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Bundled payments have long been an experiment in the Medicare program to help reduce health care spending. The Affordable Care Act (ACA) gave the Centers for Medicare and Medicaid Services broad authority to test bundled payments, or paying providers for episodes of care instead of for each service provided.

Research has found savings associated with participating in the Bundled Payment for Care Improvement (BPCI) initiative. While there have been encouraging results, Medicare has experienced net losses under BPCI when taking reconciliation payments into account.

However, some alternative payment models have seen significant savings. There's still much to learn as the new iteration of BPCI — BCPI Advanced — continues.

For example, Christopher Whaley, a policy researcher at the RAND Corporation, and coauthors recently published research in the March 2021 issue as part of the Health Affairs Considering Health Spending series. They found a bundled payment program developed by Carrum Health for orthopedic and surgical procedures in a commercially-insured population led to significant price reductions of more than 10%, or more than $4,000 per procedure, with employers capturing approximately 85% of the savings.

In this episode of A Health Podyssey, listen to Alan Weil interview Christopher Whaley on bundled payments, the promise of direct payments in the commercial market, and whether alternative payments can become a mainstream payment model.

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