Bundled Payments for Care Improvement program to cut costs for episodes of care

CMS recently developed the Bundled Payments for Care Improvement initiative which would allow hospitals, physicians and other health care centers to enter payment arrangements — including financial and performance-based accountability models — for episodes of care in an effort to reduce health care costs.

“The goal of the [Bundled Payments for Care Improvement] BPCI program is to align payment incentives among the various providers who take care of the patient during an episode of care to enhance the health care outcomes and experience of the Medicare beneficiary, and to do this through a specified period of time that is intended to coincide with all of the elements of care required to treat medical conditions,” Mark I. Froimson, MD, MBA, told Orthopedics Today.

Through the voluntary BPCI program, CMS is working to replace the current fee-for-service (FFS) system with a bundled payment model. In this model, CMS provides a prospectively determined bundled payment to the hospital, which covers services provided by the center, its physicians and practitioners during a patient’s episode of care. If spending is kept under the amount provided by CMS, the hospital and its physicians can keep the difference and participate in gainsharing. However, if spending is above the amount provided, the hospital must provide CMS with the additional amount.

“Bundled payment models issue a single payment to providers for an entire episode of care and hold that same group of providers accountable for cost, quality and patient outcomes of that episode,” a CMS official told Orthopedics Today. “Bundled payments incentivize providers to better coordinate care, improve quality and consider financial implications in their decision-making.” (Editor’s Note: Orthopedics Today conducted an interview with a CMS official, who requested to only be identified as an employee of CMS rather than by name in the article, as is CMS’ regular practice with media outlets.)

The BPCI also aims at reducing costs by having hospital administrators, physicians and post-acute care providers work together to find the best pathway to care at the lowest cost.

Image: Jwhitephoto LLC

“As Medicare’s expenses have increased so dramatically, what [the government is] trying to do is figure out a methodology of reducing expense,” Jack M. Bert, MD, said. “The government realized there has to be savings, and it makes most sense to shift the responsibility back to hospital systems and physicians to try to get them to work together to reduce their costs.”

According to CMS, the BPCI is designed so physicians will find cost savings without limiting their ability to provide care to patients.

“BPCI specifically states that Medicare providers participating in care redesigned through the initiative cannot reduce or limit medically necessary services to any Medicare beneficiary; providers retain their ability to make decisions in the best interests of the patient,” a CMS official said.

“Many of us abbreviate it as ‘bundled payment,’ but we must keep in mind the intent is care improvement. The care improvement is derived from our intention to coordinate care better and to create a holistic experience of care for the entire episode that ultimately yields better outcomes for the patients in a better, more cohesive experience,” Froimson said.

He noted hospitals can work on successfully integrating the BPCI into their practice by first having physicians look at patients’ disposition at discharge and determine whether they are going home or to a facility. Next, if the patient is going to a facility, physicians should try to reduce patient stay to the amount of time that is medically necessary. Finally, physicians need to reduce the likelihood of readmission to the hospital. According to Froimson, this can be achieved through better care coordination and being available to patients.

According to Bert, some ways private practices can prepare for the national implementation of the BPCI within the next 2 years are to use a consultant who is familiar with the program, have a relationship with a hospital system and learn how the practice can benefit from gainsharing.

“My hunch is this is a change that is going to last, and it is going to create incentives to work on lowering costs of everything related to the surgery, whether that is by lowering implant costs, shortening length of stay, lowering the rehabilitation costs and reducing readmissions. All of those things will be incentivized by a bundled payment,” David M. Glaser, JD, told Orthopedics Today.

Models of care

Under the BPCI initiative, four models of care are being tested. Three models utilize the usual FFS payments, and one model utilizes a prospective payment system with bundled payments. Each model covers a specific episode of care. A CMS official stated Model 1 covers an inpatient stay at an acute care hospital; Model 2 covers an inpatient stay at an acute care hospital and all related services during 30 days, 60 days or 90 days following discharge; Model 3 covers post-acute care services with a participating skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency; and Model 4 includes payment of all services during an inpatient stay by the hospital, physicians and other practitioners covered by a single bundled payment.

“Model 4 is the prospectively administered bundled payment for hospitals and physicians for acute inpatient hospital stay only, so that is a prospective payment,” Bert said. “What CMS is doing on that is they are making a single, prospectively determined bundled payment to the hospital, which covers all the services, including inpatient stay, physicians and other practitioners.”

Under the BPCI, hospitals can choose to participate in Models 1, 2 and 4, and physician group practices can choose between Models 2 or 3. Model 3 was specifically designed for post-acute care providers, such as skilled nursing facilities, inpatient rehabilitation facilities, long-term care hospitals or health home agencies, according to a CMS official.

“It turns out for most hospitals, health systems and physicians, there has been a big interest in Model 2 because we want to deliver the complete episode of care and have the opportunity to focus on all elements of the episode and all of the resources that are required during that 90 days,” Froimson said.

