Understanding How Bundled Payment Is Changing Postacute Care


Despite Medicare’s increasing use of bundled payment and other episode‐based reimbursement mechanisms, little is known about their effects on postacute care (PAC) settings. Nursing homes, rehabilitation centers, and other PAC providers are the second‐largest cost driver (behind the hospital stay index) and principal source of provider variability in health care costs. Moreover, there is a lack of knowledge about strategies providers use to improve quality and simultaneously reduce PAC spending. The Harvard team will examine changes in PAC strategies deployed by participants under the Bundled Payment for Care Improvement (BPCI) initiative and determine whether they are associated with changes in patient quality and PAC spending. Specifically, the team will examine whether hospitals or physician group practices participating in BPCI demonstrations that cover the conditions now included in mandatory bundled payment show greater change than comparison groups of non‐BPCI hospitals and practices in these outcomes: 1) type, duration, dispersion, or referral patterns for PAC; 2) readmissions rates (as a measure of quality); and 3) PAC‐related expenditures (as a measure of cost). The researchers will analyze whether changes in readmissions and PAC‐related expenditures are associated with specific PAC strategies. In addition, they will assess cost and quality outcomes of hospitals and physicians that selected cardiac conditions. Targeting policymakers, clinical leaders, private payers, and accountable care organizations, the evaluation results will increase understanding of how providers can or cannot improve care or reduce spending under bundled payment incentives. The project also should help improve the visibility of Center for Medicare and Medicaid Innovation (CMMI) demonstrations overall.

Grant Details

Grantee Organization:
President and Fellows of Harvard College
Principal Investigator:
Arnold Epstein, M.D., M.A.
Award Amount:
Approval Date:
November 8, 2016

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