Nav: Home

Mandatory bundled-payment Medicare programs should stay, Penn study suggests

June 05, 2018

PHILADELPHIA-- Hospitals that receive bundled payments for joint replacements either voluntarily or through Medicare's mandatory programs, vary by size and volume, but not in spending or quality, signaling a need for both programs, according to a new study from researchers at the Perelman School of Medicine at the University of Pennsylvania. The authors say the results show that voluntary programs tend to engage larger non-profit hospitals, whereas some hospitals with lower volumes and fewer resources might only participate under a mandatory program. The results are published this week in the June issue of the journal Health Affairs.

Some policymakers, arguing that mandatory bundled-payment programs disadvantage some hospitals, have called for these programs to be strictly voluntary. The study, however, found no evidence that hospitals in the mandatory program were obviously disadvantaged compared to their voluntary counterparts.

"Our results suggest that both voluntary and mandatory approaches can play an important role in engaging hospitals across the country, so policymakers should not restrict policy options to one approach over the other," said study lead author Amol S. Navathe, MD, PhD, an assistant professor in the department of Medical Ethics and Health Policy at Penn Medicine.

Medicare's bundled-payment model is a cost-containment strategy that has been rolled out on a trial basis for more than 2,000 U.S. hospitals in recent years. The most prominent bundled-payments programs have been those relating to knee and hip replacement surgeries, which account for a large portion of annual Medicare spending. Participating hospitals are incentivized to keep their spending per patient--for the joint-replacement surgery plus a few months of post-operative care--below a standard benchmark figure, while maintaining a high level of care quality.

Initially the bundled-payment model for joint replacements was introduced as a voluntary option and enrolled more than 300 U.S. hospitals. Evidence of its success at lowering costs and maintaining quality led to a newer, mandatory program covering nearly 800 hospitals, as a prelude to a much wider use of bundled payment models. However, there have been concerns that some covered hospitals will not be able to achieve cost savings, and will stop performing these surgeries rather than lose money on them. The agency that administers Medicare, the Centers for Medicare & Medicaid Services (CMS), recently started cutting back its mandatory bundled payment programs and putting more emphasis on voluntary programs.

For the study, Navathe and colleagues used data from the American Hospital Association and CMS. They compared organizational characteristics and measures of costs and care quality for 302 hospitals in the voluntary bundled-payment joint-replacement program ("Bundled Payments for Care Improvement") and 799 in the mandatory program ("Comprehensive Care for Joint Replacement").

The researchers found no large differences in baseline spending, care quality, or financial risk exposure for voluntary vs. mandatory program hospitals. "The mandatory program does not seem to have disadvantaged its participants compared to voluntary participants on average, with respect to spending and care quality," Navathe said.

However, there were significant organizational differences between the two hospital groups. Those in the voluntary program were of course self-selected; they were on average larger, and handled a greater volume of joint-replacement surgeries. To some extent that was expected; as Navathe and colleagues have shown in a prior study, the hospitals that save money under bundled-payments programs tend to be those that are larger, with a higher volume of procedures. What that means, though, is that hospitals in the voluntary program probably are not as representative of hospitals nationwide.

"In other words, we think mandatory bundled-payment programs can produce more generalizable evidence of cost-savings," Navathe said.

"These emerging bundled-payment policies should engage a broad range of hospitals in order to bring cost savings and quality improvements to patients across the nation--and that is likely to require a mix of mandatory programs and additional targeted voluntary programs," said study senior author Ezekiel J. Emanuel, MD, PhD, professor and chair of the department of Medical Ethics and Health Policy at Penn Medicine.
The other co-authors of the paper were Daniel Polsky, Yash Shah, Qian Huang, Jingsan Zhu, Zoe M. Lyon, Josh Rolnick, and Joseph R. Martinez, all of Penn; Joshua M. Liao of the University of Washington School of Medicine, and Robin Wang of Cornell University.

