To investigate payment variation for 3 common urologic cancer surgeries and evaluate the potential for applying bundled payment programs to these procedures.

Using 2008-2011 Surveillance, Epidemiology, and End Results-Medicare linked data, we identified all beneficiaries aged greater than 65 years who underwent cystectomy, prostatectomy, or nephrectomy for cancer. Total episode payments were determined by aggregating hospital, professional, and post-acute care claims from the index surgical hospitalization through 90 days post discharge. Total episode payments were then compared to examine hospital level-variation within each procedure type and the specific payment components (ie, index hospitalization, professional, readmission, and post-acute care) driving spending variation.

Ninety-day episodes of care were identified for 1849 cystectomies, 8770 prostatectomies, and 4304 nephrectomies. We observed wide variation in mean episode payments for all 3 conditions (cystectomy mean $35,102: range $24,112-$57,238, prostatectomy mean $10,803: range $8,816-$17,877, nephrectomy mean $17,475: range $11,681-$26,711). Majority of payment variation was attributable to index hospitalization and post-acute care for cystectomy and nephrectomy and professional payments for prostatectomy. The most expensive hospitals by procedure each demonstrated a unique opportunity for spending reduction due to individual differences in component payment patterns between hospitals.

Ninety-day episode payments for urologic cancer surgery vary widely across hospitals in the United States. The key drivers of this payment variation differ for individual procedures and hospitals. Accordingly, hospitals will need individualized data and clinical re-design strategies to succeed with implementation of episode-based payment models for urologic cancer care.