Lower spending on episodes of care and high quality outcome do not allay fears about the overall impact of the bundled-payment model, research indicates.
Bundled-payments contracts for hip and knee replacement surgeries can reduce costs without sacrificing quality, but policymakers must beware unintended consequences, according to a research paper published in the Journal of the American Medical Association this week.
The paper examined hip and knee surgery data from the first 21 months of Medicare's Bundled Payments for Care Improvement (BPCI) initiative using data from 176 hospitals that participated in the BPCI initiative and a comparative sample of 841 nonparticipating hospitals.
"In the first 21 months of the BPCI initiative, Medicare payments declined more for lower extremity joint replacement episodes provided in BPCI-participating hospitals than for those provided in comparison hospitals, without a significant change in quality outcomes," the research paper's 14 coauthors wrote.
At the beginning of the study period, the baseline mean Medicare payment for hip and knee replacement episodes of care at BPCI-participating hospitals was $30,551. Reduced utilization of post-acute care services drove the lower spending level achieved at BPCI-participating hospitals during the first 21 months of the program, the researchers found. "The mean Medicare episode payments declined by an estimated $1,166 more… for BPCI episodes than for comparison episodes, primarily due to reduced use of institutional post-acute care. There were no statistical differences in the claims-based quality measures, which included 30-day unplanned readmissions," they wrote.
Unintended Consequences of Bundled Payments
Although spending levels on episodes of care at BPCI-participating hospitals were lower than the comparison group of hospitals, the researchers found no evidence to allay concerns over two of the most vexing potential unintended consequences linked to bundled payments.
One concern "is that they may provide incentives to increase the number of episodes, particularly with less intensive patients, because of the opportunity for greater financial rewards. If more beneficiaries undergo a procedure, then total payments may increase even if per-episode payments decrease," the researchers wrote.
Another concern "is that participants may select patients who would be less costly to treat. Although several indicators of patient complexity, such as mean number of hierarchical condition category indicators, did not differ between the BPCI and comparison populations, hospitalizations, SNF stays, and home-health care use prior to the episode decreased for the BPCI population relative to the change for the comparison population. This could indicate that BPCI participants treated or sought a less costly mix of patients under the initiative."
Published Response
The BPCI research paper published in JAMA is one of the most extensive and thought-provoking studies about bundled payments to date, according to an editorial JAMA published in conjunction with the study.
"This report is important for several reasons: it is by far the largest study of bundled payments to date; it focuses on bundled payments for lower extremity joint replacement (approximately 400 000 procedures per year); and the payment model evaluated is similar to the recently launched Comprehensive Care for Joint Replacement initiative," wrote Elliott Fisher, MD, MPH, director of The Dartmouth Institute for Health Policy and Clinical Practice.
More studies should be conducted to confirm the JAMA research paper's findings, Fisher wrote.
"Although the findings reported by Dummit and colleagues are promising, the study has important limitations. First, the study reported on the first few months of what will be at least a 3-year program in which participation was voluntary. Early positive results could be an anomaly, or the volunteering organizations could differ from the comparison group in unmeasured ways."
Patrick Conway, MD, acting principal deputy administrator of the Centers for Medicare & Medicaid Services, was a contributing author of the research paper.