Funding for the study was provided by the Commonwealth Fund.

Penn Medicine is one of the world's leading academic medical centers, dedicated to the related missions of medical education, biomedical research, and excellence in patient care. Penn Medicine consists of the Raymond and Ruth Perelman School of Medicine at the University of Pennsylvania (founded in 1765 as the nation's first medical school) and the University of Pennsylvania Health System, which together form a $7.8 billion enterprise.

The Perelman School of Medicine has been ranked among the top medical schools in the United States for more than 20 years, according to U.S. News & World Report's survey of research-oriented medical schools. The School is consistently among the nation's top recipients of funding from the National Institutes of Health, with $405 million awarded in the 2017 fiscal year.

The University of Pennsylvania Health System's patient care facilities include: The Hospital of the University of Pennsylvania and Penn Presbyterian Medical Center -- which are recognized as one of the nation's top "Honor Roll" hospitals by U.S. News & World Report -- Chester County Hospital; Lancaster General Health; Penn Medicine Princeton Health; Penn Wissahickon Hospice; and Pennsylvania Hospital -- the nation's first hospital, founded in 1751. Additional affiliated inpatient care facilities and services throughout the Philadelphia region include Good Shepherd Penn Partners, a partnership between Good Shepherd Rehabilitation Network and Penn Medicine, and Princeton House Behavioral Health, a leading provider of highly skilled and compassionate behavioral healthcare.

Penn Medicine is committed to improving lives and health through a variety of community-based programs and activities. In fiscal year 2017, Penn Medicine provided more than $500 million to benefit our community.

University of Pennsylvania School of Medicine

Related Medicare Articles:

How common is food insecurity among Medicare enrollees? 
Nearly 1 in 10 Medicare enrollees age 65 and over and 4 in 10 enrollees younger than 65 with long-term disabilities experience food insecurity.
Medicare for All unlikely to cause surge in hospital use: Harvard study
Despite some analysts' claims that Medicare for All would cause a sharp increase in health care utilization, a new study finds the two biggest coverage expansions in US history -- Medicare and the ACA -- caused no net increase in hospital use.
Critical heart drug too pricey for some Medicare patients
An effective drug to treat chronic heart failure may cost too much for senior citizens with a standard Medicare Part D drug plan, said a study co-authored by a John A.
Research suggests strategy for more equitable Medicare reimbursement
Those who were enrolled in both Medicare and Medicaid were sicker, had more cognitive impairments and difficulty functioning, and needed more social support than those who were not enrolled in both government programs, Saint Louis University research found.
BU finds Medicare Advantage networks are broad and getting broader
A new study led by Boston University School of Public Health (BUSPH) researchers finds that networks in Medicare Advantage -- a private plan alternative to traditional Medicare -- are relatively broad and may be getting broader.
More Medicare News and Medicare Current Events

Best Science Podcasts 2019

We have hand picked the best science podcasts for 2019. Sit back and enjoy new science podcasts updated daily from your favorite science news services and scientists.
Now Playing: TED Radio Hour

Erasing The Stigma
Many of us either cope with mental illness or know someone who does. But we still have a hard time talking about it. This hour, TED speakers explore ways to push past — and even erase — the stigma. Guests include musician and comedian Jordan Raskopoulos, neuroscientist and psychiatrist Thomas Insel, psychiatrist Dixon Chibanda, anxiety and depression researcher Olivia Remes, and entrepreneur Sangu Delle.
Now Playing: Science for the People

#537 Science Journalism, Hold the Hype
Everyone's seen a piece of science getting over-exaggerated in the media. Most people would be quick to blame journalists and big media for getting in wrong. In many cases, you'd be right. But there's other sources of hype in science journalism. and one of them can be found in the humble, and little-known press release. We're talking with Chris Chambers about doing science about science journalism, and where the hype creeps in. Related links: The association between exaggeration in health related science news and academic press releases: retrospective observational study Claims of causality in health news: a randomised trial This...