Association of Hospital Participation in Bundled Payments for Care Improvement Advanced with Medicare Spending and Hospital Incentive Payments

Importance: Bundled Payments for Care Improvement Advanced (BPCI-A) is a Centers for Medicare & Medicaid Services (CMS) initiative that aims to produce financial savings by incentivizing decreases in clinical spending. Incentives consist of financial bonuses from CMS to hospitals or penalties paid by hospitals to CMS. Objective: To investigate the association of hospital participation in BPCI-A with spending, and to characterize hospitals receiving financial bonuses vs penalties. Design, Setting, and Participants: Difference-in-differences and cross-sectional analyses of 4754139 patient episodes using 2013-2019 US Medicare claims at 694 participating and 2852 nonparticipating hospitals merged with hospital and market characteristics. Exposures: BPCI-A model years 1 and 2 (October 1, 2018, through December 31, 2019). Main Outcomes and Measures: Hospitals' per-episode spending, CMS gross and net spending, and the incentive allocated to each hospital. Results: The study identified 694 participating hospitals. The analysis observed a -$ 175 change in mean per-episode spending (95% CI, -$ 378 to $ 28) and an aggregate spending change of -$ 75.1 million (95% CI, -$ 162.1 million to $ 12.0 million) across the 428670 episodes in BPCI-A model years 1 and 2. However, CMS disbursed $ 354.3 million (95% CI, $ 212.0 million to $ 496.0 million) more in bonuses than it received in penalties. Hospital participation in BPCI-A was associated with a net loss to CMS of $ 279.2 million (95% CI, $ 135.0 million to $ 423.0 million). Hospitals in the lowest quartile of Medicaid days received a mean penalty of $ 0.41 million; (95% CI, $ 0.09 million to $ 0.72 million), while those in the highest quartile received a mean bonus of $ 1.57 million; (95% CI, $ 1.09 million to $ 2.08 million). Similar patterns were observed for hospitals across increasing quartiles of Disproportionate Share Hospital percentage and of patients from racial and ethnic minority groups. Conclusions and Relevance: Among US hospitals measured between 2013 and 2019, participation in BPCI-A was significantly associated with an increase in net CMS spending. Bonuses accrued disproportionately to hospitals providing care for marginalized communities.