Bundled Payment Model Reduced Spending on Medical, Surgical Episodes

Participating in Medicare’s Bundled Payments for Care Improvement (BPCI) initiative was associated with cost savings for medical and surgical episodes, but savings varied among hospitals and physician groups, according to a study published in JAMA Health Forum.

Under the BPCI model, physician groups and hospitals are held accountable for the quality and costs of medical and surgical episodes starting from hospital admission to 90 days after discharge.

Researchers used Medicare claims data from 2011 to 2018 to assess the association of BPCI participation with medical and surgical episode outcomes. The study compared results for physician groups and hospitals participating in BPCI model 2.

The analysis focused on outcomes for the top five highest-volume medical episodes: congestive heart failure, pneumonia, sepsis, chronic obstructive pulmonary disease, and other respiratory diseases, and the top five highest-volume surgical episodes: lower extremity joint replacement, hip and femur procedures except for major joint, percutaneous coronary intervention, upper extremity joint replacement, and spinal fusion.

January 1, 2011, to September 30, 2013, was considered the baseline period before the BPCI model began, while October 1, 2013, to December 13, 2017, was the intervention period.

The study included data for 1,288,781 beneficiaries. Nearly 700,000 beneficiaries received care at 379 BPCI hospitals and 1,441 non-BPCI hospitals, while 592,071 beneficiaries received care from 6,405 physicians in BPCI practices and 24,758 physicians in non-BPCI practices.

Between the baseline and the intervention period, total episode spending for medical episodes increased for BPCI physician groups and non-BPCI groups. Meanwhile, spending decreased for BPCI hospitals.

Hospitals that participated in the BPCI model experienced a $763 reduction in medical episode spending relative to non-BPCI hospitals. BPCI physician groups saw a non-differential decrease of $102 compared to non-BPCI physician groups. Additionally, BPCI hospitals experienced a $661 reduction in medical episode spending compared to BPCI physician groups.

BPCI participation was associated with decreased 90-day readmission and mortality for medical episodes for hospitals and physician groups.

Surgical episode spending decreased for all groups between the baseline and the intervention period. Compared to non-BPCI hospitals, BPCI hospitals saw a $1,101 reduction in episode spending. Similarly, BPCI physician groups experienced a $1,345 reduction in surgical episode spending relative to non-BPCI physician groups.

Spending changes did not differ significantly between BPCI hospitals and physician groups, the study noted.

BPCI participation was associated with a reduction in 90-day readmissions for physician groups but not hospitals. Compared to changes for BPCI physician groups, BPCI hospitals experienced an increase in readmissions. BPCI participation was tied to reductions in mortality for both physician groups and hospitals.

Participating in the BPCI initiative did not result in equal outcomes for hospitals and physician groups regarding surgical and medical episode cost savings.

The findings highlighted the benefit of engaged physician groups in episode-based payment models and how they can help generate cost savings for surgical episodes beyond joint replacement episodes. However, the results also determined how hospitals have an advantage over physician groups when achieving costs and quality outcomes for medical conditions.

The findings emphasized the need for additional research on what drives cost savings and quality improvements under bundled payments.

“Our results regarding BPCI-participating [physician group practices] point to the importance of changes in readmissions and post-acute care utilization in determining episode savings. Yet as observed from BPCI-participating hospitals, different patterns of utilization changes may drive savings for different episode types,” researchers wrote.

In the future, policymakers should consider the differences in outcomes among participant types when designing and evaluating new bundled payment models, the study concluded.