Bundled payments represent a category of value-based payment models designed to maximize patient outcomes per dollar spent. In contrast to traditional fee-for-service payment rules that remunerate providers for each discrete service provided, bundled payments aggregate or “bundle” all services related to a particular clinical episode and set a target payment for these included services.¹ Measures of patient outcomes are then aligned to the bundled payment to ensure that the payment model incentivizes the delivery of high value care.²

Although bundled payments are broadly deployed across surgical and medical conditions for both commercially and government insured populations, the penetration in urology is limited. Bundled payments in cardiac surgery,³ orthopedic surgery,⁴ cardiology procedures⁵ and other medical conditions⁶ have been implemented and tested over the past 35 years with varying degrees of success. More recently, the Large Urology Group Practice Association developed a bundled payment model for the treatment of clinically localized prostate cancer and proffered this unsuccessfully to the Center for Medicare and Medicaid Innovation (CMMI) as a urology-specific alternative payment model.⁷

The bundled payment program that is most relevant to the urology community and operates at the largest scale is CMMI’s Oncology Care Model (OCM). The OCM incorporates a bundle payment model methodology (see figure) plus $160 per beneficiary per month care coordination fees for 6-month episodes of systemic therapy for 24 cancer diagnoses.⁸ Patients receiving systemic therapy for kidney, bladder and prostate cancer were included in the OCM, including bladder cancer patients receiving bacillus Calmette-Guérin and prostate cancer patients receiving hormone therapy alone. The OCM runs from January 1, 2016 through June 2022. Provider participation in the program is voluntary

Figure. OCM bundled payment methodology.

The most recent interim evaluation of the OCM assessing episodes that started between January 1, 2016 and January 1, 2019 revealed several notable results:⁹

• There were 176 OCM practices included in the analysis, resulting in 641,451 OCM episodes (13.2% were prostate cancer episodes).
• There was a significant decrease in episode spending for OCM practices compared to non-OCM practices. This decrease in spending, however, was driven largely by reductions in spending across 4 cancer episodes: lung (−$1,292 [−3.2%], p <0.01), lymphoma (−$1,017 [−2.3%], p <0.05), colorectal (−$879 [−2.4%], p <0.05) and high-risk breast (−$790 [−2.2%], p <0.01).
• The OCM net financial impact to CMMI was a $315.6 million loss after combining savings in episode spending ($144.7 million) with the additional monthly care coordination ($376.1 million) and bonus payments ($84.3 million) to participating providers.
• There was an increase in episode spending in episodes for prostate cancer treated with androgen deprivation therapy without any other chemotherapy (“low-intensity prostate cancer”) for OCM practices compared to non-OCM practices ($236 [2.1%], p ≥0.10), although not significant.
• There was a decrease in episode spending in episodes for prostate cancer treated with chemotherapy (“high-intensity prostate cancer”) for OCM practices compared to non-OCM practices (−$387 [−0.9%], p ≥0.10), although not significant.
• There were significant changes in aspects of Medicare spending for high-intensity prostate cancer episodes for OCM practices compared to non-OCM practices
  • Medicare Part B decrease (−$703 [−3.9%], p <0.10)
    • Part B non-chemotherapy drug payment decrease (−$354 [−6.1%], p <0.10)
    • Part B supportive care drug payment decrease (−$280 [−5.9%], p <0.10)
  • Medicare Part D increase ($699 [3.5%], p <0.01)
• There was a significant decrease in the use of denosumab (compared to bisphosphonates) for prostate cancer patients with bony metastases for OCM practices compared to non-OCM practices (−4.0%, 95% CI −5.9% to −2.2%, p ≤0.01)

Taken together these interim OCM results tell a predictable story. That is, the ability of bundled payment models to drive value-based care is dependent on both the design details of the model and the idiosyncrasies of the targeted clinical conditions. To the former point, consider the impact to the net financial performance of OCM if there was no monthly care coordination fee, or some fraction of the $160 per beneficiary per month. Reducing this care coordination fee alone could move the OCM from a net negative to a net positive financial impact. To the latter point, the analysis of episodes with high-intensity prostate cancer and prostate cancer with bony metastases suggests that where value opportunities exist (eg non-chemotherapy or supportive drug utilization, denosumab vs bisphosphonates), bundled payments can provide the right incentive model to maximize patient outcomes per dollar spent.

The role of bundled payments in all facets of health care, including urology, remains the same–a solution to the problem of low value health care. As purchasers, payers and (increasingly) providers look to extract more value from health care spending, bundled payments will provide an entrée for urologists to be part of that solution.