Medicare's Mandatory Bundled Payments Prove Their Worth

Hospitals that get bundled payments for joint replacements either voluntarily or through Medicare's mandatory programs, vary by size and volume, but not in spending or quality.

Voluntary bundled payment programs engage larger non-profit hospitals, while lower volume hospitals with fewer resources might only participate under a mandatory program, a new study shows.

The results, published in the June issue of Health Affairs, suggest that both mandatory and voluntary bundled payment programs are needed to engage more hospitals.

"Our results suggest that both voluntary and mandatory approaches can play an important role in engaging hospitals across the country, so policymakers should not restrict policy options to one approach over the other," study lead author Amol S. Navathe, MD, an assistant professor in the department of Medical Ethics and Health Policy at Penn Medicine, said in prepared remarks.

Critics of mandatory bundled-payments have called for the programs to be strictly voluntary amid concerns that some hospitals won't see cost savings, and will stop performing these surgeries rather than lose money.

The Centers for Medicare & Medicaid Services began cutting back its mandatory bundled payment programs and putting more emphasis on voluntary programs.

However, the study found no evidence that hospitals in the mandatory program were obviously disadvantaged compared to their voluntary hospitals.

The researchers used data CMS and American Hospital Association that compared organizational characteristics and measures of costs and care quality for 302 hospitals in the voluntary bundled-payment joint-replacement program and 799 in the mandatory program.

The researchers found no large differences in baseline spending, care quality, or financial risk exposure for voluntary vs. mandatory program hospitals.

"The mandatory program does not seem to have disadvantaged its participants compared to voluntary participants on average, with respect to spending and care quality," Navathe said.

Hospitals in the voluntary program were self-selected; they were generally larger, had a greater volume of joint-replacement surgeries, and likely were not representative of hospitals nationwide.