Spillover Effects of Medicare's Voluntary Bundled Payments for Joint Replacement Surgery to Patients Insured by Commercial Health Plans

Abstract

Background: Under the Bundled Payments for Care Improvement (BPCI) program, bundled paymtents for lower-extremity joint replacement (LEJR) are associated with 2% to 4% cost savings with stable quality among Medicare fee-for-service beneficiaries. However, BPCI may prompt practice changes that benefit all patients, not just fee-for-service beneficiaries.

Objective: To examine the association between hospital participation in BPCI and LEJR outcomes for patients with commercial insurance or Medicare Advantage (MA).

Design: Quasi-experimental study using Health Care Cost Institute claims from 2011 to 2016.

Setting: LEJR at 281 BPCI hospitals and 562 non-BPCI hospitals.

Patients: 184 922 patients with MA or commercial insurance.

Measurements: Differential changes in LEJR outcomes at BPCI hospitals versus at non-BPCI hospitals matched on propensity score were evaluated using a difference-in-differences (DID) method. Secondary analyses evaluated associations by patient MA status and hospital characteristics. Primary outcomes were changes in 90-day total spending on LEJR episodes and 90-day readmissions; secondary outcomes were postacute spending and discharge to postacute care providers.

Results: Average episode spending decreased more at BPCI versus non-BPCI hospitals (change, -2.2% [95% CI, -3.6% to -0.71%]; P = 0.004), but differences in changes in 90-day readmissions were not significant (adjusted DID, -0.47 percentage point [CI, -1.0 to 0.06 percentage point]; P = 0.084). Participation in BPCI was also associated with differences in decreases in postacute spending and discharge to institutional postacute care providers. Decreases in episode spending were larger for hospitals with high baseline spending but did not vary by MA status.

Limitation: Nonrandomized studies are subject to residual confounding and selection.

Conclusion: Participation in BPCI was associated with modest spillovers in episode savings. Bundled payments may prompt hospitals to implement broad care redesign that produces benefits regardless of insurance coverage.

Primary funding source: Leonard Davis Institute of Health Economics at the University of Pennsylvania.