JAMA studies suggest bundled payments are working

Two new studies underscore that Medicare’s bundled payment for care improvement (BPCI) programs are helping provide better quality care to patients.

Bundled payments, which tie reimbursement payments to an entire episode of care and outcomes, are an important part of the healthcare system’s overall shift from fee-for-service to value-based care. The BPCI program has four bundle models that have been rolled out in trials with healthcare providers, with the ultimate aim of lowering costs.

One new study from MIT researchers analyzed the first-year results (2016) of the mandatory comprehensive joint replacement (CJR), which is a five-year bundled payment program. The study, published in JAMA, measured 75 metropolitan statistical areas (MSAs) that were assigned the CJR model compared to 121 MSAs that were not as a control group.

Among the MSAs participating in CJR, the mean percentage of patients discharged to institutional post-acute care was 2.9 percent lower, the study found, suggesting that the bundled payment model may reduce institutional post-acute care. The mean rate of discharge to institutional post-acute care among the control group was 33.7 percent.

“This preliminary analysis provides the strongest evidence to date that mandatory bundled payment can work to reduce health care use,” reads an accompanying blog post on the two studies. “Evidence that CJR worked in this context is an important finding, supporting the mandatory rollout of bundled payment programs.”

The study also found that the CJR program was associated with a $453 reduction per joint replacement episode, a statistically nonsignificant decrease in total Medicare spending. However, those savings were ultimately eaten up by hospitals that were eligible for shared savings, resulting in a net increase in spending.

Another study, also published in JAMA, looked at how hospital participation in the bundled payment program for lower extremity joint replacement (LEJR) impacted case mix, which may help calm fears of the unintended consequences of bundles.

“The lack of associations between Bundled Payments for Care Improvement program participation and changes in volume or the majority of patient case-mix factors may provide reassurance about 2 potential unintended effects of voluntary bundled payments for lower extremity joint replacement,” the study, conducted by University of Pennsylvania researchers, found.

Since bundled payments set a fixed price that hospitals must not exceed, it was thought that providers were likely to boost volumes of these episodes paid for by Medicare. The move would have shifted the case mix to lower-risk patients and potentially wiped out any program savings, but the findings showed no significant changes.

“CMS is rightfully concerned that severity adjustment may become a means for hospitals to up-code severity and ‘game’ the program,” the blog reads. “This tension between appropriately accounting for variation in hospital risk while minimizing the ability for hospitals to game performance measures is central in alternative payment models.”

Both studies are likely encouraging for the overall mission of bundled payment models, with more knowledge on the risks and costs of the models.