Study: Bundled payments lowered costs for hip, knee replacements, but not for other conditions

Medicare spending costs money
A review of 20 studies on bundled payments found that hip and knee replacement bundles led to lower Medicare costs, but the same can't be said for other types of conditions. (Getty/zimmytws)

A new study found Medicare’s hip and knee replacement bundled payment models didn’t lead to a decrease in quality of care and also saved Medicare money.

But bundled payments for other types of clinical episodes like heart attacks haven’t yielded similar results.

The research, published Monday in the journal Health Affairs, offers a review of 20 existing studies that examined how bundled payments have impacted spending, healthcare utilization and quality. The study comes as the Trump administration has introduced new payment models as part of a larger shift toward value-based care.

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All of the studies were published between 2016 and 2019 and examined the bundled payment models for hip and knee replacements. Studies also examined the Bundled Payments for Care Improvement (BPCI) initiative, which links payments for the multiple services a patient will receive during an episode of care, and the Acute Care Episode Demonstration that bundles payments for orthopedic and cardiovascular procedures.

There were 16 studies that examined whether bundled payments reduced costs. Of those 16, six showed a "significant decrease in episode payments associated with bundled payment," the Health Affairs study found. 

For example, one multicenter study showed episode payments declined by $1,166 for patients undergoing a hip or knee replacement. Researchers found that the quality of care remained the same for hip and knee replacement bundled payments, while costs for such episodes decreased. 

But while bundled payments yielded favorable results for hip and knee replacements, “it has yet to demonstrate similar benefits for other clinical episodes,” the study team said.

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Researchers also discovered that certain procedures led to no change in Medicare payments. Specifically, there was no change to payments for spinal fusion, revision of a worn out joint replacement or medical conditions such as heart attack or congestive heart failure.

The lack of savings could severely impact the access to such procedures, the study claimed.

“Given the penalty for cases that exceed the bundled payment target price, providers may be reluctant to accept these patients, which could in turn lead to decreased access to care,” the study said. “Studies have suggested that CMS needs to include more robust risk stratification of patients in bundled payment programs to allow higher payments for more complex patients.”

A possible reason hip and knee replacements fared better is that the procedures are elective, and “patients undergoing it tend to be younger, with lower rates of poverty and disability than patients with medical conditions included in bundled payment,” the study said.

Researchers suggested that when policymakers are thinking of scaling up bundled payment programs, they should focus on the clinical episodes that “may be an appropriate fit for such payment models.”

The Centers for Medicare & Medicaid Services is still considering new bundled payment models. Last year, it proposed to bundle payments for radiation therapy, which oncology centers oppose. The Trump administration is also considering creating post-acute care bundles.

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