The first year of CMS’ voluntary Bundled Payments for Care Improvement initiative has yielded a mixed bag of results, according to the program’s 2016 evaluation report. “There have been modest reductions in Medicare episode payments for select clinical episode groups with isolated instances of quality declines and fewer instances of increased quality,” the CMS report said. Patrick Conway, MD, acting principal deputy administrator and chief medical officer for CMS, was optimistic about the results of the experience of participants through June 2015. In a blog post, he pointed to how “11 out of the 15 clinical episode groups analyzed showed potential savings to Medicare.” This is echoed in a recent JAMA study. But one researcher warns the program may have inadvertently encouraged unnecessary treatment, contrary to Medicare’s goal of lowering overall spending through value-based care models.
Bundled Payments for Care Improvement initiative
Enthusiasm for bundled payments is high. Leading health policy experts recently called on CMS to expand its mandatory bundled payment initiative. The Bundled Payments for Care Improvement (BPCI) initiative is designed to test whether linking the payments for all providers involved in delivering an episode of care can reduce Medicare costs while maintaining or improving quality of care. The Centers for Medicare & Medicaid Services (CMS) launched the BPCI initiative under the authority of the Center for Medicare and Medicaid Innovation. BPCI Awardees, which can include hospitals, physician groups, post-acute care (PAC) providers and other entities, entered into agreements with CMS to be held accountable for total Medicare episode payments. Those agreements also specify Awardees’ choices among four payment models, 48 clinical episodes, three episode lengths and waiver options.
The BPCI initiative is designed to reward Awardees for adopting practices that reduce Medicare payments for the bundle of services in the episode relative to a target price that CMS determines based on the provider’s historical payments for the same type of episode. When Awardees’ episode payments are below the target price, they may receive net payment reconciliation amounts (NPRA), which they can keep or share with their partnering providers. When Awardees’ episode payments are above the target price, they may have to return amounts to CMS. Thus, Awardees have strong incentives to lower episode costs.
How Are They Performing?
A recent JAMA report is the largest study to date of the program. The major finding of the study is that while spending decreased in both the intervention and control populations, the decrease was significantly greater for health care organizations in the BPCI. For hospitals participating in the BPCI initiative, mean Medicare payments for the hospitalization and 90-day post-discharge period were $30,551 during the baseline period and decreased to $27,265 during the intervention period. In the comparison hospitals, mean episode payments were $30,057 at baseline and decreased to $27,938 during the intervention period. Payments declined $1166 more in the BPCI hospitals than in the comparison group. Almost all of the reduction in spending was from reduced use of institutional post-acute care.
Limitations
The JAMA study does suffer from some limitations. First, these could be positive results from an early part of the initiative and thus an outlier. For instance, the greater changes in hospital characteristics for the BPCI participants between the baseline and intervention periods suggest that these hospitals were evolving differently than the comparison hospitals. Second, the quality measures were limited. Although the incentives to improve quality are strong given the high cost of complications, subsequent studies will need to confirm that beneficiaries are not harmed. A third concern is whether the design of the evaluation was sufficiently sensitive to behavioral changes that could make any apparent savings misleading.
Using a different method to study the model, researchers indicate that total spending actually decline less in the BPCI hospitals than in the comparison hospitals. In the BPCI hospitals, during the pre-intervention period, the mean number of total joint replacement episodes initiated per quarter per hospital was 61.5 and the mean total payment per episode was $30 551, for mean total payments per quarter per hospital of $1,878,887, whereas the comparable numbers in the intervention period were a mean of 64.6 episodes and mean payment per episode of $27,265, for mean total payments per quarter per hospital of $1,761,319, a mean difference of $117,568 per hospital, a 6.3% decrease.
It is thus too soon to tell whether the portion of the BPCI initiative focused on lower extremity joint replacement is actually improving care and achieving savings for the Medicare program. The launch of the Comprehensive Care for Joint Replacement initiative should therefore be seen as an important step forward.
PricewaterhouseCoopers (PwC) study
About 31% of hospitals have adopted a bundled payment program, and about 63% of those hospitals have achieved savings, according to a survey by PwC. Even so, BPCI’s varied results—and the mixed results of other alternative payment models such as accountable care organizations—could give healthcare providers pause. Health systems that succeeded in pocketing savings in the orthopedic and cardiovascular groups did so, in part, by discharging patients to less expensive clinicians, such as home health providers, compared to institutional post-acute providers. Hospitals that embrace bundled payments should ensure that they have identified appropriate post-acute provider partners, and have improved consumer outreach initiatives.