The Potential Risk of Using Historic Claims to Set Bundled Payment Prices: The Case of Physical Therapy After Lower Extremity Joint Replacement
Abstract Background One of the most significant challenges of implementing a multi-provider bundled payment contract is to determine an appropriate, casemix adjusted total bundle price. The most frequently used approach is to leverage historic care utilization based on claims data. However, those claims data may not accurately reflect appropriate care (e.g. due to supplier induced demand and moral hazard effects). This study aims to examine variation in claims-based costs of post-discharge physical therapy (PT) utilization after total knee and hip arthroplasties (TKA/THA) for osteoarthritis patients.Methods This retrospective cohort study used multilevel linear regression analyses to predict the factors that explain the variation in the utilization of post-discharge PT after TKA or THA for osteoarthritis patients, based on the historic (2015-2018) claims data of a large Dutch health insurer. The factors were structured as predisposing, enabling or need factors according to the behavioral model of Andersen.Results The 15,309 TKA and 14,325 THA patients included in this study received an average of 20.7 (SD 11.3) and 16.7 (SD 10.1) post-discharge PT sessions, respectively. Results showed that the enabling factor ‘presence of supplementary insurance’ was the strongest predictor for post-discharge PT utilization in both groups (TKA: β=7.46, SE=0.498, p-value<0.001; THA: β=5.72, SE=0.515, p-value<0.001). There were also some statistically significant predisposing and need factors, but their effects were smaller.Conclusions This study shows that enabling factors such as the presence of supplementary insurance can cause historic claims-based pricing methods to potentially overestimate clinically appropriate post-discharge PT use, which would result in a bundle price that is too high. Clinical guidelines and best practice standards should be leveraged more often in bundled payment pricing methods to target this potentially avoidable utilization of care, and to stimulate the implementation of multi-provider bundled payment contracts.