Bundled payments yield ‘modest’ savings from hip, knee replacement procedures

Hospitals that were enrolled in Medicare’s Bundled Payments for Care Improvement program saved about 2% for each major hip or knee replacement they performed compared with hospitals that were not enrolled in the program, data showed.

“One of the aspirations of Medicare’s value-based payment programs is to catalyze change in our nation’s entire health system,” Amol S. Navathe, MD, PhD, a senior fellow at the Leonard Davis Institute of Health Economics and an assistant professor of medical ethics and health policy at the University of Pennsylvania Perelman School of Medicine, told Healio Primary Care.

“This study examined whether hospitals and clinicians responded to incentives under bundled payments by redesigning care for all patients, not just those covered under Medicare-bundled payments,” he said.

Navathe and colleagues wrote in Annals of Internal Medicine that “the potential for spillover effects reflects how many organizations approach care redesign. It can be administratively or psychologically costly not to implement change uniformly across populations (that is, to redesign care processes for patients covered by certain insurers but not others).”

In a quasi-experimental study, the researchers looked at the association between hospital participation in Medicare’s Bundled Payments for Care Improvement (BPCI) program and outcomes in 184,922 adults who underwent major hip or knee replacement — the “most common procedure in a large national program,” Navathe said — and had either commercial insurance or Medicare Advantage (MA). The researchers analyzed data from 281 BPCI hospitals and 562 non-BPCI hospitals that performed either a major joint replacement of the lower extremity; double joint replacement of the lower extremity; revision of the hip or knee; hip and femur procedures except those on major joints; and/or lower-extremity and humerus procedures except those on the hip, foot and femur from 2011 to 2016.

The researchers found that average episode spending decreases (or episode savings) at BPCI vs. non-BPCI hospitals was “modest” (change = –2.2%; 95% CI, –3.6 to –0.71). The decreases were larger at hospitals that had high baseline spending, but they did not vary by MA status. In addition, differences in changes in 90-day readmissions were not significant (adjusted difference in differences = –0.47%; 95% CI, –1 to 0.06). Participation in BPCI was associated with differences in decreases in post-acute spending and discharges to institutional post-acute care providers.

“This suggests that Medicare’s efforts can potentially improve care and increase affordability for patients regardless of insurance coverage,” Navathe said. “Practicing physicians should note that many, if not most, health delivery organizations in value-based programs are taking a systemwide view toward redesigning care.”

However, he said the takeaway from the results is more nuanced. “For patients,” he said, “it is likely unambiguous that implementing broad care redesign is good. For hospitals and clinicians, if they change practice as if they are in a value-based payment model when they are not, this could hurt their bottom line financially.”

Thus, the findings “are also a call for greater alignment between the hospitals/health systems and insurers,” he said. “Clinicians are likely to change the way they practice for all patients, so trying to create more consistency in the payment arrangements across Medicare and other insurers such as private plans or Medicaid would likely be beneficial.”

Navathe said future research should determine whether the “spillover effect” that he and his colleagues observed “occurs more broadly across all Medicare value-based programs that are showing benefit.”