Benefits of bundled payments turn on whether they are voluntary or mandatory: GAO

Medicine Money
The results of bundled payments can differ tremendously based on whether those models are mandatory or voluntary, according to GAO. (Getty/utah778)

CMS suspects Medicare could save money by adopting episode-based payment models. But according to a new report by the Government Accountability Office, the outcome is highly dependent on the specific structure of those models.

In particular, the results can change massively depending on whether the models were voluntary. GAO found (PDF) that mandatory bundles would give the Centers for Medicare & Medicaid Services more consistent results, because practices tend to only participate in the voluntary models when they know they can come out ahead. As a result, voluntary models tend to advantage physicians more than Medicare.

"In general, stakeholders reported that voluntary models largely benefit providers. For example, these models tend to have more generous terms and providers can choose to participate in only those models where they are likely to be successful," GAO said. "On the other hand, mandatory models are more likely to give CMS generalizable evaluation results."


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Episode-based, or bundled, payment models adjust clinicians' compensation depending on how much an episode of care costs relative to equivalent care at other practices. Some of these models exclusively use upside risk—which rewards providers for keeping care spending low—but some also employ downside risk: penalizing participants if expenditures exceed the target price.

As of February 2018, CMS had tested six different models for episode-based payment, according to GAO: five voluntary and one mandatory. These tests took place in hospitals, physician group practices, skilled nursing facilities, home health agencies, inpatient rehab facilities and long-term care facilities.

RELATED: HHS planning new bundled payment models with mandatory participation on the table

CMS significantly scaled back its use of mandatory bundles, by nixing the mandatory model for hip fracture and cardiac care and reducing the regions participating in the mandatory model for joint replacement. However, Department of Health and Human Services Secretary Alex Azar has since said CMS intends to revisit the mandatory bundled payments.

GAO said the mandatory participation structure allowed CMS to test the model in a wider range of hospitals, but voluntary structures generally resulted in more enthusiastic participants.

"In general, voluntary models attract smaller groups of motivated providers—which may be ideal for CMS when testing a more novel concept in care redesign before attempting more extensive testing. In the case of mandatory models, these may be particularly useful for testing models of care delivery and payment that have already shown some potential for reducing costs and improving quality—that is, models that CMS is considering for broader implementation," the office wrote.

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