Hospitals Flee Downside Risk in Medicare Bundled Programs

More than half of the hospitals that voluntary participate in Medicare bundled payment model programs leave those programs when faced with the possibility of financial penalties based on their performance.

So concludes a new report by the U.S. Government Accountability Office.

Some of these models feature both “upside” and “downside” risk.  Upside risk offers financial incentives to participants that keep their costs below targeted amounts; they share those savings with Medicare.  Downside risk occurs when hospitals are penalized when their costs exceed agreed-upon targets.  Some of the model programs begin with only upside risk and later move into both upside and downside risks, but when the downside risk begins, the GAO found, more than half choose to leave the voluntary programs rather than incur downside risk.

Some observers believe this behavior speaks to the need to require participation in the models rather than make participation voluntary.

Learn more about the GAO’s look at the behavior of hospitals that participate in Medicare bundled payment programs in its report “Medicare: Voluntary and Mandatory Episode-Based Payment Models and Their Participants.”

 

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