The Impact of Bundled Payments on Quality and Cost of Care

The overall objective is to examine the effects of the Bundled Payments for Care Improvement (BPCI) Model 2 on the quality and costs of care for conditions related to seven of the ten Medicare severity disease-related groups (MS-DRGs) most commonly selected by program participation. Five of these are surgical (major joint replacement of the lower extremity; double joint replacement of the lower extremity; revision of the hip or knee, hip and femur procedures except major joint; lower extremity and humerus procedure except hip, foot, and femur) and two are medical (simple pneumonia and respiratory infections; chronic obstructive pulmonary disease, bronchitis/asthma). These MS-DRGs represent two larger service lines: orthopedics and pulmonary. For each of these seven MS-DRGs, the team will first describe characteristics of provider organizations participating in bundled payment arrangements, including geographic characteristics and clinical volume. We will subsequently empirically test the effect of bundled payment arrangements on quality outcomes and costs of care for these conditions. Additionally, the team will examine any spillover effects that occur within the service lines that contain these seven MS-DRGs.

Inclusion criteria

• Provider organizations that participate in model 2 of the BPCI program, accept bundled payment for the ten most common MS-DRGs, and have at least ten or greater episodes in each of the MS-DRGs.

Exclusion criteria

• Provider organizations who participated in the BPCI program, but do not meet inclusion criteria will be excluded.