Succeeding in Medicare's newest bundled payment program: Results from teaching hospitals

In 2018, Medicare implemented a successor to its Bundled Payments for Care Improvement (BPCI) program, BPCI Advanced, with stricter participation rules and new financial incentives to reduce spending.

Using claims-based episode data from thirteen participants, we compared spending and utilization in the first fifteen months of the new program (October 2018 to December 2019) to hospital- and episode-specific target prices, with a deep dive into clinical correlates for the most commonly-selected clinical episodes, sepsis and congestive heart failure.

Twelve out of thirteen participants in a collaborative of teaching hospitals achieved shared savings for both Medicare and their own institution. Aggregate hospital shared savings were 5.8% of benchmark prices across 6,131 patients in 16 clinical episodes (p<0.001), appreciably higher than the reference savings rates reported after the first period of Medicare's predecessor BPCI program. Differences in shared savings across hospitals for sepsis and congestive heart failure correlated with reductions in patients' use of post-acute care, including reductions in skilled nursing facility, readmission, and home health rates. Evidence is presented showing reductions in patient utilization for cost-intensive post-acute settings accompanied increases in the proportion of patients exclusively utilizing non-institutional care after discharge from an anchor stay or procedure.

These findings provide an example of the fulfillment of a core promise of bundled payments to uncover new opportunities for reduced spending.

Non-random cohort of hospitals.