Small, rural hospitals not using bundled payment models: study

Stethoscope on top of bundles of money
Bundled payments are not popular among smaller, less profitable hospitals. (Getty Images/Wavebreakmedia)

Hospitals signing up for bundled payment options tend to be larger and better resourced than hospitals that are not enrolling, according to a new study published in JAMA.

Bundled payments are a value-based payment option in which providers are reimbursed based on expected costs for a clinically defined episode of care, such as all services tied to a surgery, as a strategy for reducing healthcare costs. Typically, a bundle includes all the costs related to hospitalization through 90 days after discharge.

Several initiatives have been rolled out by the Centers for Medicare & Medicaid Services (CMS) in an effort to move providers toward value-based payment models. The Bundled Payments for Care Improvement (BPCI) initiative and BPCI-Advanced were established in 2018. An additional five primary care payment models were introduced in April under the Trump administration in an effort to improve value-based care.

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But according to a recent study supported by the Commonwealth Fund, it seems not many hospitals—particularly those that are smaller, underfunded and in rural locations—are taking advantage of those initiatives meant to encourage bundled care. 

RELATED: Alvalere: BPCI participation shows providers open to greater risk

"Participating in these new models takes a lot of work, which requires a lot of personnel, expertise in data analysis, etc.," author Karen Joynt Maddox, M.D., of the Washington University School of Medicine in St. Louis told FierceHealthcare. "We suspect that smaller, more rural hospitals simply don’t have the infrastructure to participate in the current programs. They may also be less able to withstand potential financial losses if they don’t end up doing as well under the program as they hope."

Researchers looked at hospital participation files from BPCI between the years of 2013 and 2018 and BPCI-Advanced for the years of 2018 and 2019. They examined whether the duration of hospital participation in BPCI affected hospital readmission rates and Medicare payments along with which hospitals joined BPCI-Advanced after completion of BPCI.

Although the number of participant hospitals under BPCI-Advanced was double those enrolled in the original BPCI, the demographic of these hospitals remained virtually the same. According to previous reports, only 12.1% of eligible hospitals were enrolled in BPCI before 2018, and 20% of hospitals have dropped out of the program prematurely, as BPCI-Advanced allows hospitals to drop out without penalty.

BPCI-Advanced participant hospitals were more often large, for-profit teaching hospitals located in urban areas versus hospitals not enrolled. In addition, BPCI-Advanced participant hospitals usually had higher operating margins and less patients that were dually enrolled in Medicaid than nonparticipating hospitals.

RELATED: CMS: Nearly 1,300 new providers signed on to new bundled payments

Specifically, 15% of initial BPCI-Advanced participants dropped out of inpatients bundles fully, and 44.6% dropped out of at least one bundle. Hospitals that dropped out tended to be for-profits, small hospitals located in areas with few skilled nurses and rehabilitation facilities.

In 2018-2019, there were more hospitals participating in BPCI-Advanced than participated in BPCI, although BPCI-Advanced hospitals were larger and better resourced than nonparticipants. And hospitals that stayed in BPCI were likely to re-enroll in BPCI-Advanced.

The authors of the study speculate that the broader enrollment in BPCI-Advanced could be due to financial incentives created under the Medicare Access and CHIP Reauthorization Act to participate in alternative payment models. Also, it’s possible that hospital administrators believe these models will be mandatory in coming years.

Looking forward, new strategies may be needed to attract hospitals that are smaller in size and have less favorable finances.

One possibility is to provide technical support in order to make it easier for hospitals to participate.

"Things like more user-friendly data downloads, guidance on successful strategies from other similar hospitals, etc. might help," Maddox said. "CMS could also make the incentives higher and the potential losses lower—sweeten the pot. Another option is to make the models mandatory, which was attempted under the Obama administration, but later canceled."

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