Verdict still out on Medicare bundled payments

Do the bundled payment programs that are the hallmark of finance reform in the Medicare program actually work?

A new 174-page report prepared by the Lewin Group on behalf of the Centers for Medicare & Medicaid Services delves into that subject. Despite the report's abundant length, it was short on providing concrete answers.

Bundled payments were introduced as part of the Affordable Care Act. Health policy experts believe that such payments can encourage providers to cut their costs of delivery by operating within constrained budgets. The program can also supposedly contain drug costs because the bundled payments will force providers to haggle over price, the Economist reported.

Bundled payment programs tend to be successful among private payers when the participants receive a higher volume of cases, according to policy experts.

The Medicare program uses four kinds of programs for the Bundled Payments for Care Improvement (BPCI) initiative. The report used a variety of data to track the success of the programs. Lewin noted that for procedures such as spinal surgery or joint replacement, costs were brought down nominally using bundled payments, specifically because the single payments often prompted providers to use less expensive home healthcare services rather than skilled nursing facilities.

But for the most part, there was not much of a difference in the quality of care received by the bundled and non-bundled payment groups as measured in terms of mortality rates, readmissions and emergency room visits, according to the Lewin report. In some cases, the readmission and ER visit rates were actually higher among the bundled payment groups.

Lewin conceded that the relatively small size of the bundled payment participants hampered its conclusions. Findings presented in this report are limited in several ways. First, they base findings on the "experiences from the 15 awardees who signed up for (one) BPCI (program) during the first quarter of the program may not be representative of the population of the 90 awardees currently enrolled in BPCI. Second, in many cases, our sample sizes may have not been large enough to allow us to detect incipient changes in outcomes and therefore non-significant results should be interpreted as inconclusive," the Lewin report said.

To learn more:
- read the Lewin report (.pdf)
- check out the Economist article