AHRQ Report Studies Effects of Bundled Payments on Cost and Quality

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An August 2012 report by the Agency for Healthcare Research and Quality (AHRQ) concluded that bundled payment programs may be associated with reductions in health care spending and utilization and may have a small effect on quality measures.  The AHRQ report defines bundled payment as “a method in which payments to health care providers are related to the predetermined expected costs of a grouping, or ‘bundle,’ of related health care services.”  As part of its study, AHRQ reviewed 58 bundled payment studies and 4 review articles to (1) examine the effects of bundled payments on spending and quality of care measures and (2) understand how key design and contextual features of bundled payment programs may impact outcomes.

The AHRQ study found that transitioning from cost-based or fee-for-service payment to bundled payment models generally resulted in a decrease in health care spending and utilization.  Specifically, the study noted a decrease in spending of 10 percent or less, and a 5 to 15 percent reduction in utilization of services, depending on the underlying program.  The report also found somewhat inconsistent results with respect to bundled payment’s effect on quality, noting that in a given program, some quality measures improved while others worsened. 

The AHRQ report also determined that there was insufficient evidence to estimate the impact of bundled payment by key design features and contextual factors.  According to AHRQ, more research is needed with respect to design features, including the number of providers and services included in the bundle, the methods for limiting financial risk, the use of quality measurement, and the methods for distributing payment among participating providers.  In addition, future studies should address contextual factors such as whether bundled payment is more effective in highly integrated delivery settings, the role financial pressure plays in spending and utilization, and the impact on different subgroups of patients.

The AHRQ report noted that its findings were subject to several limitations.  For example, most of the bundled payment programs that were reviewed as part of the study were focused on single institutional providers such as hospitals or skilled nursing facilities, and may not be easily generalized to programs with multiple providers or provider types, or to newer bundled payment programs.  In addition, the report cautioned that the results may be limited by the quality of the underlying studies and review articles.

The full version of the AHRQ report is available here.

Reporter, Jennifer Simmen Lewin, Atlanta, + 1 404 572 3569, jlewin@kslaw.com.

Published In: Administrative Agency Updates, Health Updates, Insurance Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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