Lower Costs, Better Care: How Bundled Payments Impact Patients

Published April 17, 2017

Our patients typically have two priorities when it comes to orthopaedic care: They want to get better quickly, receiving the best possible medical treatment. And they want great care at an efficient price.  

After all, why should paying for medical care be any different than paying for other important investments? Balancing value and cost is a key factor in any purchase.

Providing high-quality care at the lowest possible price is part of our mission at The Centers for Advanced Orthopaedics. And that’s why we are working hard to roll out a bundled payment program, which is a type of value-based payment model, for seven of our most common procedures.

Bundled payments have been rising in popularity as an alternative to the standard “fee-for-service” model, as they reward the outcome of a surgery instead of the number of treatments and services provided. In this model, Medicare sets one flat fee for reimbursement for a specific procedure – like a knee replacement – and that fee covers all appointments, treatment and physical therapy. It’s one bill, and the cost is fixed, which means that physicians are financially rewarded for successful treatment and recovery, without complications or hospital readmissions. This model encourages all care providers to work closely together to monitor the patient and create a holistic treatment plan. The result? Lower prices and even better results than before.

In fact, a recent study by the University of Pennsylvania found that bundled payments reduced costs by 20 percent for joint replacement surgeries, with the same or better quality of care. And Remedy Partners, a software and services company that manages bundled payment programs at over 1,000 health care locations – including The Centers – found that bundled payments led to a significant drop in unnecessary hospital readmissions.

“The patient truly benefits,” said Duncan Sibson, vice president of Remedy Partners. “Physicians are thinking more about the coordination of services and making sure there are better handoffs and transition points, leading to more efficient care. I’ve heard the patient response has been incredibly positive, as they feel that all their care providers are on the same team.”

The Centers for Medicare & Medicaid Services (CMS) launched a voluntary bundled payment pilot program in 2009 for limited medical conditions in an acute care or hospital setting. This was expanded in 2013, and after realizing significant success, CMS announced a mandatory bundled payment program for specific conditions, including joint replacements, at hospitals across the country. 

Now, health insurers are also creating bundled payment programs, and a few private practices, including The Centers, are voluntarily working with insurance companies and CMS to create this payment option for their own patients. We will be rolling out  initial bundles for total and partial knee replacement, total hip replacement, knee scope, cervical spine fusion, ACL and rotator cuff surgeries.

“Voluntary bundled payments have been met with wonderful success and enthusiasm,” said Sibson. “Providers like The Centers for Advanced Orthopaedics are interested in changing and improving the way healthcare is delivered, and they are making it better for the patient while being able to guide the entire episode of care – it’s a win for everyone.”

With the bundled payment structure, doctors are given more control to manage a patient’s entire episode of care, from the initial visit to the post-op physical therapy. And in an organization like The Centers, that translates to greater internal collaboration and learning.

“We’ve found bundled payments to be a wonderful internal tool for groups, as it enhances collaboration and communication,” said Sibson. “Physicians are putting a great emphasis on using data to identify and share individual best practices, which allows the rest of the practice to rally around that and learn from it. It really brings everyone together in a meaningful way, and patients ultimately get better coordinated and more efficient care.”