Medicare's Bundled Payments for Care Improvement initiative: expanding enrollment suggests potential for large impact

Abstract

Objectives: Aiming to encourage care coordination and cost efficiency, the Center for Medicare and Medicaid Innovation (CMMI) launched the Bundled Payments for Care Improvement (BPCI) initiative in 2013. To help gauge the program's potential impact and generalizability, we describe early and current participants.

Study design: We examined the cross-sectional association between BPCI participation and providers' structural and cost characteristics.

Methods: Using data from October 2013 and June 2014, we quantified changes in BPCI participation. We described structural differences between participating and nonparticipating hospitals using t tests and χ2 tests, and we used the Cochrane-Armitage test to assess whether participants were more likely be in higher 90-day episode cost quintiles than their peers at baseline (2009-2010).

Results: Overall (risk-bearing and non-risk-bearing) participation in BPCI increased from about 400 in October 2013 to more than 2000 in June 2014-attributable, in part, to Model 2, the most comprehensive of the 4 models offered by CMMI for provider participation. Model 2 hospitals increasingly resemble eligible but nonparticipating hospitals. For the most commonly chosen condition of hip replacement, Model 2 hospitals were not costlier than their peers. Hospitals used to make up 97% of Model 2 participants, but physician practices now comprise a substantial number of Model 2 participants. However, most BPCI participants have not yet begun to bear financial risk. Risk-bearing Model 2 hospitals are a smaller and less representative group, with higher baseline costs for hip replacement than their peers.

Conclusions: Growing participation in BPCI suggests strong interest in bundled payments. The long-term impact of BPCI will depend on CMMI's ability to persuade interested but non-risk-bearing participants to bear risk.

Figure 1. Change in BPCI Enrollment for Models 1, 2, and 4, Stratified by Risk-bearing Status

Abbreviations: BPCI is the Bundled Payments for Care Improvement initiative. Notes: Early is October 2013 and current is June 2014. Complete risk-bearing indicates participants who have begun bearing risk for all of their selected conditions. Partial risk-bearing indicates participants who have begun bearing risk for some, but not all, of their selected conditions.

Figure 2. Proportion of Model 2 BPCI Hospitals that Selected Major Lower Extremity Joint Replacement in each Quintile of 90-day Medicare Episode Payments for Hip Replacement, across All US Hospitals, 2009–2010

Abbreviations: BPCI is the Bundled Payments for Care Improvement initiative. Note: For Panel A, p-value<0.001. For Panel B, p-value=0.58. For both panels, we restricted our analyses to acute care hospitals.