Penn Researchers Continue to Beat the Drum for Bundled Payments

Mandatory bundled payments, in particular—which they say hold greater potential for research and savings.

University of Pennsylvania’s Perelman School of Medicine and Children’s Hospital of Philadelphia. Photo courtesy Wikimedia Commons user Ajaxean.

Bundled payments are a logical concept, in theory: Wrap the total cost of all appointments and interventions involved in solving a single medical problem into a single, flat payment. Rather than aa messy web of various charges for different aspects of surgery preparation, procedures, and rehabilitation, a knee replacement will cost x amount, period, and patients and Medicare alike will save money.

A lot of the research working to place hard evidence behind that hypothesis has come out of Penn Medicine in Philadelphia. One name that often appears on studies in the field is Amol S. Navathe, MD, PhD. This week, it’s printed again—beside the names of 9 Penn colleagues and 1 University of Washington researcher—on a study published in Health Affairs that compares hospitals participating in mandatory or voluntary bundled payment programs.

>>>READ: CMS is Leading the Way Toward Bundled Payments. Should It Be?

The mandatory vs. voluntary battle has been playing out through CMS actions under the last 2 presidential administrations. The former leadership group moved to expand mandatory programs, requiring hospitals in certain areas to use bundled payments for Medicare patients receiving certain orthopedic and cardiac operations. The current group has nixed some of those plans and re-emphasized voluntary programs.

"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," Penn’s Navathe, an assistant professor in the department of Medical Ethics and Health Policy, said of the new study.

The researchers used CMS data and the American Hospital Association’s Annual Survey to make their comparisons. They examined 302 hospitals in the voluntary joint replacement Bundled Payments for Care Improvement (BPCI) plan alongside 799 in the mandatory program Comprehensive Care for Joint Replacement program (the former recently received an update that expanded its covered conditions and added some outpatient bundles, called BPCI Advanced).

The team didn’t find any substantial differences between baseline spending, care quality, or financial risk. The 2 programs did, however, differ when it came to the hospitals covered by them.

BPCI hospitals, which self-selected, tended to be larger and more likely to be academic teaching hospitals—higher volume, Navathe and others found in an earlier study, can lead to increased savings. But those institutions are not representative of American healthcare on the whole: There's plenty of rural and community hospitals that might have also benefitted. In a previous interview with Healthcare Analytics News™, Navathe argued that self-selection could hinder the overall drive towards value-based care.

“There [must] be participant hospitals in [the mandatory models] that wouldn’t have volunteered and yet achieved savings while hitting quality targets,” he said. “Mandatory programs are much better for getting broad participation that impacts more beneficiaries and are better at producing robust evidence.”

And at the moment, that last point might be key: Evidence will be essential to the further spread of bundled payment programs. Tom Price, the current administration’s first Secretary of Health and Human Services (which oversees CMS) had a pretty negative view of bundled payments: He called them “experimenting with Americans’ health.”

He resigned last September, however. In Alex Azar’s confirmation hearing in January, the new HHS head struck a more positive note on the subject. He endorsed the work of the Center for Medicare and Medicaid Innovation (CMMI) which develops and backs new payment models, and ceded that their programs may, at times, need to be compulsory.

“I believe that we need to be able to test hypotheses, and if we have to test a hypothesis, I want to be a reliable partner,” he said. “If, to test a hypothesis around changing our healthcare system, it needs to be mandatory there as opposed to voluntary, then so be it.”

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