Bundled payments cut costs but will face opposition from new administration

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A study published this week in JAMA Internal Medicine found that hospitals experienced significant savings on joint replacement procedures under the bundled payment model. But the program may be in jeopardy once Tom Price, President-elect Donald Trump's pick to oversee the Department of Health and Human Services, takes office.
Tom Price
Tom Price

Bundled payments are an effective way for providers to reduce costs for joint replacements without a significant investment—but the man tapped to head the Department of Health and Human Services has vigorously opposed alternative payment model mandates.

The Centers for Medicare & Medicaid Services unveiled the bundled payment initiative in 2015, and a study published this week in JAMA Internal Medicine found that hospitals experienced significant savings on joint replacement procedures under the program.

The team examined data from nearly 4,000 lower extremity joint replacement patients at Baptist Health System in San Antonio, Texas, which were recorded between July 2008 and June 2015. Costs for implants and post-acute care both dropped notably at Baptist, the study found, by an average of 29% and 27%, respectively, per case. Overall, spending on such procedures dropped by 20% at Baptist hospitals, according to the study.

But an article by Kaiser Health News notes that Rep. Tom Price, President-elect Donald Trump’s pick to lead HHS, has opposed mandates for bundled payments and that he is likely to revoke this once he is confirmed and in office. KHN reports that in September, he wrote a letter to the CMS stating that the federal agency overstepped its bounds by requiring bundled payments, as it took the decision away from patients and physicians.

In addition, the Center for Medicare and Medicaid Innovation, which experimented with the new payment models, would be dismantled with a repeal of the ACA, which the incoming Trump administration and Republican Congress has vowed to do.

An editorial accompanying the study notes that the research only focused on one system, so further analysis is needed to fully understand the positives and negatives of the bundled payment programs. It also noted that an increase in volume for such procedures could skew savings figures.

“Much more work is needed to assess how health status changes after calculated savings and to the extent to which volume increases offset per episode savings,” the authors wrote.