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Medicare's bundled payment model did not change skilled nursing facilities' discharge patterns

Many BPCI-participating hospitals instead elect to send patients to home health organizations, which are less costly.

Jeff Lagasse, Associate Editor

While many skilled nursing facilities operate on the premise that hospital partners with strong outcomes data are the best way to achieve referrals, new research published in the American Journal of Managed Care suggests otherwise.

SNFs that participated in the Bundled Payments for Care Improvement program between 2010 and 2015 saw no discernible changes in hospital referral patterns compared to the control group that was studied. The proportion of patients discharged to SNFs by BPCI participants didn't budge in any statistically significant way.

The authors wrote that the results are consistent with research "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."

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The findings are particularly relevant given there has been a growing trend toward voluntary bundled payment models. BPCI was established to improve outcomes and rein in Medicare costs by having providers work together to share payment for a single episode of care. But many BPCI-participating hospitals instead elect to send patients to home health organizations, which are less costly.


There are a number of reasons why no changes in discharge patterns were found. For one, hospitals remain concerned about how to steer patients to SNFs while still preserving the Centers for Medicare and Medicaid Services' requirement for patient choice in the discharge process.

Because of this, most hospitals continue to provide patients with impartial lists of SNFs on discharge. 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.

Secondly, BPCI likely affects discharge decisions for patients with specific clinical conditions, rather than for all patients being discharged from a given hospital. In a 2018 evaluation of hospitals that joined an accountable care organization, for example, changes in post-acute care utilization and payments did not spill over to all beneficiaries admitted to ACO hospitals. BPCI-participating hospitals, likewise, may not be redesigning SNF referral patterns broadly -- which is a time- and labor-intensive process.

Bundled payment programs for lower joint replacement have demonstrated effectiveness in cost containment without much negative effect on quality, but those results don't appear to be connected to BPCI. Instead, cost savings under BPCI for patients undergoing lower joint replacement appear to be driven mainly by rapid reductions in the overall use of post-acute care, including skilled nursing. In the near-term, hospitals appear to be shifting toward home-based care after discharge.


As of March, 250 providers have dropped out of BPCI Advanced, the latest iteration of the BPCI model. While that's a 16 percent drop in numbers, 715 acute care hospitals and 580 physician group practices remain in the program.

Twitter: @JELagasse

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