Get On Board With Bundled Payments

Orthopedics

By: Joe Paone

Published: 8/1/2019

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You can deliver quality outcomes at lower costs - and profit, too -??by managing every aspect of an episode of care.


It's time to embrace the bundled payment, a single fee negotiated with insurers in exchange for managing every aspect of patient care from the moment cases are scheduled to 90 days post-op. There's risk involved (you pay the costs that exceed the bundled amount), but also plenty of opportunity for reward (you share in the savings realized by delivering quality care for less than the agreed upon fee).

Excelsior Orthopedics in Amherst, N.Y., began bundling for total joints 4 years ago, and has thrived since implementing the risk-sharing reimbursement model. "It lends itself well to total joints, because they're predictable, repeatable surgeries with good outcomes," says Excelsior CEO David Uba, MBA.

Payers were responsive to Excelsior's bundled payment proposals because the cost savings were so obvious, according to Mr. Uba. He says the site-of-service differential, just getting the cases out of the hospital, gave his group the ability to save local payers about 30% to 35% per episode of care.

"Bundled payments have allowed us to control the flow of not only patient outcomes and quality, but also the opportunity to control the dollar," explains Mr. Uba. "No longer does the insurance company assign value along the spectrum of care. We do."

Success in managing the episode of care and ultimately profiting in the bundled payment model demands understanding every detail that goes into replacing joints, and guiding patients all the way through the process to achieve optimal outcomes, says Andrei Gonzales, MD, assistant vice president of product management and value-based payments with Change Healthcare in Nashville, Tenn. "It's different from how you've traditionally looked at care," he adds. "It's looking at all the services as a whole to ensure you're getting the outcome you want at a competitive and fair price."

Managing the elements
EQUIPMENT PLANNING You can include plenty of room in the bundled payment to cover the costs of the supplies and devices needed to perform procedures.   |  Pamela Bevelhymer, RN, BSN, CNOR

Surgery centers currently can negotiate bundled payments for total joints only with private and commercial payers. "Because hips and knees are still not approved to be done in ASCs, we're not operating under any bundled payment scenarios for Medicare patients," explains Mr. Uba. "We've been doing outpatient joints for 5 years now and have a body of work and outcomes data on at least 750 patients. CMS has this data, too. It'd be much easier if CMS finally determined to allow [total joints] at ASCs."

Dr. Gonzales says commercial payers often want to contract with surgeons' groups because they're in the best position to coordinate care across the full episode, from the time the patient enters their clinic with a referral for surgery to the time the patient is up and moving and progressing toward successful recovery.

It's essential to determine what services and providers will be included in the bundle, and engage the providers in charge of those elements of care. Put together a tight list of all the services that are part of care coordination, focusing on providers that you really trust to provide consistent quality and affordable care, suggests Dr. Gonzales. "If you have all those components, you should be able to put together a solid program with any payer," he says.

Ultimately, the ability to coordinate care across multiple providers is key. "If you don't have control over what's happening with patients [outside of your facility], your ability to operate in a bundled payment can be very limited," says Dr. Gonzales. "It won't really work out for you."

Mr. Uba says Excelsior was well-positioned for bundling. "We run all of the ancillary services — urgent care, MRI, imaging, DME, physical therapy — and we have an ASC that's 100% owned and controlled by our physicians," he explains.

That means his group has oversight of the entire means of production to do outpatient joints. "Managing risk has been easy for us," says Mr. Uba. "If you don't know what you're doing under the bundle, things can go awry pretty quickly. It needs to be tightly managed. Your processes need to be crisp."

For that reason, Excelsior has several pages of flowcharts that outline patients' care processes that are implemented as soon as surgeons identify potential outpatient candidates, all the way through to discharge, physical therapy and follow-up clinic visits. "Patient selection criteria, the right protocols, good care pathways, the right pain management protocols — there are a lot of components to this, but the bundle sets up the structure within which all those things can be aligned and managed properly," says Mr. Uba.

Controlling costs
BUNDLED UP ?Andrew Stoeckl, MD, and his team at Excelsior Orthopedics manage all of the services in an episode of care, giving them greater control over outcomes.   |  Excelsior Orthopedics

Delivering cost-effective care is also key to succeeding with bundled payments. "Instead of paying for volume, as you do when you're seeing patients under the fee-for-service model, there's an expectation that the care they're receiving across an episode is coordinated to improve quality at an overall reduced price," says Dr. Gonzales. "By looking at how to control all the costs in the episode, not just at the [surgical] facility, you can gain from some of the savings the payer recognizes by the patient's overall care being less expensive."

Don't cut corners in order to save money, warns Dr. Gonzales, because payers aren't just looking to lower costs — they also want higher quality of care. Complications, revision surgeries and infections can run up costs and wipe out profits in an episode. "If you avoid a wound infection or a contracture, and make sure the patient has good range of motion and is really progressing well with their functional scores, then in theory that should result in overall less cost, and the patient's happier," says Dr. Gonzales.

