As Medicare prepares to require hundreds of hospitals to take bundled payments for some orthopedic surgeries, about two-thirds of the hospitals, medical groups and other providers mulling whether to join the Obama administration's voluntary bundled-payment program said, “No thanks.”
The Affordable Care Act program known as the Bundled Payments for Care Improvement initiative attracted about 6,900 providers that agreed to formally review how participating would play out for them.
The CMS announced on Thursday that 2,100 providers finished that review and entered contracts under which Medicare will bundle the costs of treating various conditions—heart failure, joint replacement, stroke, heart attacks—into a single payment.
Their participation marks a significant spike from the roughly 240 providers that previously entered contracts under the program.
“We are excited that thousands of providers in the Bundled Payments for Care Improvement initiative have joined us in changing the healthcare system to pay for quality over quantity,” said Dr. Patrick Conway, CMS acting principal deputy administrator and chief medical officer.
Federal officials have targeted bundled payments, accountable care and other new payment models for rapid expansion.
By the end of next year, at least 30% of payments to providers in traditional Medicare will be under such contracts, the CMS announced in January. That will increase to 50% by 2018, the administration said.
The bundled-payment initiative is testing four different bundles involving 48 conditions, such as cardiac bypass surgery, new hips and knees, and pacemaker replacements.
The large number of providers that decided against committing to the bundles is not surprising, said Andrew Ryan, an associate professor of health management and policy at the University of Michigan.
The contracts inherently deliver savings for Medicare because they reduce what providers are paid upfront and hospitals must squeeze their spending enough to earn a profit on a reduced payment. To do so, they must manage care delivered outside their walls, Ryan said. “It's really not immediately obvious that this is a good idea for hospitals.”
Some of the hospitals that opted out may end up dealing with bundles anyway in January if Medicare adopts its proposal to require bundled payments for hip and knee replacements in 75 markets, noted Erin Smith, a senior manager with consulting firm Avalere, who previously worked on the bundles program at the CMS Innovation Center. The hospitals that participate in the analysis required under the voluntary program, she said, may be better prepared to succeed in the model when it is mandatory.