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Researchers Find a Bundle of Complications Around Bundled Payment Outcomes

June 14, 2018
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Researchers consider the tangle of issues facing federal healthcare officials, around bundled payment mechanisms

An article published in the June issue of Health Affairs by a team of healthcare policy researchers may well shake up the ongoing debate over the relative value and efficacy of mandatory, versus voluntary, bundled payment models. “Comparison Of Hospitals Participating In Medicare’s Voluntary And Mandatory Orthopedic Bundle Programs,” authored by Amol S. Navathe, M.D., Ph.D., Joshua M. Liao,  M.D., Daniel Polsky, Ph.D., Yash Shah, Qian Huang, Jingsan Zhu, and Zoe M. Lyon, Robin Wang, Josh Rolnick, Joseph R. Martinez, and Ezekiel J. Emanuel, M.D., Ph.D., examines data to determine whether mandatory or voluntary bundled payment models more clearly demonstrate better quality and cost outcomes.

As the authors write in their abstract to the article, “We analyzed data from Medicare and the American Hospital Association Annual Survey to compare characteristics and baseline performance among hospitals in Medicare’s voluntary (Bundled Payments for Care Improvement initiative, or BPCI) and mandatory (Comprehensive Care for Joint Replacement Model, or CJR) joint replacement bundled payment programs. BPCI hospitals had higher mean patient volume and were larger and more teaching intensive than were CJR hospitals, but the two groups had similar risk exposure and baseline episode quality and cost. BPCI hospitals also had higher cost attributable to institutional post-acute care, largely driven by inpatient rehabilitation facility cost,” the authors write in their article. “These findings suggest that while both voluntary and mandatory approaches can play a role in engaging hospitals in bundled payment, mandatory programs can produce more robust, generalizable evidence. Either mandatory or additional targeted voluntary programs may be required to engage more hospitals in bundled payment programs.”

The researchers note that, “After several small demonstration projects that began in the 1990s, CMS [the Centers for Medicare and Medicaid Payments] expanded bundled payment nationwide in late 2013 via the Bundled Payments for Care Improvement (BPCI) initiative. The largest voluntary program to date, the initiative has included 1,201 hospitals. The most popular episode among participating hospitals was major joint replacement of the lower extremity (hereafter “joint replacement”) via the initiative’s model 2, in which 313 hospitals bundled hospitalization and up to ninety days of post-acute care. Based on expanding participation in BPCI over time and reports of financial savings, CMS used BPCI’s bundled payment design as the basis for the Comprehensive Care for Joint Replacement (CJR) Model beginning in April 2016,” they note. “The first mandatory Alternative Payment Model, CJR required nearly 800 hospitals in 67 urban markets (areas with a population of at least 50,000 people) to bundle joint replacement through the program’s first year.”

Meanwhile, the authors note, “Though CJR largely follows BPCI in terms of design, the two programs differ along several key dimensions. They represent different mechanisms of participation: Hospitals may volunteer to participate in BPCI because they expect to succeed under bundled payment, whereas Medicare required all acute care hospitals in markets selected for CJR to participate in it. These markets were selected to oversample markets with above-average episode expenditures and an annual joint replacement surgery volume of more than 400 episodes. BPCI also includes forty-seven other conditions besides joint replacement, while CJR focuses on joint replacement alone.”

The researchers “used publicly available data from CMS to identify hospitals participating in joint replacement bundles through BPCI or CJR, and data on a 20 percent national sample of Medicare beneficiaries for the period 2010–16 to construct bundled payment episodes for patients admitted nationwide for joint replacement surgery under Medicare Severity–Diagnosis Related Groups (MS-DRGs) 469 and 470 (these groups are for major hip and knee joint replacement or reattachment of lower extremity with or without major complicating or comorbid condition, respectively).”

So what did the researchers find? “In this first study to compare hospitals participating in Medicare’s mandatory and voluntary joint replacement bundled payment programs, we found that the hospital groups exhibited significant differences in organizational characteristics without large differences in baseline quality or spending performance. Specifically, BPCI hospitals had higher volumes and also differed from CJR hospitals with respect to key characteristics such as size, profit status, and Medicare utilization, but the two groups were similar with respect to exposure to financial risk and risk-standardized measures of baseline quality and episode spending. While BPCI hospitals had higher spending on institutional post-acute care than CJR hospitals, these differences represented small proportions of total episode spending.”

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