Evaluating the Impact of the Bundled Payment for Care Improvement Initiative on the Value of Care

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As Medicare increasingly moves to value‐based reimbursement, bundled payment has emerged as a prominent tactic. Based on a limited analysis of early savings from its voluntary Bundled Payment for Care Improvement (BPCI) initiative, the Centers for Medicare and Medicaid Services (CMS) in April 2016 implemented bundled payment for services performed by all hospitals and postacute care providers for comprehensive joint replacement (CJR) in 67 geographic areas. The agency also proposed a second mandatory bundled payment to hospitals in 98 markets for cardiac conditions (referred to as the Episode Payment Model) and hip and femur fractures for 2017. While CMS published an initial evaluation of the first 21 months of experience with the CJR demonstration, several unanswered questions remain about the effects of bundled payment on the quality and costs of care. University of Pennsylvania researchers will examine the outcomes of hospital BPCI participants that chose orthopedic and pulmonary conditions, which are among the top‐10 most selected Medicare diagnosis‐related groups in the BPCI. The project team will compare quality and costs for beneficiaries treated by BPCI‐participating providers to those for matched beneficiaries by nonparticipating providers. The analysis will build on CMS’s CJR evaluation by examining the impact on total Medicare expenditures and evaluating the effects of hospital characteristics and accountable care organization involvement on quality and spending outcomes. This evaluation will provide CMS and policymakers with an independent analysis of the cost and quality impact of bundled payments. It will provide useful insights for policymakers and delivery system leaders on hospital characteristics associated with successful outcomes under the BPCI.

Grant Details

Grantee Organization:
Trustees of the University of Pennsylvania
Principal Investigator:
Amol Navathe, M.D., Ph.D.
Award Amount:
$318,313.00
Approval Date:
November 8, 2016

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