An Early Look at the Effects of the Medicare Bundled Payments for Care Improvement: Evidence from Presence Health

28 Pages Posted: 31 Jul 2019

See all articles by Nathan Petek

Nathan Petek

University of Chicago

Will Clark

University of Chicago

Jonas de Souza

University of Chicago

Heidi Graham

University of Chicago

Svati Patel

University of Chicago

Xikuan Wang

University of Chicago

David DiLoreto

Presence Health

Daniel Adelman

The University of Chicago Booth School of Business

Date Written: May 1, 2018

Abstract

A recent Medicare bundled payment pilot program gives a single health care provider a financial incentive to keep total payments to all providers during a multi-week episode of patient care under a certain value. We estimate the effect of the pilot for knee and hip replacements using data from 11 Presence Health hospitals. Unconditional on patient characteristics, the program caused a 12 percent decrease in spending. Controls for patient characteristics reduce the effect by half, which is consistent with selection of healthier patients. Direct estimates of the selection effect are typically not statistically significant. The rest of the spending decrease is driven by reduced utilization of inpatient rehabilitation and shifting patients from inpatient rehabilitation to skilled nursing facilities. Spending decreases are concentrated among relatively healthy patients while spending on patients with major complications or comorbidities increases.

Keywords: bundled payment, alternative payment programs

JEL Classification: C23, H42, I13

Suggested Citation

Petek, Nathan and Clark, Will and de Souza, Jonas and Graham, Heidi and Patel, Svati and Wang, Xikuan and DiLoreto, David and Adelman, Daniel, An Early Look at the Effects of the Medicare Bundled Payments for Care Improvement: Evidence from Presence Health (May 1, 2018). Available at SSRN: https://ssrn.com/abstract=3428049 or http://dx.doi.org/10.2139/ssrn.3428049

Nathan Petek

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Will Clark

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Jonas De Souza

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Heidi Graham

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Svati Patel

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Xikuan Wang

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

David DiLoreto

Presence Health ( email )

United States

Daniel Adelman (Contact Author)

The University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-2019 (Phone)

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