Bundled payments can cut post-discharge costs

surgery
Surgery.

A voluntary bundled payment program operated by the Centers for Medicare & Medicaid Services has significantly cut the costs of surgical procedures, according to new research.

Bundled payment models are becoming increasingly popular, however questions as to their overall effectiveness in controlling costs linger.

But new research on the Bundled Payments for Care Improvement initiative, published in the Journal of the American Medical Association, may shed some light on their cost-saving potential. 

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The study examined more than 61,000 joint replacement surgeries between October 2011 and June of last year. The costs of the joint replacements averaged $30,201 at 768 hospitals prior to the introduction of the bundled payment program. After it was phased in at 176 hospitals, payments for care declined to the mean of $27,265. The bundled payments were for an episode of care that extended to 90 days beyond discharge from the hospital.

Comparison hospitals also saw their Medicare payments drop during the study period, but those in the joint replacement program saw their payments drop by an addition $1,166. The study concluded that was primarily for reductions in post-acute care costs. SNF payments were $546 lower and payments for inpatient rehabilitation hospitals were $445 lower. Readmissions and other post-discharge complications were not statistically different among the two populations.

The study also noted better experiential outcomes in the bundled payment population: “Respondents reported greater improvements in mobility, physical and emotional problems, and pain and did not differ from the comparison group with respect to changes in other functional measures or satisfaction,” it concluded.

The news appears to be encouraging for the CMS, which announced in 2015 it would roll out a comprehensive bundled payment program for joint replacements starting this spring. The intent is to reduce the $7 billion a year it currently spends on joint replacements, as well as reduce the variability in care quality, although it does not contain any components for keeping procedure volumes in check.

Indeed, the study authors did note that despite the lower costs in a bundled payment program, such initiatives shouldn't encourage hospitals to perform more procedures, increasing payouts even as the cost per episode declines.

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