Providing value-based care continues to be a hot button issue in healthcare in the United States, as both public and private payers push for better accountability for care quality and reductions in cost with bundled payment reimbursement models.
The savings can amount to as much as $5,577 per joint replacement case!
According to a study, “Cost of Joint Replacement Using Bundled Payment Models,” published in the February, 2017 issue of JAMA Internal Medicine, Comprehensive Care for Joint Placement programs (CJR) saved U.S. taxpayers $5,577 per joint replacement care episode for 3,942 patients.
The Medicare Bundle Payment for Care Improvement (BPCI) and Comprehensive Care for Joint Placement programs (CJR) are two bundle payment models offered by the Centers for Medicare and Medicaid Services (CMS).
Bundled payments allow payers to pay providers and healthcare facilities for a single episode of care with one pre-defined payment as opposed to the traditional system of paying for each expense item separately.
When done right, bundled payment models can cut costs without diminishing levels of care.
However, there is risk. If episode costs are more than the bundle price, providers eat that difference.
Walter B. Beaver, Jr., M.D., a surgeon at OrthoCarolina Hip & Knee Center shared his experiences with making bundles both profitable and fair. He originally discussed “Practicing in Alternative Payment Models” at the International Congress for Joint Reconstruction’s 2018 6th Annual South Hip and Knee Course.
He prefaced his talk by saying, “I don’t have all the answers because they are always changing. We are always getting different criteria from our Medicare and our private insurers for what goes on in a bundle.”
An Upfront Investment
According to Beaver, there are both retrospective and prospective payment options in both public (BPCI and CJR) and private value-based programs. His institution, OrthoCarolina, first got involved in bundles in 2014 with prospective bundles.
In that first year, he said they had contracts with 6 different payers/employers and performed 500 procedures (335 TKAs, 150 THAs and 16 spine surgeries).
“The return on investment for individual physicians and the group as a whole was positive and we decreased cost and improved quality for patients,” he said.
He explained that it takes a lot of work to make bundles successful. OrthoCarolina established a Quality Improvement Committee to get the physicians on board to change behavior as well as hired a Value Based Program Director and patient navigators. Patient navigators help patients navigate the healthcare system and find the right care arrangements.
“You need to be willing to make an initial upfront investment with recurring costs. It is costly in the beginning, but eventually covered by program revenue if you do it correctly. We have been very successful with prospective bundles,” Beaver said.
Other important factors in participating in bundles include:
- Determining a bundle price that is fair to all involved
- Figuring out internal and external costs to deliver that bundle
- Contracting with outside entities for purchased services
- Aligning incentives for all
- Setting strict inclusion/exclusion criteria
- Measuring quality–if you do not, you will lose bundle
“The provider group is responsible for all costs during the episode of care. They are going to be the one to manage the bundle so they must manage it efficiently to remain profitable,” he said.
“You must identify all costs to determine bundle price with the payer so you can negotiate something fair for you and your group.”
This includes establishing a pre-determined price for each “care partner” who will care for the patient during the episode including the hospital, internal costs (surgeon/physician assistant/administrators), anesthesia, radiology, post-acute rehab, durable medical equipment (DME) and any unexpected costs.
Beaver explained that your internal costs include the physician fee, the physician assistant fee, administrative costs (contracting resources and data analysis as well as salaries for the program manager and navigators) and salaries for billing support staff.
“Our physician fee is 125% of the customary professional fee plus share of the profit based on the value returned to the program. Each of our surgeons earned 242% of the professional fee in 2016.”
