The Path Ahead for Bundled Payments

Abstract

Bundled payment policy is at a crossroads. Over the last decade, participants in several nationwide models of bundled payments have driven practice changes and produced savings for medical and surgical episodes compared with usual care without bundled payments. [1][2][3][4] There is no evidence that bundled payments have induced procedural volume increases, as was a prior concern. 5 Bundled payments also appear to complement mechanisms for quality improvements and cost savings in population-based models such as accountable care organizations. 6 However, it has been challenging in bundled payment models to balance financial incentives for participants with savings for Medicare. This is evident in Bundled Payments for Care Improvement Advanced (BPCI Advanced), in which Medicare recently adjusted program rules to mitigate its financial losses and preserve program viability. These post hoc changes transferred some savings earned by participants back to Medicare, prompting some participants to exit the program. Separately, the evidence has been mixed about how bundled payment programs affect equity and safetynet organizations. Given these benefits and challenges, it is now critical to define the role for bundled payments and other specialty-focused payment models within a comprehensive alternative payment model strategy.The report by Sashikumar and colleagues in this issue of JAMA brings new results into this policy context. 7 Using claims data from 694 participating hospitals and a differencein-differences methodology, the authors analyzed data from the BPCI Advanced initiative (from October 1, 2018, through December 31, 2019) and found that the program was associated with an estimated $75 million decrease in gross spending, but after distribution of financial bonuses, it was also associated with an estimated $279 million increase in net spending for Medicare. 7 Hospitals that served larger proportions of historically marginalized populations earned disproportionately large bonuses, in stark contrast to analyses of other value-based programs. 8 The authors of this study used a contemporary approach to examine a timely policy topic and adopted a rigorous approach that included several sensitivity analyses and a focus on safety-net organizations. The work of replicating Medicare approaches to calculate financial benchmarks (called target prices in bundled payment programs) was critical for assessing net savings as an outcome. Another important contribution was the effort to identify and distinguish between target price (what spending amounts trigger financial bonuses) and counterfactual episode spending (what spend-

Performance of Physician Groups and Hospitals Participating in Bundled Payments Among Medicare Beneficiaries

“…11 Although it is only one aspect of a payment model's success, spending reductions are critical because policy makers increasingly judge the viability of bundled payment programs by their cost savings. 22 Second, these study findings affirm the suitability of hospitals to bundled payment models, specifically highlighting their relative advantage over PGPs in achieving cost and potential quality outcomes for medical conditions. These findings contrast with prior research 12 demonstrating that PGPs may be more successful than hospitals at reducing spending in population-based payment models, such as acute care organizations.…”

“…This analysis adds to prior work by describing the association of PGP participation in BPCI with cost savings for multiple surgical episodes, extending beyond hip and knee replacements . Although it is only one aspect of a payment model’s success, spending reductions are critical because policy makers increasingly judge the viability of bundled payment programs by their cost savings …”

Variation in Ischemic Stroke Payments in the USA: A Medicare Beneficiary Study

“…For policymakers, these should be recognized as only a herald of what can be potentially achieved [19]. However, for further success, all the stakeholders ought to invest in generating more accurate, timely data that promote transparent and equitable reimbursement agreements based on the value provided to the patient [20].…”

Value-based Reimbursement as a Mechanism to Achieve Social and Financial Impact in the Healthcare System

“…The first available evaluations have suggested the importance of accurately considering costs and the variability associated with the way in which patients interact with the healthcare system regarding the characteristics of each disease prior to the definition of the agreements to mitigate financial and social risks to the system. 5 Regarding its impact on equity and population health, although the objective of these innovative solutions to the challenge of generating social impact by increasing value in the healthcare system seems to be clear, its successful implementation is dependent on an accurate measurement process for outcomes and costs, which must be followed by radical cultural and organizational changes in which providers, payers and patients must all participate. 25…”

“…4 To manage the financial risk of value-based reimbursement agreements more effectively, it is critical to consider accurate patient-level cost information when adjusting fees and bonuses before establishing new payment strategies. 5 The achievement of outcome and cost measurement capabilities at the individual case level while ensuring compliance and agility requires innovative cutting-edge technologies. 6 Those technologies have the capability to collect and evaluate data for any clinical condition or care cycle and to provide data that can be used to identify the most effective reimbursement strategies.…”