Study Highlights Promise of Bundled Payments in Employer Plans

by Jane Anderson

A bundled payment program run by San Francisco-based digital health company Carrum Health resulted in an average per-episode savings of more than $16,000 per orthopedic or surgical procedure, a recent RAND Corp. analysis found.

Counting both procedures reimbursed under the bundled payment program and procedures reimbursed outside the program, per-episode costs for the three procedures studied — spinal fusion, major joint replacement and bariatric surgery — were 10.7% lower overall, on average, than costs for comparable procedures prior to implementation of the program. That added up to a total savings of $4,229 per episode, the study found.

The analysis, published in the March issue of Health Affairs, determined that employer-sponsored health plans captured approximately 85% of the total savings, or $3,582 per episode. Patient cost-sharing payments decreased by $498 per episode, a 27.7% relative decrease.

"What we studied is a program that uses provider-focused financial incentives to give providers plans to operate more efficiently, and then also pairs it with incentives to patients to use high-value providers," says study author Christopher Whaley, a policy researcher in health care at the RAND Corp. in Santa Monica, Calif. "What we found is that, following the introduction of this program, overall episode costs fell by quite a bit, and patient cost-sharing actually went to zero for patients who went through the program."

"[The] bundled prices tend to be quite a bit lower than if we just go through the normal insurance system," Whaley says, noting that the providers give up higher prices for a guaranteed payment with no insurance road blocks or red tape. Implementation of the direct payments program also was associated with reductions in price variation, the study found.

Although researchers didn't look at outcomes as thoroughly as they did costs, they did find that some outcomes appeared to be better in patients participating in the bundled payment program, Whaley says: "For example, for bariatric surgery, the national commercial patient readmission rate is, I think, around 4%, and for the patients who went through the program, it was 0.5%. So it looks like readmissions are about 75% lower, which is a huge quality difference."

From Health Plan Weekly