Bundled Payment: Effects on Health Care Spending and Quality

Closing the Quality Gap: Revisiting the State of the Science

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 report evaluates the effects of bundled payment systems on health care and quality of care.

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 4 review articles. Most studies (57 of 58) were observational or descriptive; 1 study employed randomization of providers, and none employed random assignment of patients to treatment and control groups. The included studies examined 20 different bundled payment interventions, 16 of which focused on single institutional providers. The introduction of bundled payment was associated with:

  1. Reductions in health care spending and utilization.
  2. Inconsistent and generally small effects on quality measures.

These findings were consistent across different bundled payment programs and settings, but the strength of the body of evidence was rated as low, due mainly to concerns about bias and residual confounding. Insufficient evidence was available to identify the influence of key design factors and most contextual factors on bundled payment effects.

Limitations: Most of the bundled payment interventions studied in reviewed articles (16/20) were limited to payments to single institutional providers (e.g., hospitals, skilled nursing facilities) and so have limited generalizability to newer programs including multiple provider types and/or multiple providers. Exclusion criteria and the search strategy we used may have omitted some relevant studies from the results. The review is limited by the quality of the underlying studies. The interventions studied were often incompletely described in the reviewed articles.

Conclusions: There is weak but consistent evidence that bundled payment programs have been effective in cost containment without major effects on quality. Reductions in spending and utilization relative to usual payment were less than 10 percent in many cases. Bundled payment is a promising strategy for reducing health spending. However, effects may not be the same in future programs that differ from those included in this review.

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

Evidence-based Practice Center: RAND EPC

Page last reviewed August 2012
Internet Citation: Bundled Payment: Effects on Health Care Spending and Quality: Closing the Quality Gap: Revisiting the State of the Science. August 2012. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/research/findings/evidence-based-reports/gapbundtp.html