Froimson added that Model 3 has been of large interest to post-acute providers, such as rehabilitation facilities and skilled nursing facilities that focus on care after hospital discharge.

“It has turned out that Model 2 and Model 3 are the predominant models moving forward, and there is much less interest in Model 1 and Model 4,” he said.

The models will be implemented in two phases. According to the CMS, phase 1 is a preparation period and “the initial period of the initiative during which CMS and participants prepare for implementation and assumption of financial risk.” In phase 1, participants will receive monthly beneficiary-level claims data, engage in a variety of learning activities with other BPCI phase 1 participants and obtain baseline pricing information to inform assessments of opportunities under BPCI.

“Those participants in phase 1 of Models 2, 3 and 4 that are approved by CMS and intend to assume financial risk for episodes may enter into a BPCI model agreement with CMS as awardees and begin phase 2, also referred to as the ‘risk-bearing’ period,” a CMS official told Orthopedics Today.

Phase 1 will come to an end in October 2015 when all participants will be transitioned into phase 2, which will allow awardees to bear financial risk for the model, continue receiving monthly beneficiary-level claims data, and utilize applicable fraud and abuse waivers and payment policy waivers.

Froimson noted two policy waivers that physicians should be aware of include, a waiver that allows patients to be discharged to a post-acute facility sooner than 3 days — which would reduce the expenditure of resources and improve the patient’s experience — and the gainsharing waiver, which will allow physicians to receive funds that were leftover from the episode of care.

“There are ways for a hospital-employed physician, a physician group aligned with a hospital or hospital system to gainshare within the bundle with their hospital system,” Bert said. “They just need somebody with gain sharing experience who can help them do that. Groups are currently setting up gain sharing relationships with hospitals at this time.”

Comprehensive Care for Joint Replacement Model

With hip and knee replacement listed as two of the most common procedures provided to Medicare beneficiaries, CMS is testing bundled payments for a total joint replacement episode of care through the Comprehensive Care for Joint Replacement Model. The Comprehensive Care for Joint Replacement Model is being proposed for 75 selected geographic areas.

“The model would encourage hospitals, physicians and post-acute care providers to work together to improve the quality and coordination of care from the initial hospitalization through recovery,” a CMS official said.

Although the Comprehensive Care for Joint Replacement Model is built on the same type of design as Model 2 of the BPCI, there are several differences between the two programs. The main difference is the BPCI covers a range of clinical episodes in different specialties, while the Comprehensive Care for Joint Replacement Model specifically targets lower extremity joint replacement procedures. Although the BPCI is a voluntary program for hospitals, physicians and post-acute care facilities, the joint replacement model is mandatory for all inpatient prospective payment system hospitals that are selected.

“What is going to happen with this particular model is it is going to have mandatory participation applying to the hospitals only,” Bert said. “It is going to force the hospitals to have arrangements with physicians and vendors to reduce costs and improve coordination of care.”

Froimson noted that in the total joint model all episode lengths are 90 days vs. the BPCI program which allows providers to choose an episode length of 30 days, 60 days or 90 days.

“One other key feature is that in the BPCI model quality was tracked, but it was not tied to payment,” Froimson said. “In the [Comprehensive Care for Joint Replacement] Model, hospitals are accountable for specific quality metrics, including complication rates, readmission rates and patient satisfaction. If they are able to achieve those quality metrics, then a discount to CMS will be reduced.”

However, similar to the BPCI, the joint replacement model is forcing hospitals and physicians to look at the way they spend money on an episode of care and find the best way to save.

“[The Comprehensive Care for Joint Replacement Model] forces hospital systems, as well as physician groups, to look at their costs, number one; and number two, have the ability to negotiate for reduced costs with all the vendors,” Bert said. “There is no question there is significant mark-up in various products that are being utilized today and there is a lot of waste. From that perspective, I think that is a good thing.”

BPCI and orthopedists

Although the BPCI is only a proposal and the proposed rule could be finalized by Jan. 1, 2016, orthopedists are raising questions on how this will impact them in the long run.

“One of the concerns is, ‘What is the impact on physician fees?’” A. Seth Greenwald, DPhil(Oxon), told Orthopedics Today. “If the bundled payment is figured correctly, and the cost for an episode of care is less than the bundled payment, there is an opportunity for gainsharing, including the physician.”

However, Glaser noted that in order to receive any share of the bundled payment, orthopedists need to have an agreement with the hospital. The physician will be paid under the fee schedule unless they choose to share the benefit (and possibly the risk) with the hospital.

“As a physician, you need to figure out a way to increase your negotiating power so you are able to get compensated fairly as part of the bundle,” Glaser said. “There are various strategies to do that. One that seems clear to me is trying to form larger practices to have more ability to negotiate.”

Greenwald also noted orthopedists should become involved in the management of the bundled payment system because they would know the best ways to save costs.

