Bundled Payments - and the "Value Proposition"
When we first came together as a large group practice, we saw the writing on the wall — the healthcare landscape was rapidly changing, threatening the financial viability of our independent physician practices, and we needed to take control of the change. Since that point, the pace of disruption in healthcare has only continued to accelerate, further proving the power of our decision to come together. Fortunately, The Centers’ size and prominence afford us a unique position to manage through this disruption and capitalize on the opportunities it presents.
The shift from fee-for-service to value-based payment models is a permanent and ever-growing trend. The impetus for this change is, of course, the recognition that the rising cost of healthcare is not sustainable and that the transition to value-based reimbursement would have to include incentivizing care coordination to reduce costs. The fee-for-service reimbursement method, which can lead to costly, fragmented care, is being replaced with new risk- and gain-sharing models, ones that give physicians the chance to be rewarded for effectively managing the entire episode of a patient’s care. This change is very real and its implementation is occurring quickly.
In 2013, the Center for Medicare & Medicaid Innovation, which was created by the Affordable Care Act, implemented the Bundled Payments for Care Improvement (BPCI) initiative pilot program to test innovative payment and service delivery models that have the potential to reduce Medicare and Medicaid expenditures while preserving or enhancing the quality of care for beneficiaries. This program links all payments for medical services associated with an episode of care that is triggered by a hospitalization. BPCI hospital participants may benefit financially from providing services more efficiently, but they are also at risk if the total cost for the bundle is higher than a historical benchmark.
In January 2015, the Centers for Medicare and Medicaid Services (CMS) announced that 30 percent of its payments would be tied to alternate payment models by 2016, with that figure increasing to 50 percent by 2018. As momentum for value-based payment models continued to build, in July 2015, CMS announced that it would require hospitals in 75 geographic areas to participate in a bundling program called Comprehensive Care for Joint Replacement (CJR) for reimbursement of hip and knee surgeries. Launched on April 1, 2016, CJR now holds participating hospitals financially accountable for the cost of each CJR episode of care. The CJR program also incentivizes increased coordination of care among hospitals, physicians and post-acute care providers.
While both the BPCI and the CJR initiatives are hospital bundled payment programs, they illustrates how reimbursement is changing. As Mike McCaslin, principal at Somerset CPAs, highlighted in his keynote speech at our Annual Meeting in October 2015, The Centers for Advanced Orthopaedics and its physicians must begin to consider themselves “care managers” for the entire episode of care — from pre-op to surgery and through to rehabilitation and physical therapy. Thankfully, due to the nature of orthopaedics, where our care is more episodic than most other medical disciplines, we are in an ideal position to manage the entire episode of care.
The Centers for Advanced Orthopaedics has been taking steps to prepare for the coming sea change in how our organization will be compensated for the care we will provide. Using Healthjump as our data mining and aggregation partner, we are now able to pull data from our numerous EHR and Practice Management systems. And, we are adding a new Data Manager position in the corporate office to help us make sense of all this data and to make it usable.
As a natural next step, The Centers recently signed a letter of intent to work with Remedy Partners, the largest risk-bearing entity in the BPCI initiative pilot program. Remedy will oversee the development and implementation of seven initial bundles for The Centers. They will also assist us in negotiations with commercial payors and oversee and manage the patient care coordination of these programs. After much research and vetting, with a focus on our ability to control the total cost of the episode, and with the advice of Remedy, who has significant experience in successfully implementing orthopaedic bundled payment programs, we will be establishing the following bundles for commercial payors:
- Total knee
- Total hip
- Partial knee
- Knee scope
- Cervical spine fusion
- ACLs
- Rotator cuff
A commercial payor bundling model will place The Centers at the forefront of the bundled payment movement, and it is a first of its kind partnership for Remedy, one where Remedy is working with a large-volume provider to approach payors, rather than the other way around. Over the coming months, Remedy will be utilizing data mined by Healthjump in concert with data from commercial payors to create a complete view of our patients’ full episodes of care for these seven bundles.
While our current billing and collection processes won’t be affected, there is a critical need to adapt our clinical culture to effectively manage the coming change in reimbursement. Between 70 percent and 80 percent of all of The Centers’ physicians perform the seven procedures listed above. And, since adoption of these bundles will require a change in care management, a high level of physician involvement and acceptance will be important to the success of our commercial bundled payment programs.
At a session on emerging payment models at the AAOS 2016 meeting earlier this year, the presenting physicians offered a set of guiding principles to successfully execute bundled payments:
- Minimize Length of Stay: Because hospital and post-acute stays put patients at risk for hospital-acquired conditions, physicians must strive to minimize the time their patients spend in institutions to both control cost and boost outcomes.
- Reduce variation: Efficiency and quality are essential to success under bundled payment models. Standardization around clinical best practice and care pathway redesign simplify care and reduce outcome disparities.
- Keep protocols simple: While it may be tempting to optimize every detail of patient care, overly complex protocols reduce compliance and increase the administrative burden on physicians.
Remedy’s experience with current Medicare bundled payment participants has validated these key points, and The Centers will use them as guiding principles as we develop our own clinical protocols. Once developed, we will roll out the clinical protocols to CAO through training sessions conducted by CAO physicians.
The ability to deliver better care, better outcomes, and lower costs through bundled payments is a proven model. By adjusting our current workflows, collaborating on best practices, developing quality measures, and standardizing patient education, The Centers can — and will — achieve positive results.
In this new healthcare landscape, physicians are the quarterbacks of care, not just for the care they personally provide, but for all care in an episode — and they need to design and lead the game plan from kickoff to the final play. Due to our size as one of the largest orthopaedic groups in the country, payors want to work with us to improve outcomes, reduce costs, and set the standard in terms of establishing best practices and clinical guidelines. Through these efforts, which will take the commitment of our entire organization, we will ensure The Centers is the value proposition for musculoskeletal care throughout every community we serve.
That’s a powerful concept we can all get behind.