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1. Bundled Payment: Effects on Health Care Spending and Quality Closing the Quality Gap: Revisiting the State of the Science

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1. Bundled Payment: Effects on Health Care Spending and Quality Closing the Quality Gap: Revisiting the State of the Science Evidence Report/Technology Assessment Number 208 1. Bundled Payment: Effects on Health Care Spending and Quality Closing the Quality Gap: Revisiting the State of the Science Agency for Healthcare Research and Quality Evidence-Based Practice Advancing Excellence in Health Care • www.ahrq.gov Evidence Report/Technology Assessment Number 208 1. Bundled Payment: Effects on Health Care Spending and Quality Closing the Quality Gap: Revisiting the State of the Science Prepared for: Agency for Healthcare Research and Quality U.S. Department of Health and Human Services 540 Gaither Road Rockville, MD 20850 www.ahrq.gov Contract No. 290-2007-10062-I Prepared by: RAND Evidence-based Practice Center Arlington, VA and Boston, MA Investigators: Peter S. Hussey, Ph.D. Andrew W. Mulcahy, Ph.D., M.P.P. Christopher Schnyer, M.P.P. Eric C. Schneider, M.D., M.Sc., FACP AHRQ Publication No. 12-E007-EF August 2012 This report is based on research conducted by the RAND Evidence-based Practice Center (EPC) under contract to the Agency for Healthcare Research and Quality (AHRQ), Rockville, MD (Contract No. HHSA 290-2007-10062-I). The findings and conclusions in this document are those of the authors, who are responsible for its contents; the findings and conclusions do not necessarily represent the views of AHRQ. Therefore, no statement in this report should be construed as an official position of AHRQ or of the U.S. Department of Health and Human Services. The information in this report is intended to help health care decisionmakers—patients and clinicians, health system leaders, and policymakers, among others—make well-informed decisions and thereby improve the quality of health care services. This report is not intended to be a substitute for the application of clinical judgment. Anyone who makes decisions concerning the provision of clinical care should consider this report in the same way as any medical reference and in conjunction with all other pertinent information, i.e., in the context of available resources and circumstances presented by individual patients. This report may be used, in whole or in part, as the basis for development of clinical practice guidelines and other quality enhancement tools, or as a basis for reimbursement and coverage policies. AHRQ or U.S. Department of Health and Human Services endorsement of such derivative products may not be stated or implied. This document is in the public domain and may be used and reprinted without special permission. Citation of the source is appreciated. Persons using assistive technology may not be able to fully access information in this report. For assistance contact [email protected]. None of the investigators have any affiliations or financial involvement that conflicts with the material presented in this report. Suggested citation: Hussey PS, Mulcahy AW, Schnyer C, Schneider EC. Bundled Payment: Effects on Health Care Spending and Quality. Closing the Quality Gap: Revisiting the State of the Science. Evidence Report/Technology Assessment No. 208. (Prepared by the RAND Evidence-based Practice Center under Contract No. 290-2007-10062-I.) AHRQ Publication No. 12-E007-EF. Rockville, MD: Agency for Healthcare Research and Quality. August 2012. www.effectivehealthcare.ahrq.gov/reports/final.cfm. DOI: https://doi.org/10.23970/ AHRQEPCERTA208.1. ii Preface The Agency for Healthcare Research and Quality (AHRQ), through its Evidence-based Practice Centers (EPCs), sponsors the development of evidence reports and technology assessments to assist public- and private-sector organizations in their efforts to improve the quality of health care in the United States. The reports and assessments provide organizations with comprehensive, science-based information on common, costly medical conditions, and new health care technologies and strategies. The EPCs systematically review the relevant scientific literature on topics assigned to them by AHRQ and conduct additional analyses when appropriate prior to developing their reports and assessments. In 2004, AHRQ launched a collection of evidence reports, Closing the Quality Gap: A Critical Analysis of Quality Improvement Strategies, to bring data to bear on quality improvement opportunities. These reports summarized the evidence on quality improvement strategies related to chronic conditions, practice areas, and cross-cutting priorities. This evidence report is part of a new series, Closing the Quality Gap: Revisiting the State of the Science. This series broadens the scope of settings, interventions, and clinical conditions, while continuing