Study Compares Hospitals Enrolled in Medicare’s Voluntary vs Mandatory Bundled Payment Programs Interview with:

Amol Navathe, MD, PhD Assistant Professor, Health Policy and Medicine Perelman School of Medicine University of Pennsylvania

Dr. Navathe

Amol Navathe, MD, PhD
Assistant Professor, Health Policy and Medicine
Perelman School of Medicine
University of Pennsylvania What is the background for this study?

Response: Bundled payment is a key Medicare Alternative Payment Model (APM) developed by the Centers for Medicare and Medicaid Services (CMS) to increase health care value by holding health care organizations accountable for spending across an episode of care. The model provides financial incentives to maintain quality and contain spending below a predefined benchmark.

In 2013, CMS launched the Bundled Payments for Care Improvement (BPCI) initiative to expand bundled payment nationwide. BPCI’s bundled payment design formed the basis for CMS’s Comprehensive Care for Joint Replacement (CJR) Model beginning in 2016. While the programs are similar in design, BPCI is voluntary while CJR is mandatory for hospitals in selected markets. Moreover, CJR is narrower in scope, focusing only on lower extremity joint replacement (LEJR) and limiting participation to hospitals. What are the main findings? 

Response: In this study, we compared hospitals participating in joint replacement bundles under BPCI model 2 and CJR, and we evaluated the breakdown of episode spending components between the two groups. We found that BPCI and CJR hospitals were significantly different with respect to organizational characteristics but did not differ in terms of baseline quality or spending performance. BPCI hospitals were larger, had higher mean annual Medicare patient volume, and had a greater utilization by Medicare beneficiaries. Furthermore, BPCI hospitals were more likely to be not-for-profit, teaching hospitals. However, hospitals in both groups were similar in terms of exposure to financial risk and risk-standardized measures of baseline quality and episode spending, with a few exceptions representing only a small proportion of total episode spending. What should readers take away from your report?

Response: The voluntary and mandatory bundled payment programs have engaged different types of hospitals, and results from BPCI might not be as generalizable as those from CJR. Thus, extending voluntary programs to hospitals that would otherwise not volunteer might fail to achieve similar results if such hospitals are less capable.

Furthermore, both voluntary and mandatory approaches may be important in engaging hospitals across the country, so policy makers should not restrict themselves to one approach. To increase the reach of bundled payment, policies should be designed to engage a broad range of hospitals. This goal can be accomplished via mandatory programs or additional targeted voluntary programs.

Finally, the current mandates do not appear, on average, to put mandatory hospitals at a relative disadvantage in reducing spending or improving quality. Therefore, mandatory programs may be one avenue to engage hospitals that would be reluctant to volunteer. What recommendations do you have for future research as a result of this work?

Response: Future research should explore how differences between BPCI and CJR hospitals identified in our analyses reflect a hospital’s ability to succeed in joint replacement programs. To further clarify the utility of the programs, future work should fully evaluate their impact on spending and patient outcomes. A comparison between hospitals that volunteer and those unwilling to volunteer unless mandated to do so could provide evidence about the benefits of mandatory models. Is there anything else you would like to add?

Response: Under the current presidential administration, CMS has made a policy shift toward physician-focused models, thus reducing mandated participation for roughly half of the CJR hospitals. The subset of hospitals required to remain in the program (CJR mandate hospitals) were compared to BPCI hospitals. The comparison of organizational characteristics between CJR mandate hospitals and BPCI hospitals yielded similar results to those when CJR hospitals were compared. Moreover, compared to BPCI hospitals, CJR mandate hospitals had similar patterns of volume and spending, with significantly higher baseline spending in certain episode cost components.


Health Aff (Millwood). 2018 Jun;37(6):854-863. doi: 10.1377/hlthaff.2017.1358.

Comparison Of Hospitals Participating In Medicare’s Voluntary And Mandatory Orthopedic Bundle Programs.

Navathe AS1, Liao JM2, Polsky D3, Shah Y4, Huang Q5, Zhu J6, Lyon ZM7, Wang R8, Rolnick J9, Martinez JR10, Emanuel EJ11.

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Last Updated on June 12, 2018 by Marie Benz MD FAAD