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.”
The researchers point to a few core policy implications. “First,” they say, “the differences in organizational characteristics between BPCI and CJR hospitals demonstrate that Medicare’s voluntary and mandatory programs have engaged different types of hospitals to date and that results from BPCI might not be as generalizable as those from CJR. While Medicare may have intended to select a different set of hospitals in the two programs, our analysis is the first to empirically describe on which characteristics the two hospital groups differ.” Second, “CJR has engaged hospitals that, on average, perform similarly to hospitals that chose to volunteer for BPCI. On the other hand, the differences highlight the possibility that extending voluntary programs such as BPCI to hospitals that would not otherwise volunteer (like most in CJR) might not achieve the same results if required participants had fewer resources, weaker leadership, or less capacity to perform in at-risk arrangements.”
In other words, put very simply, the BPCI program has succeeded partly because of its voluntary nature. Were the program to be extended in a mandatory form to additional hospitals, the researchers conclude, the chances are small that the level of success achieved so far in the BPCI program would be maintained.
“These findings could temper policy makers’ expectations that either voluntary or mandatory programs alone can achieve the desired broad impact,” the researchers conclude. “Instead, our results suggest that both voluntary and mandatory approaches can play an important role in engaging hospitals across the country, and that perhaps policy makers should not restrict policy options to one approach over the other. Our study highlights the fact that whichever path or paths CMS selects, emerging bundled payment policies, to reach beneficiaries across the US, should engage a broad range of hospitals for cost savings and quality improvement. This would require approaches that use either mandatory programs or additional targeted voluntary programs, as exemplified by the approach that Medicare has adopted in its accountable care organization policies: While early programs tended to engage large, urban provider organizations, emerging models focus explicitly on rural and small physician-led organizations.”
All of this holds tremendous implications for federal healthcare policymakers in the federal agencies and in Congress. As bundled payment programs move forward, these researchers conclude, it is going to prove more challenging to achieve the levels of success obtained so far. At the same time, federal healthcare policy leaders will need to find ways to engage a broader range of patient care organizations in participating in bundled payments, in order to broaden the success of the overall phenomenon.
And data and analytics, as well as foundational information technology, will most certainly play a role in all of this. For one thing, it’s clear that the leaders of pioneering patient care organizations have already moved forward to leverage data, data analytics, foundational information technology, and continuous performance improvement at the clinical and operational level, in order to be successful in programs like BPCI. The profound challenge for federal healthcare policymakers will be to move all hospitals and medical groups forward in relevant areas, as they attempt to move the needle on the entire U.S. healthcare system.
What Dr. Navathe and his colleagues have highlighted here is a spectrum of challenges and opportunities around bundled payments. It will require very strategic, thoughtful policymaking on the part of senior officials at the Department of Health and Human Services and the Centers for Medicare and Medicaid Services, in order to turn these opportunities into realities, for the betterment of healthcare delivery and of patients’ health status.