Physician practices succeed under bundled payment model

Participants in Medicare Bundled Payments for Care Improvement Advanced, or BPCI-A, successfully reduced spending on targeted episodes of care, but physician practices cut costs more than their hospital counterparts.

This is from a recent study published in JAMA Health Forum by researchers from the University of Pennsylvania, Thomas Jefferson University and University of Texas Southwestern Medical Center. Researchers sought to determine spending differentials between physician group practices (PGPs) and hospitals participating in BPCI-A between October 2018 and September 2019.

BPCI-A participants were held accountable for the cost and quality of care within 90 days of an index admission for any of 32 clinical conditions in the model. At the time, hospitals or PGPs elected to participate and either retained savings by reducing episode costs below the target price or sustained losses.

Independent evaluations of BPCI-A have focused on hospital participation despite PGPs taking the lead in specific episodes, including the popular lower-extremity joint replacement surgery, researchers stated.

PGPs tend to use different strategies to reduce costs compared to their hospital counterparts, researchers explained. For example, they are more likely to shift post-acute care toward physician visits over home health agencies.

These strategies were successful at reducing costs under BPCI-A, the study indicated.

Joint replacement treatment by PGPs was associated with an $855 differential in spending by the end of the 90-day episode versus non-participating physician practices. In comparison, treatment by BPCI-A hospitals was associated with a $613 differential reduction versus non-participating hospitals.

Meanwhile, joint replacement patients who received surgery from both a BPCI-A−participating physician and participating hospital had a differential reduction of $1147 compared to patients receiving care from nonparticipants.

These findings translated to 3.1% savings for patients treated by participating PGPs, 2.2% for participating hospitals and 4.1% for both, researchers reported.

Additionally, they found no significant differential changes in quality outcomes, including mortality, hospital readmissions, emergency department visits and joint replacement complications.

Overall, PGPs accounted for about 78% of total savings from reductions in spending on joint replacements. The study also stated that they accounted for nearly three-quarters of joint replacement episodes managed under BPCI-A during the period.

The study comes as CMS gears up to launch a new bundled payments program called the Transforming Episode Accountability Model (TEAM) in 2026. The program is a risk-based, mandatory, five-year program for hospitals in select areas that will target clinical conditions. CMS also says TEAM draws on lessons from BPCI-A.

However, researchers suggested in the study that CMS may be missing a key to reducing costs: PGPs.

"Given that PGPs outpaced hospitals in joint replacement episode volume, these findings have important implications for the design of TEAM -- to engage physicians in this forthcoming mandatory bundled-payment model that will allow only hospital participation," they wrote.

Researchers suggested that future bundled payment models could use gainsharing to involve PGPs. Through gainsharing, physicians earn a portion of the savings or accrue incentives for coordination or coparticipation.

However, researchers noted several limitations to their study, including favorable patient selection among PGPs. Patients treated by PGP physicians appeared to be healthier, researchers noted. The study also analyzed one specific episode in BPCI-A.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.