National representativeness of hospitals and markets in Medicare's mandatory bundled payment program

In 2016 Medicare implemented its first mandatory alternative payment model, the Comprehensive Care for Joint Replacement (CJR) program, in which the agency pays clinicians and hospitals a fixed amount for services provided in hip and knee replacement surgery episodes. Medicare made CJR mandatory, rather than voluntary, to produce generalizable evidence on what results Medicare might expect if it scaled bundled payment up nationally. However, it is unknown how markets and hospitals in CJR compare to others nationwide, particularly with respect to baseline quality and spending performance and the structural hospital characteristics associated with early savings in CJR. Using data from Medicare, the American Hospital Association, and the Health Resources and Services Administration, we found differences in structural market and hospital characteristics but largely similar baseline hospital episode quality and spending. Our findings suggest that despite heterogeneity in hospital characteristics associated with early savings in CJR, Medicare might nonetheless reasonably expect similar results by scaling CJR up to additional urban markets and increasing total program coverage to areas in which 71 percent of its beneficiaries reside. In contrast, different policy designs may be needed to extend market-level programs to other regions or enable different hospital types to achieve savings from bundled payment reimbursement.