Payers often award preferred status to providers they believe deliver high-value care, says Dr. Gonzales. "A provider may come in under budget, but their quality outcomes might not be good, which could indicate they're meeting their budget by underutilizing care. Then their opportunity to become a preferred provider and get additional volume starts to suffer."

Seek out providers of outside services who are interested in delivering value-based care. Although Excelsior runs every element of the episode of care, the bundled payments Dr. Uba negotiated with local payers includes some financial wiggle room if they need to contract with external providers.

"We have that flexibility in the bundle, as long as everybody's motives are aligned," he says. "You need reasonable people who aren't fighting over a dollar. You need the right people around the negotiating table with the right motivations, [getting involved in joint replacement care] for the right reasons, not as a money grab."

Patient-pleasing care

To improve efficiencies and reduce the cost of care, assign a point person to guide patients throughout the episode of care or implement a technology that does the job for you. The importance of care navigators in this process is huge, according to Mr. Uba, who's embraced digital platforms that help his team interact with patients. Traditionally, patients attend a pre-op education class 5 to 6 weeks before surgery and receive a big booklet filled with countless instructions about preparing for surgery and recovery. By the time the week of surgery arrives, they've forgotten most of what they learned.

"We take that book, chunk it up, and deliver that information electronically via text, emails or instant messaging — however the patient wants to receive it," says Mr. Uba. "Patients receive information throughout the episode of care at the times they need it."

Bundled care can simplify the finances of surgery for patients. "Our local payers have determined that if the patient has a copay plan, they'll only charge them the outpatient copay — say, $250 — for the entire episode of care," says Mr. Uba.

Patients, therefore, don't have co-pays for physical therapy because Excelsior pays the providers who deliver the other components of care. "That's great from a therapy perspective, because some copays for therapy are so high, it demotivates the patient," explains Mr. Uba. "Once you remove that financial barrier, people come to therapy and finish their therapy, which is critical for creating positive outcomes."

Bundling can also help differentiate your center from local competition by moving beyond metrics like readmission rate or infection rate. Data your payer provides can show patients how well you perform during episodes of care. "It becomes a whole new metric," explains Dr. Gonzales. "You're able to show the overall outcome instead of process measures that are very difficult to tie to a real outcome.

PRICE POINTS
Bundled Payment Breakdown
LINE ITEM Bundled payments help control the costs of implants, one of the biggest expenses of joint replacement surgery.

Before negotiating bundled payments with commercial payers, calculate how much it would cost to provide services in the bundle and your desired reimbursement rate for each element. Include enough padding for profit and paying for unexpected outcomes. If possible, find out what insurers are paying facilities in your area and offer to deliver the same care with quality outcomes for less. You'll be in a powerful position at the negotiating table if an insurer is paying the local hospital $33,000 to replace joints and you propose to perform the same procedures — ?and take on the financial risk of delivering excellent outcomes — ?for $10,000 less.

Ta\ble

On the right is a list of the basic components of a typical bundle for outpatient total joint arthroplasty, courtesy of David Uba, CEO of Excelsior Orthopedics in Amherst, N.Y. Only the total cost is negotiated with the payers; the individual allocations are determined by the entities providing the services. "Insurers give us the bundle, and we determine who gets what," says Mr. Uba. Instead of paying the surgeon $1,400 for a joint replacement, for example, they might give him $4,700 because he's taking on more responsibility for the patient's care and outcomes. They get to assign value to the entire episode of care.

Mr. Uba says bundling impacts vendor negotiations, too. "We know what our allowance is in the bundle for implants, so vendors can either play at that level or not," he says. "It helps us in those negotiations to say, 'Meet our price or we're going with a different vendor.' Every dollar you save on that implant, you can allocate to something else."

— Joe Paone

Patients have a full view of what's happening across the continuum of care, instead of just information from your own facility."

Payer-provided data also provides insight into your bundle partners. For example, you may think procedures and discharges are going well, but the data tells you physical therapy isn't doing a good job in helping patients achieve excellent outcomes. "Now you'll need to work with them and let them know if they still want your patients, things need to improve," says Dr. Gonzales.

HOME S\TYLE
Excelsior Orthopedics
HOME STYLE After discharge, Excelsior Orthopedics patients are sent to a nearby high-end condo — paid for by the bundle — where their recovery can be closely monitored.

"I haven't seen any providers really fail at these programs," he adds. "They might not perform well in the first year, but then they get very specific guidance where quality wasn't good enough, where costs were too high. They have the opportunity to improve in those areas. It's data they didn't have before."

Some experts worry about providers turning away high-risk patients because they might exceed the bundled amount and affect their performance metrics. Mr. Uba says that shouldn't be a consideration.

"The economic component of it is fairly separate. Either a patient's a good candidate for outpatient joints, or they're not," he says. "You could make the counterargument too: Given the enhanced reimbursement, are you doing cases you shouldn't because you're motivated by getting paid more? You have to go into it making quality, outcomes and patient safety top priorities." OSM

HOME STYLE After discharge, Excelsior Orthopedics patients are sent to a nearby high-end condo — paid for by the bundle — where their recovery can be closely monitored.

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