Do Bundled Payments Cut Costs? Study Raises Doubts

Many CMS models have little or no effect on spending

Bundled payments have been touted as a way to keep skyrocketing health care costs under control, but a new analysis by the Kaiser Family Foundation (KFF) has raised early doubts about some of the initiatives being undertaken by the Centers for Medicare and Medicaid Services (CMS).

A recent American Medical Association study found that nearly 60% of medical practices are enrolled in alternative payment models.

The KFF study looked at four ways the CMS is promoting bundled payments through its Bundled Payment Care Improvement (BCPI) initiative, according to an article posted on the FierceHealthFinance website. These initiatives include:

  • Bundles for an entire episode of care at a hospital that is discounted from the usual Medicare payment (BPCI1)
  • Bundled payments for all episodes of care (inpatient and outpatient) (BPCI2)
  • Bundled payments for episodes of inpatient and post-discharge care (BPCI3)
  • Bundled payments for hospital episodes of care and any subsequent readmissions (BPCI4)

The KFF study found that bundled payments produced mixed results when it came to cutting costs. For example, in the BPCI1model, which bundles inpatient care, the initial evaluation found that BPCI (bundled payment) episodes had achieved lower cost growth than non-BPCI episodes compared with the baseline level during the initial hospital stay but not afterward for the post-acute period. In the BCPI2 model, for which hospitals and physician groups are accountable for episodes encompassing the acute and post-acute period, BPCI episodes resulted in lower spending in the post-acute care period compared with non-BPCI episodes. This reduction was attributable, in part, to decreases in the use of skilled nursing facility services and inpatient rehabilitation facilities concurrent with increases in the use of home health services, and to reductions in hospital readmissions. In the BPCI3 model, which focused only on post-acute care episodes, no statistically significant change in overall spending was detected among the relatively small number of episodes evaluated over the initial three months.

“No notable differences in quality were found between BPCI [bundled payment] and non-BCPI participants across all four models,” the authors concluded.

In November 2015, the CMS announced the final plan for a new program that would introduce bundled payments to joint-replacement surgeries.

Sources: FierceHealthFinance; February 25, 2016; Kaiser Family Foundation; February 23, 2016; and CMS; November 24, 2015.