Bundled Payments May Not Actually Change Hospitals’ Skilled Nursing Choices

The refrain has been nearly constant in the skilled nursing space: In order to win precious referrals in new payment models, operators need to woo hospital partners with strong data on outcomes.

But a new study says all that effort might not matter much at all.

A team of researchers could identify no significant changes in hospital referral patterns among participants in the Bundled Payments for Care Improvement (BPCI) program between 2010 and 2015, according to results published this week in the American Journal of Managed Care.


“We found no discernible changes in two measures of hospital–SNF integration among BPCI participants compared with matched controls over the study period,” the team wrote. “These results are consistent with a recent study that showed no differences in the proportion of patients discharged to the SNFs most utilized by hospitals among BPCI participants with the greatest success in reducing Medicare payments.”

In theory, BPCI — and its updated descendant, BPCI Advanced — works to reduce Medicare costs and improve outcomes by forcing providers along the continuum to work together, sharing a single payment for certain episodes of care. In practice, however, bundled payments have only led to pain for nursing homes, with participating hospitals electing to bypass SNFs entirely in favor of the cheaper home health setting.

A team from Harvard University, for instance, determined that the $1,084-per-patient savings achieved under the Comprehensive Care for Joint Replacement (CJR) model — another bundled payment program — came “nearly exclusively” from reductions in discharges to SNFs and inpatient rehabilitation facilities (IRFs). In addition, under BPCI, hospitals’ top motivation has become sending patients home as quickly as possible, often while bypassing SNFs, a University of Pennsylvania study determined last year.


Jane Zhu, an assistant professor of medicine at Oregon Health and Sciences University, authored both the latter study and the one released this week, which also acknowledges these shifts.

“Rather, cost savings under BPCI for patients undergoing lower joint replacement appear to be driven primarily by rapid reductions in the overall use of institutional post-acute care, including skilled nursing,” they wrote. “Thus, in the near term, hospitals appear to be shifting toward home-based care after discharge.”

But despite the frequent advice to providers about boosting clinical capabilities and demonstrating those outcomes with clear data to win more business, hospitals seem to be sending residents to the same groups of SNFs that they always have.

Zhu’s team observed that BPCI participants saw their overall roster of SNF partners grow by less than one, on average, with no change in the concentration of residents sent to specific SNFs within the existing footprint. The researchers also noted that BPCI hospitals tended to have a greater network of SNF partners than their non-participating counterparts, though that number was lower for those that only took part in joint replacement bundles.

Some of the proposed reasons for this inertia may sound familiar to SNFs and hospitals alike: Wary of anti-steering rules that protect patient choice, the researchers speculate, hospitals simply don’t want to rock the boat.

“As a consequence, most hospitals continue to provide patients with impartial lists of SNFs on discharge,” they wrote. “This tension, whereby hospitals have financial responsibility for SNF care but perceive themselves to be limited in their ability to direct patients to specific providers, may limit more dramatic shifts in referral patterns.”

Additionally, the team noted that hospitals may have established strong relationships with SNFs before the advent of BPCI, with forward-thinking operators simply formalizing partnerships that have existed for years.

“Early evidence suggests that hospitals may be more likely to form such linkages with those SNFs that already share strong relationships, often demonstrated by large discharge referral volumes,” they wrote. “Hospitals may also share electronic health records with SNFs, collect data and monitor performance, embed healthcare providers within SNFs, and hire care coordinators to track patients after discharge, all of which could improve patient transitions without affecting discharge flows.”