the focus on improving the quality of health care through critical assessment of relevant evidence. Targeting multiple audiences and uses, this series assembles evidence about strategies aimed at closing the “quality gap,” the difference between what is expected to work well for patients based on known evidence and what actually happens in day-to-day clinical practice across populations of patients. All readers of these reports may expect a deeper understanding of the nature and extent of selected high-priority quality gaps, as well as the systemic changes and scientific advances necessary to close them. AHRQ expects that the EPC evidence reports will inform consumers, health plans, other purchasers, providers, and policymakers, as well as the health care system as a whole, by providing important information to help improve health care quality. We welcome comments on this evidence report or the series as a whole. Comments may be sent by mail to Elisabeth U. Kato, M.D., M.R.P., at: Agency for Healthcare Research and Quality, 540 Gaither Road, Rockville, MD 20850, or by email to [email protected]. Carolyn M. Clancy, M.D. Jean Slutsky, P.A., M.S.P.H. Director Director, Center for Outcomes and Evidence Agency for Healthcare Research and Quality Agency for Healthcare Research and Quality Stephanie Chang, M.D., M.P.H. Christine Chang, M.D., M.P.H. Director Task Order Officer, Evidence-based Practice Program Closing the Quality Gap Series Center for Outcomes and Evidence Center for Outcomes and Evidence Agency for Healthcare Research and Quality Agency for Healthcare Research and Quality Kathryn McDonald, M.M. Elisabeth U. Kato, M.D., M.R.P. Lead EPC Investigator and Associate Editor, Task Order Officer Closing the Quality Gap Series Center for Outcomes and Evidence Stanford University Agency for Healthcare Research and Quality Bernard Friedman, Ph.D. Center for Delivery, Organization, and Markets Agency for Healthcare Research and Quality iii Acknowledgments The authors gratefully acknowledge the Task Order Officer for this project, Elisabeth Kato, and Bernard Friedman of the Agency for Healthcare Research and Quality. We would also like to thank Reema Singh and Kate Barker of RAND for research assistance and project support. Technical Expert Panel Harold Miller Robert Berenson Network for Regional Health Improvement Urban Institute Pittsburgh, PA Washington, DC Gregory Pope R. Adams Dudley Research Triangle Institute International University of California, San Francisco Waltham, MA San Francisco, CA Meredith Rosenthal Robert Greene Harvard School of Public Health United HealthCare Boston, MA Edina, MN Dana Safran Keith Michl Blue Cross Blue Shield of Massachusetts Internist, Private Practice Boston, MA Manchester Center, VT Barbara Wynn RAND Corporation Arlington, VA Peer Reviewers Michael Chernew Harold Miller Harvard Medical School Network for Regional Health Improvement Boston, MA Pittsburgh, PA Jonathan Christianson Gregory Pope University of Minnesota Research Triangle Institute International Minneapolis, MN Waltham, MA R. Adams Dudley Meredith Rosenthal University of California, San Francisco Harvard School of Public Health San Francisco, CA Boston, MA Robert Greene Dennis Scanlon United HealthCare Pennsylvania State University Edina, MN State College, PA Stuart Guterman Melony Sorbero The Commonwealth Fund RAND Corporation New York, NY Pittsburgh, PA Harold Luft Palo Alto Research Institute Palo Alto, CA iv Bundled Payment: Effects on Health Care Spending and Quality Closing the Quality Gap: Revisiting the State of the Science Structured Abstract Background. “Bundled payment” is 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. The intent of bundled payment systems is to decrease health care spending while improving or maintaining the quality of care. Purpose. To systematically review studies of the effects of bundled payment on health care spending and quality, and to examine key design and contextual features of bundled payment programs and their association with program effectiveness. Data Sources. Electronic literature search of PubMed® and the Cochrane Library for studies published between 1985 and 2011. Study Selection. Title and abstract review followed by full-text review to identify studies that assessed the effect of bundled payment on health care spending and/or quality. Data Extraction. Two authors independently abstracted data on study design, intervention design, context, comparisons, and findings. Reviewers rated the strength of individual studies as well as the strength and applicability of the body of evidence overall. Differences between reviewers were reconciled by consensus. Studies were categorized by bundled payment program and narratively summarized. Data Synthesis. We reviewed 58 studies, excluding studies of the Medicare Inpatient Prospective Payment System, for which we reviewed
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