Clinical Investigation
Congestive Heart Failure
Do heart failure disease management programs make financial sense under a bundled payment system?

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Background

Policy makers have proposed bundling payments for all heart failure (HF) care within 30 days of an HF hospitalization in an effort to reduce costs. Disease management (DM) programs can reduce costly HF readmissions but have not been economically attractive for caregivers under existing fee-for-service payment. Whether a bundled payment approach can address the negative financial impact of DM programs is unknown.

Methods

Our study determined the cost-neutral point for the typical DM program and examined whether published HF DM programs can be cost saving under bundled payment programs. We used a decision analytic model using data from retrospective cohort studies, meta-analyses, 5 randomized trials evaluating DM programs, and inpatient claims for all Medicare beneficiaries discharged with an HF diagnosis from 2001 to 2004. We determined the costs of DM programs and inpatient care over 30 and 180 days.

Results

With a baseline readmission rate of 22.9%, the average cost for readmissions over 30 days was $2,272 per patient. Under base-case assumptions, a DM program that reduced readmissions by 21% would need to cost $477 per patient to be cost neutral. Among evaluated published DM programs, 2 of the 5 would increase provider costs (+$15 to $283 per patient), whereas 3 programs would be cost saving (−$241 to $347 per patient). If bundled payments were broadened to include care over 180 days, then program saving estimates would increase, ranging from $419 to $1,706 per patient.

Conclusions

Proposed bundled payments for HF admissions provide hospitals with a potential financial incentive to implement DM programs that efficiently reduce readmissions.

Section snippets

Decision model

We developed a decision analytic model to assess the cost-savings potential of DM programs. The decision tree is displayed in Figure 1. The hypothetical patient cohort in the model is representative of all patients admitted with a primary diagnosis of HF. This cohort is similar to those enrolled in the trials of DM programs and was selected to resemble a community-based HF population. The principal time horizon for the analysis (ie, 30 days after an index hospitalization) was selected to model

Costs and outcomes

From January 1, 2001, through December 31, 2004, a total of 1,363,977 Medicare beneficiaries had an index HF hospitalization. The median cost of inpatient care for those patients readmitted within 30 days of an index hospitalization was $9,923 per patient (25th-75th percentile, $6,599 to $18,976). The corresponding mean cost was $17,122 (95% CI $17,050 to $17,195). In the context of a baseline 30-day readmission rate of 22.9% and the median cost, 30-day inpatient care distributed across all

Discussion

Disease management programs are costly; and without sufficient financial incentives, such programs are implemented infrequently.18 Before our analysis, the extent to which bundled payments (as a new reimbursement strategy) could incentivize hospitals to bolster coordinated care through interventions such as DM programs was unknown. Our analysis suggests that current bundled payments may provide a positive financial incentive to providers who implement effective DM programs. By reducing

Acknowledgements

We thank Erin LoFrese for her editorial contributions to this manuscript and Melissa Greiner for data and analytic support. Neither Ms LoFrese nor Ms Greiner received compensation for their assistance, apart from her employment at the institution where the study was conducted.

References (18)

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Javed Butler, MD, MPH, served as guest editor for this article.

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