Initial Analysis of a CMS Bundled Payment Effort

By October 6, 2016Commentary

Halleluja!! At last there may be a health system innovation that is working as intended.  A couple of years ago CMS started a voluntary program to bundle payments for certain health care episodes of care (some of these are now mandatory).  An analysis of the impact of this effort was published in the Journal of the American Medical Association.   (JAMA Article)   The research compared performance at the approximately 175 hospitals participating in the initiative for knee and hip replacements, the most prevalent bundled episodes, with the performance of a similar number of non-participating hospitals. The study looked at relative costs, quality on certain measures and results of a beneficiary survey.  Hospitals participating in the program were more likely to be large, urban, non-profit, a teaching hospital and part of a system than those facilities that did not participate.  In these hospitals, prior to the start of the bundled payments, patients were less likely to be discharged directly to home, more likely to go to an inpatient rehabilitation facility and more likely to be readmitted to the hospital within 30 days.

In the participating hospitals, mean Medicare costs for the bundled episodes was $30551 in the baseline period and declined to $27265 during the bundled payment period, compared to baseline payments of $30057 and intervention period payments of $28237 for the non-participating facilities.  While both categories showed a decline in reimbursement, it was significantly larger for the bundled payment institutions.  This larger payment reduction was largely due to lower use of discharge to other institutions, like a skilled nursing facility or an inpatient rehabilitation facility.  Claims-based quality measures showed no differences in outcomes for the patients at the bundled payment or non-participating facilities.  The survey results indicated that beneficiaries at bundled payment hospitals reported a faster return to fuller functional status.  This may reflect the value of a home discharge as opposed to one to another institutional setting.  These initial results suggest that CMS can save a lot of money by using bundled payments, at least for these procedures, without compromising patient quality and in fact, leading to a faster functional recovery for patients.

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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