Predictors of Success in the Bundled Payments for Care Improvement Program

Background: Hospitals participating in Medicare’s Bundled Payments for Care Improvement (BPCI) program were incented to reduce Medicare payments for episodes of care. Objective: To identify factors that influenced whether or not hospitals were able to save in the BPCI program, how the cost of different services changed to produce those savings, and if “savers” had lower or decreased quality of care. Design: Retrospective cohort study. Participants: BPCI-participating hospitals. Main Measures: We designated hospitals that met the program goal of decreasing costs by at least 2% from baseline in average Medicare payments per 90-day episode as “savers.” We used regression models to determine condition-level, patient-level, hospital-level, and market-level characteristics associated with savings. Key Results: In total, 421 hospitals participated in BPCI, resulting in 2974 hospital-condition combinations. Major joint replacement of the lower extremity had the highest proportion of savers (77.6%, average change in payments −$2235) and complex non-cervical spinal fusion had the lowest (22.2%, average change +$8106). Medical conditions had a higher proportion of savers than surgical conditions (11% more likely to save, P=0.001). Conditions that were mostly urgent/emergent had a higher proportion of savers than conditions that were mostly elective (6% more likely to save, P=0.007). Having higher than median costs at baseline was associated with saving (OR: 3.02, P<0.001). Hospitals with more complex patients were less likely to save (OR: 0.77, P=0.003). Savings occurred across both inpatient and post-acute care, and there were no decrements in clinical care associated with being a saver. Conclusions: Certain conditions may be more amenable than others to saving under bundled payments, and hospitals with high costs at baseline may perform well under programs which use hospitals’ own baseline costs to set targets. Findings may have implications for the BPCI-Advanced program and for policymakers seeking to use payment models to drive improvements in care.