RAND: Bundled payment models that waived cost sharing led to major savings

hospital money
A new study from the RAND Corporation explored bundled payment models for three common surgical procedures: hip and knee replacements, spinal fusion and bariatric weight loss. (Getty/PraewBlackWhile)

Giving patients discounts for choosing providers that bundle expensive procedures like knee surgeries together resulted in significant savings, a new study finds.

The study, published Monday by RAND Corporation, comes as value-based care models have grown in popularity in Medicare but not as much in commercial insurance.

The study examined a program that negotiates a preferred price with certain providers to cover an entire episode of care within a 30-day period and waives cost sharing for patients.

The study looked at three types of major surgical procedures for patients with commercial insurance. Researchers explored hip and knee replacements, spinal fusion and bariatric weight loss and in total examined 2,372 procedures.

It found that a bundled payment program reduced surgery costs by an average of $4,229, a roughly 10% decline.

“As an incentive for patients, cost-sharing payments were waived for the 21% of the patients who went through the program,” according to a release on the study. “Following implementation, patient payments decreased by $498, a 27.7% reduction.”

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Researchers said spinal fusion surgery generated the most savings followed by joint replacement and bariatric surgery.

The study, to be published in Health Affairs, comes after the bundled payment models came under criticism from the Trump administration.

A review conducted last year by the Center for Medicare and Medicaid Innovation was worried about whether bundled payment models were structured well enough to generate substantial savings for Medicare.

The review also found that payment models which provided a global budget for care, including Maryland’s Total Cost of Care program, met financial and quality metrics.