Spending and quality after three years of Medicare’s bundled payments for medical conditions: quasi-experimental difference-in-differences study

OBJECTIVE: To evaluate whether longer term participation in the bundled payments for care initiative (BPCI) for medical conditions in the United States, which held hospitals financially accountable for all spending during an episode of care from hospital admission to 90 days after discharge, was associated with changes in spending, mortality, or health service use. DESIGN: Quasi-experimental difference-in-differences analysis. SETTING: US hospitals participating in bundled payments for acute myocardial infarction, congestive heart failure, chronic obstructive pulmonary disease (COPD), or pneumonia, and propensity score matched to non-participating hospitals. PARTICIPANTS: 238 hospitals participating in the Bundled Payments for Care Improvement initiative (BPCI) and 1415 non-BPCI hospitals. 226 BPCI hospitals were matched to 700 non-BPCI hospitals. MAIN OUTCOME MEASURES: Primary outcomes were total spending on episodes and death 90 days after discharge. Secondary outcomes included spending and use by type of post-acute care. BPCI and non-BPCI hospitals were compared by patient, hospital, and hospital market characteristics. Market characteristics included population size, competitiveness, and post-acute bed supply. RESULTS: In the 226 BPCI hospitals, episodes of care totaled 261 163 in the baseline period and 93 562 in the treatment period compared with 211 208 and 78 643 in the 700 matched non-BPCI hospitals, respectively, with small differences in hospital and market characteristics after matching. Differing trends were seen for some patient characteristics (eg, mean age change −0.3 years at BPCI hospitals v non- BPCI hospitals, P<0.001). In the adjusted analysis, participation in BPCI was associated with a decrease in total episode spending (−1.2%, 95% confidence interval −2.3% to −0.2%). Spending on care at skilled nursing facilities decreased (−6.3%, −10.0% to −2.5%) owing to a reduced number of facility days (−6.2%, −9.8% to −2.6%), and home health spending increased (4.4%, 1.4% to 7.5%). Mortality at 90 days did not change (−0.1 percentage points, 95% confidence interval −0.5 to 0.2 percentage points). CONCLUSIONS: In this longer term evaluation of a large national programme on medical bundled payments in the US, participation in bundles for four common medical conditions was associated with savings at three years. The savings were generated by practice changes that decreased use of high intensity care after hospital discharge without affecting quality, which also suggests that bundles for medical conditions could require multiple years before changes in savings and practice emerge.