The exact makeup of services that fall within each bundle, which is referred to as an episode of care, vary by condition such as pneumonia or a procedure like a knee replacement. A 2018 article in NEJM Catalyst provided the following definition: “An episode of care involves the entire care continuum for a single condition or medical events, such as joint replacement or labor and delivery, during a fixed period. It includes all acute and post-acute care delivered by hospitals, physicians, skilled nursing facilities, and other providers participating in a care pathway.”
Thus far, the vast majority of experimentation around bundled payments has happened within Medicare. Two of the more prominent initiatives, Bundled Payments for Care Improvement (BCPI) and Comprehensive Care for Joint Replacement (CJR), have exhibited mixed results.
BPCI, which involves bundles for provider payments for up to 48 medical conditions and procedures, has proven more effective when applied to surgical procedures, as opposed to medical conditions. Studies have shown that BPCI participation reduced hospitals’ per-episode costs of care without affecting mortality, readmissions, or related emergency department visits.
However, BCPI evidence on bundled payments for medical conditions, as opposed to procedures, is less promising. A 2018 study of five common conditions—congestive heart failure, pneumonia, chronic obstructive pulmonary disease, sepsis, and acute myocardial infarction—found no significant changes in cost or quality between participating hospitals and a control group.
Alternatively, studies of the CJR model, which pay hospitals based on DRG coding a bundled payment for hip and knee replacements, have documented reductions in per-episode spending with no adverse effect on healthcare quality. Hospitals that achieved savings tended to be larger, with a higher volume of procedures, were more likely to be nonprofit or a teaching facility, and be integrated with post-acute care facilities.
Surgical procedures may be more appropriate for bundled payments because these episodes of care are fairly routine with wide variation in cost under FFS arrangements. Additionally, health outcomes are easy to measure because these patients are generally healthy, with few complex health conditions that muddy results. However, to see a transformative change in the healthcare delivery system, we need to develop tools that allow episode analytics and payer-to-provider agreements to extend into more complex and chronic conditions, such as diabetes, behavioral health, COPD and asthma, to truly bend the unsustainable cost growth curve we are on.