One of Obamacare’s big experiments to lower costs is working surprisingly well

A few years ago, under the authority of the Affordable Care Act, the federal government started an experiment: It would pay hospitals a single amount for surgeries to replace joints like knees and hips instead of paying them for each individual service. The hope was that hospitals could lower costs while maintaining or even improving the quality of care.

The program was called “bundled payments,” and it was voluntary under the Obama administration — hospitals could opt in or out. Almost immediately, it seemed to be working. Costs per procedure were going down, and quality seemed to stabilize or even improve. Hospitals didn’t have to worry about squeezing every dollar they could out of Medicare and could start focusing more on the care itself. 

But some health economists had two outstanding fears: Would hospitals start performing more surgeries, which would erase any savings to Medicare? And would they start becoming more selective about their patients to avoid particularly costly ones?

According to new research led by Ezekiel Emanuel and Amol Navathe at the University of Pennsylvania published Tuesday in JAMA, the answer to both is: no, not really. The volume of procedures isn’t going up, and for the most part, the kind of patients receiving replacements isn’t changing, either.