Study: Bundled Payments Lowered Costs, Increased Savings

Key Insights

• A study published in Health Affairs identified a 10.7 percent relative cost reduction by applying bundled payments to select orthopedic and surgical procedures.
• Researchers noted that quality of care either remained constant or improved.
• Bundled payments may also help to reduce healthcare spending in additional areas, such as maternal care.

Study: Bundled Payments Lowered Costs, Increased Savings for Self-Funded Employers and Patients

A recent study in Health Affairs found that bundled payments for certain surgical procedures lowered total costs by $4,229 on average, a 10.7 percent relative reduction. This reduction led to savings for both the participating self-insured employers and patients. “Employers captured approximately 85 percent of the savings, or $3,582 per episode (a 9.5 percent relative decrease),” the researchers noted. Additionally, “patient cost-sharing payments decreased by $498 per episode (a 27.7 percent relative decrease).”

While federal initiatives, such as the Bundled Payments for Care Improvement (BCPI) from the Centers for Medicare and Medicaid Services (CMS), have demonstrated the value of bundled payments, this study focused on commercially insured patients. Researchers analyzed a program in which select providers received “preferred prices” to cover joint replacement, spinal fusion, and gastrointestinal surgeries. The payments also covered related post-procedure care for 30 days, waiving cost-sharing “for patients who receive care from these providers.”

“The impacts of the program increased over time, with employers effectively saving $7 for every $1 in patient copays waived,” Modern Healthcare reported. Care quality was equal to or slightly improved, echoing findings from a previous study published in Health Affairs. “[T]he sizable savings could help drive more employers and payers to this type of model,” according to Christopher Whaley, the study’s lead author and policy researcher at RAND Corp.

Additional Applications for Bundled Payments

In addition to the surgical and orthopedic procedures analyzed in the study, bundled payments can also support maternal care. UnitedHealthcare has explored this “maternity care bundled payment program” to advance value-based care and “reward care providers for value over volume, helping align incentives and linking reimbursement to the delivery of coordinated, efficient care.”

“Bringing together industry stakeholders with the collective vision to work together to improve care quality and affordability will be crucial for modernizing the nation’s healthcare system,” according Mark Cone, MD, FACOG, Market President of Privia Medical Group — Gulf Coast.

Bundled payments are a useful tool to lower waste in the healthcare system and “address the wasteful spending of failed care delivery and coordination, as well as over- and under-treatment.” As Melissa Montague, Vice President and General Manager of Privia Women’s Health and Privia Pediatrics, noted: “These promising alternative payment systems can improve patient health outcomes while rewarding providers for delivering best-in-class, evidence-based care.”