As an alternative Medicare payment model, bundled payment for care improvement (BPCI) programs aim to reduce spending by creating incentives for providers to remove expendable costs.
Bundled payments are “episode-based,” relevant to specific conditions or treatments in which providers are expected to absorb service costs and any preventable complication costs associated with the treatment. It is another element within the healthcare industry’s shift toward value-based care.
Lower costs are an anticipated side-effect of the value-based care approach, as opposed to traditional fee-for-service. A single sum is distributed to multiple providers for all services associated to an “episode” of care, rather than reimbursing for individual services.
In one JAMA Network study, the objective was to gauge the effectiveness of bundled payments in relation to lower extremity joint replacement (LEJR).
A five-year trial implemented by the Centers for Medicare and Medicaid Services randomized eligible metropolitan statistical areas (MSAs) to the Comprehensive Care for Joint Replacement (CJR) bundled payment model to a control group or for LEJR, according to the study.
The interim analysis of the first year (2016) demonstrated a “significantly lower percentage” of discharges to post-acute care among beneficiaries in MSAs covered by CJR. Total Medicare spending per episode however, did not reflect any notable reductions. The study concludes, further evaluation is necessary as the program continues its implementation.
Another JAMA study addressed the fear that BPCI programs may incline participating hospitals to take on lower-risk patients by increasing the number of episodes covered by Medicare, since bundled payments are fixed price. The study used LEJR episodes to assess changes in case mix in relation to volume.
The results were reassuring and showed no association with volume and the hospital market mix.
For the full interim analysis of the first-year of CMS’ trial, visit JAMA Network,
And check out their study on the relationship between volume and case mix in Medicare’s BPCI program.
For more information on bundled payments, visit the Kaiser Family Foundation.