HARRIS MEYER / January 6, 2020
Medicare’s voluntary bundled-payment program for hip and knee replacements reduced spending by 1.6% from 2013 to 2016 — less than previously estimated — with no overall change in quality, according to a new study in Health Affairs.
Another new Health Affairs study reported that lower extremity joint replacement is the only type of clinical episode in Medicare bundled-payment programs that has produced savings so far. The meta-analysis found no evidence of reduced spending or quality improvement for other clinical episodes. 
The two studies highlight the challenges facing federal policymakers, hospitals and physicians in using bundled payments to achieve cost savings and better quality care on a wide range of medical and surgical episodes.
The Trump administration expanded bundled payments in 2018 through the Bundled Payment for Care Improvement Advanced demonstration program, which gives providers the option to participate in bundles for 33 inpatient and four outpatient conditions.
Under BPCI Advanced, the CMS pays a fixed price for each episode, which starts with an initial hospital admission or outpatient procedure and includes almost all services during the next 90 days. Providers make money if they keep total costs below the target price, which the CMS has discounted by 3%. They’re at risk for up to 20% of costs that exceed the target price. Savings payments are adjusted based on performance on seven quality measures.