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Medicare's Bundled Payments for Care Improvement Initiative: Expanding Enrollment Suggests Potential for Large Impact
Lena M. Chen, MD, MS; Ellen Meara, PhD; and John D. Birkmeyer, MD
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Medicare's Bundled Payments for Care Improvement Initiative: Expanding Enrollment Suggests Potential for Large Impact

Lena M. Chen, MD, MS; Ellen Meara, PhD; and John D. Birkmeyer, MD
Expanding and more representative participation in Medicare's Bundled Payments for Care Improvement initiative suggests potential for large impact, pending the results of risk-bearing participants.
These earlier efforts have highlighted the difficulty of implementing bundled payments,17,18 and thus, the rapid growth of BPCI participation is somewhat surprising. Administrative and logistical challenges to bundled payments include establishing provider networks that share and distribute risk, constructing the legal and regulatory framework to support these arrangements, and modernizing information and billing systems to accommodate episodes of care. Recent data suggest that these are continuing challenges. For example, a recent effort to establish bundled payments for orthopedic procedures in California broke down during the implementation phase, with disagreements such as how a bundle should be defined.17 In contrast, CMMI delineated what services would be included in a bundle, had an established risk-adjustment methodology, and designated benchmarks for episode costs; it is too early to tell though whether or not these aspects of the program will be enough to minimize implementation challenges. Finally, it is possible that many of BPCI’s current participants will drop out of the program prior to beginning to bear risk.

The rising interest of physician groups is another notable finding from our descriptive work, and one that makes sense given the central role that physicians play in an episode of care. For example, post acute care makes up a substantial proportion of total episode costs for major joint replacement.19 While orthopedic surgeons may not dictate length of stay in a skilled nursing facility (SNF), they are able to influence which patients are discharged with the less-costly option of home health (vs an SNF). Similarly, hospitalists help decide which patients require sub-acute care on discharge, and may help triage patients presenting for readmission. Furthermore, some hospitalist groups have assumed the care of patients in skilled nursing facilities in addition to acute care hospitals. Guidelines for BPCI encourage participation from physician groups, as only those inpatients cared for by a participating physician are attributed to participating physician groups. How BPCI participants will distribute risk among the various providers that share in a patient’s care (eg, attending physician, consulting physician, acute care hospital, post acute care provider) remains to be determined, however.

Although participating providers increasingly chose a wide range of conditions, the most popular conditions remain orthopedic and cardiac. This may reflect the confidence gained from prior bundled payment initiatives around these same conditions (eg, the ACE Demonstration, Geisinger’s ProvenCare). In addition, unlike many chronic medical conditions, procedures have discrete start and end points, lending themselves to episodes of care that are measured in days rather than years. Finally, surgical inpatients such as those undergoing a hip replacement, are on average more clinically homogeneous then medical inpatients. CMMI offered risk corridors to mitigate the unexpected effects of outliers, but providers may remain concerned about the inability to reliably predict the clinical course for patients with multiple comorbidities. 

Any interpretation of our results should account for the fact that BPCI is an ongoing program. For example, as of June, most Model 2 participants were still in the non–risk-bearing preparatory period (Phase 1), with the 3-year risk-bearing period (Phase 2) slated to begin by January 2015. It is possible that a substantial number of participants will drop out of the program before they begin to bear financial risk. Between October and June, one-fifth of Model 2 enrollees dropped out. It is also possible that fewer conditions will be selected for the risk-bearing phase of the program. Nevertheless, we believe that the magnitude of the trends— toward greater participation and more physician group involvement for a wider range of conditions—make these results important to note. Moreover, while we focused on those models that were open to acute care hospitals, the same general patterns were found among Model 3 (post acute care bundling) participants.

Interest in the national Medicare bundled payment program is growing, as evidenced by rising and increasingly diverse provider participation for a broad array of clinical conditions. With increased participation, the potential for generalizability of the program’s eventual outcomes has increased as well. However, the magnitude of BPCI’s long-term impact will depend on the still uncertain results of risk-bearing participants; success by a large risk-bearing group would make it easier for CMMI to convince other providers to join the program.


The authors thank Haiyin Liu, MA; Mary Oerline, MS; and Anne Cain-Nielsen, MS, for the analytic support they provided. They were compensated for their work.

Author Affiliations: Division of General Medicine, Department of Internal Medicine (LMC) and Center for Healthcare Outcomes & Policy (LMC) and Institute for Healthcare Policy and Innovation (LMC), University of Michigan, Ann Arbor, MI; VA Ann Arbor Healthcare System (LMC), Ann Arbor, MI; Dartmouth Institute for Health Policy and Clinical Practice, Geisel School of Medicine at Dartmouth (EM, JDB), Lebanon, NH; National Bureau of Economic Research (EM), Cambridge, MA.

Source of Funding: This work was supported by funding from the National Institute on Aging (Grant No. P01AG019783). This work was also supported by a Career Development Grant Award (K08HS020671) from the Agency for Healthcare Research and Quality.

Author Disclosures: Dr Meara received a grant for the preparation of this manuscript from the National Institute on Aging (P01AG019783). Dr Birkmeyer has equity interest in ArborMetrix, a company that profiles hospital quality and episode cost efficiency; the company played no role in the manuscript. Dr Chen reports no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (LC, EM, JDB); acquisition of data (JDB); analysis and interpretation of data (LC, EM, JDB); drafting of the manuscript (LC); critical revision of the manuscript for important intellectual content (LC, EM, JDB); statistical analysis (LC); obtaining funding (EM, JDB); administrative, technical, or logistic support (JDB); and supervision (EM, JDB).

Address correspondence to: Lena M. Chen, MD, MS, University of Michigan Division of General Medicine, North Campus Research Complex, 2800 Plymouth Rd, Bldg 16, Rm 407E, Ann Arbor, MI  48109-2800. E-mail:
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