Study raises doubts that bundled payments cut costs

Bundled payments have been touted as a potential savior for keeping soaring healthcare costs in check, but a new analysis by the Kaiser Family Foundation (KFF) has raised early doubts about some of the initiatives being undertaken by the Centers for Medicare & Medicaid Services (CMS).

Alternate payment models such as bundled payments are continuing to grow dramatically. A recent American Medical Association study found nearly 60 percent of medical practices were enrolled in an alternative payment model. 

The KFF study examined four ways CMS is promoting bundled payments through its Bundled Payment For Care Initiative. They include:

  • Bundles for an entire episode of care at a hospital that is discounted from the usual Medicare payment (BPCI1)
  • Bundled payments for all episodes of care (inpatient and outpatient) (BPCI2)
  • Bundled payments for episodes of inpatient and post-discharge care (BPCI3)
  • Bundled payments for hospital episodes of care and any subsequent readmissions (BPCI4)

The bundled payments had mixed results when it came to cutting costs. The study found that the BPCI1 model cut costs in the hospital setting but not after discharge. The BPC2 model did result in reduced costs. However, there was no difference in spending using the BPCI3 and BPCI4 models. Home healthcare service spending actually increased in the BPC3 model.

Overall quality appeared unchanged. "Early analysis found no notable differences in quality between (bundled payment) and (non-bundled payment) participants across all four...models," the KFF study said.

Despite the doubtful early data, CMS is undeterred about expanding bundled payment initiatives among providers. It recently announced a final plan for a new program that would introduce bundled payments to joint replacement surgeries. A CMS pilot involving bundled payments for joint replacements saved $1 million during the first year it was employed at Baptist Health in San Antonio.

To learn more:
- read the Kaiser Family Foundation study

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