Medicare Advantage Bundled Payment Model Tied to Less Skilled Nursing Facility Use

A Medicare Advantage bundled payment model for hip and knee replacements offered by Humana (NYSE: HUM) was associated with reduced skilled nursing facility use.

These bundled payments were also linked to reduced spending overall for lower extremity joint replacements (LEJR) – while maintaining quality of care, according to a study published in JAMA Network.

Of the bundled episodes, or instances when a MA beneficiary needed a hip or knee replacement, 780 of 6,355 were followed by a SNF stay. About 4,021 of 16,679 were referred to a SNF in the study’s control episodes.


The study reviewed 23,034 lower extremity joint replacement surgeries; physician practice participation in a bundled payment program was linked to a 2.7% reduction in spending, without any changes to quality, according to the JAMA study.

In other words, spending for bundled episodes was about $598 less per episode.

“The bundled payment program’s reductions in episode spending were associated with reductions in SNF use and an increased use of outpatient surgical settings,” authors said. “There was a strong secular trend toward lower episode spending, reflecting national shifts away from SNF use for patients receiving LEJR.”


The Centers for Medicare & Medicaid Services (CMS) only recently allowed bundled payment programs to offer sites other than inpatient for hip and knee replacements, authors noted.

An evaluation of the Comprehensive Care for Joint Replacement program found that hospitals were less likely to perform such surgeries in outpatient settings because they were excluded from Medicare bundled payments.

“This study offers evidence that site-neutral LEJR can be effectively incorporated into a bundled payment program design to bring about additional program savings without apparently affecting quality of care,” added authors.

Bundled payments are a value-based arrangement with “promising evidence,” study authors concluded, especially if hip and knee replacements are included. Such programs that are part of traditional Medicare, or Fee-for-Service Medicare, have been linked to lower spending and improved or stable quality of care.

Private insurers are increasingly offering bundled payments with Medicare Advantage partners, but there’s generally a lack of data that proves these bundles have the same effect.

“Despite a significant increase in Medicare Advantage enrollment during the past decade, to our knowledge, this is the first analysis of an LEJR bundled payment program offered by a Medicare Advantage plan,” authors said. “The magnitude of episode spending reductions, reductions in SNF use, and the finding of stable quality in this analysis are all similar to results of studies of bundled payment programs in traditional Medicare.”

In this particular study, researchers found there was “no statistically significant” difference in quality of care between bundled and control episodes.

Physician practices involved in the Bundled Payments for Care Improvement initiative, reviewed by the Medicare Shared Savings Program, also experienced greater savings within accountable care organizations (ACOs) compared to bundled payment programs in traditional Medicare, the study found.

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