Bundled Payments May Have Unintended Consequences

Participants could seek less-costly mix of patients, authors say

Lower spending on episodes of care and high-quality outcomes do not allay concerns about the overall impact of the bundled-payment model, according to a new study published online in the Journal of the American Medical Association.

Bundled Payments for Care Improvement (BPCI) is a voluntary initiative of the Centers for Medicare and Medicaid Services to test the effect of holding an organization accountable for all services provided during an episode of care on episode payments and quality of care.

The new study evaluated whether BPCI was associated with a greater reduction in Medicare payments without loss of quality of care for lower-extremity joint (primarily hip and knee) replacement episodes initiated at BPCI-participating hospitals that were accountable for total-episode payments.

The authors estimated the differential change in outcomes for Medicare fee-for-service beneficiaries who had a lower-extremity joint replacement at a BPCI-participating hospital between the baseline (October 2011 through September 2012) and intervention (October 2013 through June 2015) periods compared with beneficiaries with the same surgical procedure at matched hospitals.

There were 29,441 lower-extremity joint replacement episodes during the baseline period and 31,700 during the intervention period (mean age, 74.1 years; 65.2% women) at 176 BPCI-participating hospitals, compared with 29,440 episodes during the baseline period (768 hospitals) and 31,696 episodes during the intervention period (841 hospitals) (mean age, 74.1 years; 64.9% women) at matched comparison hospitals.

The BPCI mean Medicare episode payment was $30,551 at baseline, and this declined to $27,265 during the intervention period. Comparison mean Medicare episode payments were $30,057 during the baseline period, and this number also declined (to $27,938).

The mean Medicare episode payments declined by an estimated $1,166 more (P

Although spending levels on episodes of care at BPCI-participating hospitals were lower than at comparison hospitals, the researchers found no evidence to allay concerns over two of the most vexing potential unintended consequences linked to bundled payments.

One concern is that bundling “may provide incentives to increase the number of episodes, particularly with less-intensive patients, because of the opportunity for greater financial rewards. If more beneficiaries undergo a procedure, then total payments may increase even if per-episode payments decrease,” the authors wrote.

The other concern is that participants may select patients who would be less costly to treat, the authors noted.

“Although several indicators of patient complexity, such as mean number of hierarchical condition category indicators, did not differ between the BPCI and comparison populations, hospitalizations, SNF [skilled nursing facility] stays, and home health-care use prior to the episode decreased for the BPCI population relative to the change for the comparison population,” they wrote. “This could indicate that BPCI participants treated or sought a less costly mix of patients under the initiative.”

An accompanying editorial noted that although the findings were promising, the investigation had important limitations. “First, the study reported on the first few months of what will be at least a 3-year program in which participation was voluntary,” the editorial pointed out. “Early positive results could be an anomaly, or the volunteering organizations could differ from the comparison group in unmeasured ways.”

Sources: HealthLeaders Media; September 21, 2016; and JAMA; September 19, 2016.