Controlling External Costs
Determining external costs, he said, is all about negotiation. When contracting with outside entities like anesthesiologists and physical therapists, you want to be fair to them but don’t want to bust the bundle. And when negotiating with the facility, you need to set standardized protocols to be shared by all surgeons to decrease variations of practice as well as length of stay of patients. If you do all this successfully, you will increase the direct volume of patients.
He also suggests “encouraging” the implant vendor to work with the hospital, although he said, personally he stays out of that negotiation process and just tells the hospital what he needs and that he expects it to be ready when the time comes so he can take care of his patients.
He added that managing a bundle also requires controlling the sometimes uncontrollable, such as patients’ visits to the Emergency Department (ED) after being discharged. To reduce ED visits for OrthoCarolina, they use the group’s Orthopedics Urgent Care and direct care through the navigators and providers on call.
They also contract with other specialists such as hospitalists to manage complications during acute admission, vascular specialists for Doppler ultrasound and treatment if needed, durable medical equipment (DME), and home health and outpatient physical therapy.
He said, “To reduce ED visits, patients can also be held accountable for non-life-threatening services provided without direction from the provider. You want them to follow your system of care.”
Retrospective Bundles
Next Beaver discussed retrospective bundles, both public and private, and how they differ from prospective bundles. For instance, in retrospective bundles, there is still the standard fee that applies to a defined episode of care, but the provider now must meet quality and cost metrics defined in the bundle agreement. If metrics are achieved, the provider receives a portion of the savings retrospectively.
For these types of bundles, the biggest savings are at the back end after patients have been discharged from the hospital.
“The largest portion of the savings comes from acute care by ensuring the patient is in the appropriate level of care for the appropriate length of time. Pre-op risk assessments and preferred skilled nursing facilities/care navigators are key!”
He added, “A little bit of trouble with this bundle is that you are not doing all the accounting. A lot of times the hospital is doing the accounting and you don’t know where their costs are. Their cost of accounting is different from ours and they don’t like to share it with you.”
Challenges with payer adjudication include:
- Working with the billing software vendor to configure claim formats because each payer has different requirements for the types of claims they want, the dollar amount on each claim, and in what order they want to receive claims
- Developing in house software to manage bundles and acting as your own third-party administrator to pay each vendor according to the contract rates
- Negotiating patient inclusion/exclusion criteria with individual payer. This is a challenge because bundle definitions are not uniform. Each payer has their own approach.
“The more inclusive the definitions, the higher the risk, the higher the price. The more exclusive the definition, the lower the risk, the lower the price. Regardless of the inclusion criteria, the physician has the final decision from a clinical perspective to perform the operation,” he said.
