Bundled Payment Report Finds Inconsistent Effects on Quality of Care

A new review reports the use of bundled payments resulted in reduced health expenditures and small, but inconsistent, effects on patient care measures. The Agency for Healthcare Research and Quality (AHRQ) study did not evaluate the Medicare ESRD Prospective Payment System (PPS) and largely examined non-nephrology care. Researchers also examined how different designs for bundling services (e.g., payment methodology or risk-adjustment methods) and varying contextual factors (e.g., market variables or patient characteristics) influenced these outcomes. With health care spending continuing to rise and the report’s conclusion that bundled payments may reduce costs, AHRQ’s review should be assessed in the context of how the current dialysis bundled payment system influences care for patients with kidney disease.

The review Bundled Payment: Effects on Health Care (1) is part of a new AHRQ series —Closing the Quality Gap: Revisiting the State of the Science—that “aims to provide critical analysis of the existing literature on quality improvement strategies for a selection of diseases and practices.” Bundled payments were evaluated because of “weak but consistent evidence” that these systems maintained the quality of health care while reducing associated costs. Researchers performed a literature review and selected 58 studies assessing the effects of bundled payments on health care spending and quality published between 1985 and 2011. Most studies were observational and in total examined 20 different implementations of bundled payments, including a Japanese study on bundling of hemodialysis medications.

Using bundled payments, physicians can apportion patient care in an effective manner, which “should create a financial incentive for providers to reduce the number and cost of services contained in the bundle,” according to the AHRQ review. Although researchers found evidence of this, the average reduction in expenditures after changing from a fee-for-service model to bundled payments was 10 percent or less, while the decrease in health care utilization ranged from 5 to 15 percent.

The effects on patient care were generally small but less uniform, with several studies on similar bundled payment systems reporting worse, similar, or improved quality measures after the change was introduced. A lack of both standardized outcome metrics and homogenous data contributed to this finding. Also missing was evidence on the negative consequences of bundled payments, although some studies did report a decrease in health care utilization through the transfer of patients to other care settings.

The diversity of bundling systems in the report precluded researchers from examining the impact of different designs and contextual factors. Also, the studies included focused on single institutional providers and were complete prior to recent implementations of PPSs (such as the Medicare ESRD PPS), which limited the generalizability of the findings. Despite observing consistent reductions in health care spending, AHRQ concluded “the strength of the body of evidence was rated as low,” and the results may not reflect the performance of current or future bundled payment models.

Bundled payments and nephrology

The AHRQ review included a Japanese study (2) on bundling payments for anemia medications for patients on hemodialysis. Investigators following 3206 patients during the 1-year bundled payment rollout period found no change in the proportion of patients receiving recombinant human erythropoietin but an 11.8 percent reduction in dosage and a 9.6 percent increase in intravenous iron prescriptions. Patient care was assessed with hemoglobin levels, which remained stable during implementation of the bundling system.

Rajnish Mehrotra, MD, FASN—professor of medicine in the division of nephrology at the University of Washington and section chief at Harborview Medical Center in Seattle—recently co-authored a CJASN article (3) comparing mandated health care reforms, including the ESRD PPS and Quality Improvement Program (QIP), accountable care organizations, and the Affordable Care Act. He too has noted “evidence of reductions in use of erythropoietis-stimulating agents (ESAs) and increase in use of iron,” in the United States after the introduction of the ESRD PPS, which “could be deemed as a ‘reduction in healthcare utilization.’” He notes “if you take the quality measure and goal of reducing patients treated with ESAs with hemoglobin levels >12 g/dL, there has been a profound reduction in use, approximately a 10 percent absolute decrease. On the other hand, there have been some increases in the number of transfusions, which is a potentially adverse effect.”

The AHRQ report stated that quality incentives were not “an intrinsic part of the bundled payment mechanism,” in many of the systems evaluated, even though the risk for negative effects exists. These include “underuse of effective services within the bundle, avoidance of high-risk patients, and an increase in the number of bundles reimbursed,” the authors said. Ensuring a basic level of quality of care was a factor behind the ESRD Quality Improvement Program (QIP), the first mandated pay for performance initiative.

Current quality measures for ESRD lack a strong evidence base, and Mehrotra said “there is a compelling need to identify additional metrics and determine whether they provide better information on patient risk and health, such as efficiency and patient centeredness of care.” Comparative effectiveness research into how health care practices affect outcomes is needed because “there’s virtually no data on whether implementing the bundle improves any of these other measures,” he said.

The utilization of current metrics to assess performance in the QIP poses a threat to the individualization of patient care, Mehrotra said. “One size does not fit all, and this is particularly true with the management of a complex disease like ESRD.” An example he points to is the proposed mineral metabolism measure, which will penalize facilities with a higher proportion of patients with calcium levels >10.2 mg/dL. “Yet the data that identifies calcium of 10.2 mg/dL as ‘dangerous’ or ‘bad’ is very weak, and a clinical trial that randomizes patients to different calcium levels is needed to determine whether it affects outcomes.”

Just as the AHRQ review concluded, Mehrotra expects the use of bundled payments to expand, saying that “the perverse incentive of rewarding volume of care has to diminish, otherwise it is difficult to see how health care costs will come down.” But he sees benefits in the current dialysis bundle in “the rapid growth of the home dialysis population, which I personally believe to be a good development and is in line with the goals of CMS.”



Hussey PS, et al. Bundled Payment: Effects on Health Care Spending and Quality. Closing the Quality Gap: Revisiting the State of the Science, Rockville, MD, Agency for Healthcare Research and Quality, 2012.


Hasegawa T, et al. Changes in anemia management and hemoglobin levels following revision of a bundling policy to incorporate recombinant human erythropoietin. Kidney Int 2011; 79:340–346.


Watnick S, et al. Comparing mandated health care reforms: The Affordable Care Act, accountable care organizations, and the Medicare ESRD program. Clin J Am Soc Nephrol 2012; 7:1535–1543.