The Impact of Medicare Bundled Payments

Summary

Bundled payments (BP) are a key part of Medicare's shift away from the traditional fee-for-service (FFS) payment model. The investigators propose to study a nationwide randomized-controlled trial (RCT) of bundled payments for knee and hip replacements that was designed and implemented by CMS and launched in April 2016. Randomization was conducted at the Metropolitan Statistical Area (MSA) level with 67 MSAs and about 800 hospitals assigned to the treatment group. The investigators will examine the impact of bundled payments on Medicare spending, utilization, and quality. Study findings should be directly relevant for the design of payments for knee and hip replacements, two common and expensive medical procedures. Average impacts, as well as variation in impact across types of providers and markets may also shed light on economic mechanisms, which should be relevant for bundled payment initiatives under consideration for other medical services.

Conditions

• Arthroplasty, Replacement

Interventions

OTHER

Bundled payments for knee and hip replacement

The bundled payment model holds acute care hospitals (ACHs) financially responsible for the spending and quality of an entire episode of care for two types of hospital admissions: MS-DRG 469 and 470. An episode begins with an ACH stay that results in a discharge in one of the two DRGs, and ends 90 days after discharge. Before each performance year begins, hospitals receive target prices from CMS, determined by historical hospital and regional episode expenditures. Hospitals are eligible for reconciliation payment from CMS if they spend less than the target prices for an episode, provided that they met an "acceptable" quality standard. Conversely, they are responsible for paying the difference if they spend more than the target prices.

Sponsors & Collaborators

• Harvard University

  collaborator OTHER

• University of Chicago

  collaborator OTHER

• Dartmouth College

  collaborator OTHER

• Amy Finkelstein

  lead OTHER

Principal Investigators

• Amy N Finkelstein, PhD · Massachusetts Institute of Technology

• Yunan Ji · Harvard University

• Neale Mahoney, PhD · University of Chicago

• Jon Skinner, PhD · Dartmouth College

Study Design

Allocation

RANDOMIZED

Purpose

HEALTH_SERVICES_RESEARCH

Masking

NONE

Model

PARALLEL

Eligibility

Sex

ALL

Healthy Volunteers

No

Timeline & Regulatory

Start

2016-04-30

Primary Completion

2017-12-31

Completion

2022-02-28