New bundled payment program successful in lowering costs

The newest bundled payment program is a money-saver for CMS and Medicare, according to a recent study published in the New England Journal of Medicine. The findings are on par with previous studies that revealed other bundles are achieving their goals of lowering healthcare costs and improving care outcomes.

The Bundled Payments for Care Improvement Initiative (BPCI), which ties reimbursement payments to an episode of care and patient outcomes, has four broadly defined models where organizations enter into financial and performance accountability payment arrangements for episodes of care––the procedure plus 90 days of care and follow-up after discharge. Medicare implemented a new mandatory bundled payment program in 2016, the Comprehensive Care for Joint Replacement (CJR) for hip and knee replacements.

“Like other bundled-payment programs, CJR was designed to provide financial incentives for hospitals to reduce spending without compromising quality across an entire episode of care during the index hospitalization and after discharge,” Michael Barnett, MD, study author and assistant professor of health policy and management at Harvard T.H. Chan School of Public Health, et al. wrote.

Using Medicare claims from 2015 to 2017––the first two years of bundled payments in the CJR program and a period prior to implementation––researchers analyzed outcomes, rates of postsurgical complications and the percentage of high-risk patients. Researchers looked at procedures in 75 metropolitan statistical areas with the mandatory bundles and 121 control areas.

Over the two-year period, 280,161 hip or knee replacement procedures took place in 803 hospitals in the treatment areas, compared to 377,278 procedures in 962 hospitals in control areas.

Those in the CJR model has lower spending per joint-replacement episode in the treatment areas compared to the control areas, according to the analysis. Namely, CJR procedures cost $812, or 3.1 percent less.

“Institutional spending on hip- or knee-replacement episodes decreased from $25,903 to $23,915 in the treatment group and from $24,596 to $23,238 in the control group,” Barnett et al. wrote.

The spending decrease was mostly driven by a 5.9 percent decrease in the percentage of patients who were discharged to post-acute care facilities, such as skilled nursing facilities. The CJR program also did not have much of an impact on the rate of complications or the percentage of high-risk patients, underscoring quality care.

“In the first 2 years of the CJR program, there was a modest reduction in spending per hip- or knee-replacement episode, without an increase in rates of complications,” Barnett and colleagues. “This decrease in payments grew over an 18-month period, which raises the possibility that CJR could lead to greater reductions in payments as hospitals adapt to the new payment model.”