PACS for 13.7% of cases (average cost, $1352), and office-based procedures required PACS in 15% of cases (average cost, $1467). The 90-day PDEs were frequent across all sites of service (range, 38.9%-50.2%) and carried significant costs. Readmission was associated with the highest average PDE expenditure (range, $13,950-$18.934). The average readmission Medicare reimbursement exceeded that of the index procedures performed in the outpatient setting. Conclusions: The cost of PAD interventions extends beyond the index procedure and includes relevant spending during the long postoperative period. Despite the analysis challenges related to the breadth of vascular procedures and the site of service variability, the data identified potential cost-saving opportunities in the management of costly PDEs. Because of the vulnerability of the PAD patient population, alternative payment modeling using a bundled value-based approach will require reallocation of resources to provide longitudinal patient care extending beyond the initial intervention.