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 appeared to reduce costs and improve patient outcomes. But for others, there simply wasn't enough evidence to declare bundles 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, generated for the CMS by the Lewin Group, 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: “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. “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.
Medicare's Comprehensive Care for Joint Replacement model, which began in April and is mandatory for 800 hospitals in 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.
“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 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. Dr. Mark Fendrick, a professor at the University of Michigan and director of its Center for Value-based Insurance Design, said the “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.”
De Brantes, however, 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. “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.”