Overlap between Medicare’s Voluntary Bundled Payment and Accountable Care Organization Programs
Accountable care organizations (ACOs) and bundled payments represent prominent value-based payment models, but the magnitude of overlap between the two models has not yet been described. Using Medicare data, we defined overlap based on attribution to Medicare Shared Savings Program (MSSP) ACOs and hospitalization for Bundled Payments for Care Improvement (BPCI) episodes at BPCI participant hospitals. Between 2013 and 2016, overlap as a share of ACO patients increased from 2.7% to 10% across BPCI episodes, while overlap as a share of all bundled payment patients increased from 19% to 27%. Overlap from the perspectives of both ACO and bundled payments varied by specific episode. In the first description of overlap between ACOs and bundled payments, one in every ten MSSP patients received care under BPCI by the end of our study period, whereas more than one in every four patients receiving care under BPCI were also attributed to MSSP. Policymakers should consider strategies to address the clinical and policy implications of increasing payment model overlap.
© 2019 Society of Hospital Medicine
Voluntary accountable care organizations (ACOs) and bundled payments have concurrently become cornerstone strategies in Medicare’s shift from volume-based fee-for-service toward value-based payment.
Physician practice and hospital participation in Medicare’s largest ACO model, the Medicare Shared Savings Program (MSSP),1 grew to include 561 organizations in 2018. Under MSSP, participants assume financial accountability for the global quality and costs of care for defined populations of Medicare fee-for-service patients. ACOs that manage to maintain or improve quality while achieving savings (ie, containing costs below a predefined population-wide spending benchmark) are eligible to receive a portion of the difference back from Medicare in the form of “shared savings”.
Similarly, hospital participation in Medicare’s bundled payment programs has grown over time. Most notably, more than 700 participants enrolled in the recently concluded Bundled Payments for Care Improvement (BPCI) initiative,2 Medicare’s largest bundled payment program over the past five years.3 Under BPCI, participants assumed financial accountability for the quality and costs of care for all Medicare patients triggering a qualifying “episode of care”. Participants that limit episode spending below a predefined benchmark without compromising quality were eligible for financial incentives.
As both ACOs and bundled payments grow in prominence and scale, they may increasingly overlap if patients attributed to ACOs receive care at bundled payment hospitals. Overlap could create synergies by increasing incentives to address shared processes (eg, discharge planning) or outcomes (eg, readmissions).4 An ACO focus on reducing hospital admissions could complement bundled payment efforts to increase hospital efficiency.
Conversely, Medicare’s approach to allocating savings and losses can penalize ACOs or bundled payment participants.3 For example, when a patient included in an MSSP ACO population receives episodic care at a hospital participating in BPCI, the historical costs of care for the hospital and the episode type, not the actual costs of care for that specific patient and his/her episode, are counted in the performance of the ACO. In other words, in these cases, the performance of the MSSP ACO is dependent on the historical spending at BPCI hospitals—despite it being out of ACO’s control and having little to do with the actual care its patients receive at BPCI hospitals—and MSSP ACOs cannot benefit from improvements over time. Therefore, MSSP ACOs may be functionally penalized if patients receive care at historically high-cost BPCI hospitals regardless of whether they have considerably improved the value of care delivered. As a corollary, Medicare rules involve a “claw back” stipulation in which savings are recouped from hospitals that participate in both BPCI and MSSP, effectively discouraging participation in both payment models.
Although these dynamics are complex, they highlight an intuitive point that has gained increasing awareness,5 ie, policymakers must understand the magnitude of overlap to evaluate the urgency in coordinating between the payment models. Our objective was to describe the extent of overlap and the characteristics of patients affected by it.
