Providers reluctant to join in bundled payment initiatives when their finances are at risk

Many providers have entered bundled payment programs in the initial phase, but are far more reluctant to continue to do so when they have more downside risk, according to a new analysis by Avalere Health.

Bundled payments have become increasingly common in healthcare delivery and financing in recent years, with the Centers for Medicare & Medicaid Services recently announcing a significant project that will bundle joint replacement surgeries, demand for which has risen dramatically in recent years. That initiative is expected to save the Medicare program as much as $343 million over the next five years by limiting payments to providers and pressuring them to ensure that patients receive the highest quality of care. 

However, the hospital community opposed CMS' joint replacement initiative, suggesting that there remains significant resistance among providers to participate in bundled payment programs.

The Avalere analysis examined CMS' voluntary Bundled Payment for Care Improvement program. Altogether,1,500 providers initially participated, testing an average of nine unique episodes of care under the initiative. 

However, after the first phase of the program, CMS began introducing downside risk for the participants. As a result, only about 25 percent of the original participants elected to remain in the program, according to Avalere. About 27 percent of remaining participants are hospitals, with the largest representation coming from skilled nursing facilities.

"Strong participation in a voluntary program shows providers' willingness to test new alternative payment models," said Josh Seidman, senior vice president at Avalere. "However, the fact that many providers that entered the program decided it's not currently in their financial interest to accept downside risk may cause CMS to consider additional mandatory programs in the future."

 To learn more:
- read the Avalere Health analysis (.pdf)