Bundled payments, by some estimates, are taking off more quickly than any other value-based payment scheme.
But a dearth of data obscures the model's actual effect on the costs and quality of healthcare, a challenge underscored in the latest report on Medicare's voluntary Bundled Payments for Care Improvement initiative.
In one clinical episode—orthopedic surgery—setting a flat price for all of the care delivered during the episode of care appeared to reduce costs and improve patient outcomes. But for others, there simply wasn't enough evidence to declare the bundle a success or failure.
“It's hard to draw conclusions either way from this report,” said Dr. Chad Ellimoottil, an assistant professor at the University of Michigan whose research focuses on alternative payment models, including bundled payments.
The report released Monday analyzes nearly 60,000 episodes of care initiated between October 2013 and September 2014 by 130 hospitals, 63 skilled-nursing facilities, 28 home health agencies and four physician group practices participating in three of BPCI's four models. The authors cite numerous data limitations and warn against extrapolating from the results.
“For most clinical episodes, there were no statistically significant differences in the change in Medicare standardized allowed payments between BPCI participants and comparison providers,” the analysts write in the report, which was generated for the CMS Innovation Center by the Lewin Group, along with partners Abt Associates, GDIT and Telligen. “We remain limited in our ability to estimate the impact of the initiative under most model and episode combinations because of insufficient sample size and the limited time the initiative has been underway.”
BPCI hospitals were found to reduce the costs of orthopedic surgery by $864, a decrease the report attributed to a reduction in institutional post-acute care. These patients also showed greater improvement in two mobility measures than patients in non-BPCI hospitals.
Meanwhile, the costs for spinal surgery rose by $3,477 at BPCI hospitals. For several other clinical episodes, decreases in price were not deemed statistically significant.
“The results to me just reinforce what we already know,” said Francois de Brantes, executive director of the Health Care Incentives Improvement Institute, a not-for-profit organization dedicated to studying and promoting value-based payment models. “For some of these episodes, like joint replacement, it works fine,” he said. “Everything depends on the episode or the condition or the illness you're looking at.”
The U.S. is in the midst of a major push to pay for healthcare on the basis of quality over quantity, and bundled payments are regarded as an especially promising model.
Bundled payments are growing faster than any other model of value-based care among private payers, according to the McKesson Health Solutions, the consulting arm of McKesson Corp. This year, the payers that responded to McKesson's survey on value-based reimbursement—including commercial and managed Medicare and Medicaid plans—made 11% of their payments under bundles. They expect that number to rise to 15% in two years and to 17% five years from now.
Medicare's Comprehensive Care for Joint Replacement model, which began in April and is mandatory for 800 hospitals across 67 metropolitan areas, bundles payments for hip and knee replacements. In July, the CMS proposed introducing mandatory bundled payments for bypass surgery and heart attacks in 98 metro areas. Overall, the administration aims to tie 90% of traditional Medicare fee-for-service payments to quality or value by 2018.
“CMS is doubling down on bundled payments without a lot of evidence,” Ellimoottil said, although he called it encouraging that the clinical episodes with the highest number of cases showed cost reductions in the report. He also noted it would take time for the broader effects of bundled payments to take hold.
Implementing payment reforms does not “flip a switch and all of a sudden hospitals are way more efficient,” Ellimoottil said. “When you do implement programs like this, you get hospitals thinking about things they never thought about before,” but it takes time for changes to bear fruit.
Providers also need a critical mass of patients in order to make it worthwhile to change their approaches to care in response to value-based reimbursement schemes.
“It's a big deal for the surgeon or the hospital to really start to pay attention to how long a patient is in skilled nursing,” said Dr. Andrei Gonzales, director of value-based reimbursement initiatives at McKesson Health Solutions. “If you don't have a critical mass of patients that are in a bundled-payment model, the benefit of getting a case manager involved doesn't pan out, financially.”
Despite its caveats, the report spurred several optimistic, if measured, predictions.
“The BPCI evaluation adds to the growing body of research that changing provider incentives away from a volume-driven model can produce modest savings without compromising quality of care,” said Dr. Mark Fendrick, a professor at the University of Michigan and director of its Center for Value-based Insurance Design.
CMS acting Principal Deputy Administrator and Chief Medical Officer Dr. Patrick Conway called its findings “encouraging,” and he praised the progress made in orthopedic surgery bundles.
De Brantes was less sanguine about the administration's full-steam-ahead approach. He questioned several aspects of its bundle design, including that the episodes are triggered by hospitalization rather than encompassing the management of a condition. He also criticized the lack of adjustment for patient severity.
“Could it be a lot more definitive and improved over time? Of course,” de Brantes said of Medicare's bundled payment models. “It's up to the government to really come to grips with how to design this the right way and how to implement it the right way.”