Bundled Payments For Care Improvement Advanced: Effects On Hospital And CMS Spending, 2018-21

The Bundled Payments for Care Improvement Advanced Model (BPCI-A) aims to reduce hospital spending and generate savings for the Centers for Medicare and Medicaid Services (CMS). The design of BPCI-A evolved across four model years; however, previous analyses have not examined its impact on hospital and CMS spending throughout this period. We conducted a synthetic difference-in-differences analysis with a 100 percent sample of Medicare fee-for-service beneficiary data from the period April 2014 through December 2021 to evaluate spending changes across 883 participating hospitals and 1,772 nonparticipating hospitals. BPCI-A led to an average $324 reduction in hospitals' ninety-day episode spending, with larger reductions in model years 3 and 4. The largest spending reductions were for orthopedics and neurological care. Yet large incentive payments to hospitals led to net CMS losses of $171 million during the study period, despite net savings in model year 4. BPCI-A reduced payments to skilled nursing facilities during the study period. Thus, BPCI-A had minimal impact on the CMS budget while shifting payments to hospitals and away from skilled nursing facilities. Our results suggest that voluntary bundled payment is unlikely to generate meaningful savings for CMS.