How to ensure bundled payments coexist with ACOs

A stethoscope and paper money.
As CMS further develops its most effective alternative payment models, policymakers should try and mitigate unexpected issues when different models overlap. (Getty/utah778)

Bundled payments and accountable care organizations have emerged as favored alternative payment models within Medicare.

However, overlap between the two models could lead to unintended consequences, according to a group of researchers.

A blog post from Health Affairs looks at the potential for synergies and misaligned incentives when organizations participating in the Medicare Shared Savings Program (MSSP) also take advantage of the Bundled Payments for Care Improvement (BPCI) initiative. A statistical analysis by researchers at the University of Washington and the University of Pennsylvania suggests the two models already coexisted in 174 markets as of 2015, covering roughly three-quarters of fee-for-service Medicare beneficiaries.


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The two models produce a certain number of synergies because they target different types of care. Bundled payments deal directly with hospitalizations and post-acute care, whereas the MSSP rewards care quality and costs over an annual time frame.

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“In this way, ACOs and bundled payment may complement each other, with the former seeming to reduce hospitalization and the latter improving hospital and post-acute care quality while lowering post-acute care intensity,” the authors write. They add that hospitals participating in both programs saw lower readmission rates than those participating in only one or the other, suggesting there may be further benefits to the overlap.

On the other hand, providers participating in both programs see a slightly smaller financial upside to their participation in BCPI, because Medicare recoups part of the savings that the provider would have received had it only participated in bundled payments.

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The post also points out that providers in an ACO have little incentive to coordinate with those participating in the BCPI when they participate in the same market. According to the post, the cost of care at a provider participating in the BCPI initiative can wind up reflected in an unrelated ACO participating in the MSSP program, a situation likely to cause independent redesign of care programs to protect providers.

As CMS rolls out its next-generation bundled payment program, BPCI Advanced, the authors recommend the agency look into increasing incentives for care coordination and consider reducing its recoupment, in order to ensure overlaps between the two programs do not discourage providers from participating.

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