“I also know surgeons are the most qualified individuals to help optimize the procedure in the best interest of a patient,” Greenwald said. “When is a drain necessary? Do you have to use a tourniquet? What is the preferred [deep venous thrombosis] DVT prophylaxis regimen? All these things cost money. Even things like surgical approach and implant choice. These are items that can be optimized for a specific procedure, such as a primary total hip or knee replacement.”

Froimson noted orthopedists should be knowledgeable on the rules associated with the BPCI so they can determine what the best pathway of care is for each patient and help hospitals provide the best patient experience.

“Orthopedic surgeons, and physicians in general, need to seize on this opportunity to have a voice in the shared improvement and care redesign opportunity that make episodic care more successful for their patients because it is [the] decisions our orthopedic colleagues make that determine the journey our patients take through their episode of care. Our active participation in these programs can be rewarding for our patients in terms of an improved outcome of care and improved experience of care,” Froimson said.

“There should be a table for discussion and surgeons have to be involved in that discussion, as do other hospital personnel who derive salary from any specific episode of patient care,” Greenwald said.

He added, “The surgeons themselves, as individuals, have to be appraised on the fact that they should become involved. It is not just enough to stand in the operating room and do a case. They should be advocates of their own position.”

Future goals

According to Froimson, the BPCI program closed for new entries in July 2015.

“At this point, the [BPCI] pilot is now going to run out for the next 2 years to 3 years so Medicare can identify results, and not just in orthopedics, but in a whole host of medical conditions,” Froimson said. “Participants in the BPCI program can, during any quarter, decide to stop participating if it appears that the risk and the challenges of the program are too great, but there is no other opportunity to enter that program.”

A CMS official stated the goal is to tie “30% of Medicare payments to quality or value through alternative payment models, such as bundled payment arrangements and accountable care organizations, by 2016, and 50% of payments by the end of 2018.”

“It is Medicare’s hope, and private payers hope, that [the BPCI is] going to reduce costs dramatically,” Bert said.

However, no specific date has been set on when an official BPCI program will be implemented nationally.

“There is certainly an expressed desire on the part of the government to move in this direction, but I do not know that they have any specific set time for nationwide implementation of any specific program yet,” Froimson said. – by Casey Tingle

• References:
• Alternative reimbursement models: Bundled payment and beyond. Symposium 1. Presented at: American Orthopaedic Association Annual Meeting; June 24-27, 2015; Providence, R.I.
• Bundled payments for care improvement initiative: General information. Available at: http://innovation.cms.gov/initiatives/bundled-payments. Accessed: Aug. 17, 2015.

• For more information:
• Jack M. Bert, MD, can be reached at Minnesota Bone & Joint Specialists Ltd., 17 W. Exchange St., Suite 110, St. Paul, MN 55102; email: bertx001@gmail.com.
• Mark I. Froimson, MD, MBA, can be reached at Trinity Health, 20555 Victor Parkway, Livonia, MI 48152; email: pidgeone@trinity-health.org.
• David M. Glaser, JD, can be reached at Fredrikson & Byron, 200 South Sixth St., #4000, Minneapolis, MN 55402; email: dglaser@fredlaw.com.
• A. Seth Greenwald, DPhil (Oxon), can be reached at reached at Orthopaedic Research Laboratories, 2310 Superior Ave. East, Suite 100, Cleveland, OH 44114; email: seth@orl-inc.com.

Disclosures: Bert is the president of Orthopaedic Practice Management Inc. Greenwald and Glaser report no relevant financial disclosures. Froimson is executive vice president and chief clinical officer of Trinity Health.

 

How involved should orthopedists be in the development of public policy?

Surgical specialty input needed

Your question, as I interpret it, was prompted in part by the “bundling” stories that serve as an example of how a change in public policy can significantly affect the reimbursement system, as well as the delivery of medical care. This particular health policy change was clearly and repeatedly stated in the build up to the passage of the Affordable Care Act (ACA). One of its goals was to significantly reduce or eventually eliminate the fee-for-service (FFS)-based payment system in the United States.

It was a commonly held view at the time by those who were influential in the formulation of the upcoming policy changes that FFS was a major target and was responsible for our higher national health care costs. I heard during these deliberations that FFS was similar to ordering from the “a la carte” menu in a restaurant vs. the savings that could be achieved by having a “fixed” priced meal. This change of reducing FFS reimbursement was put forward and incorporated into the ACA as the primary method to reduce health care costs. This was done with little input from organized medicine because practicing physicians in medicine were not given access to the deliberations.

As we experience the rollout of the ACA health policy changes, the current administration has stated its implementation plan is to have 50% of payments (reimbursements) be other than traditional FFS by 2018. They are behind on a reasonable schedule to achieve this goal within the stated time frame.

The formation of accountable care organizations (ACOs) was to be one of the other cost savers. However, they have not shown significant savings. In addition, the interest in new ACOs and the maintenance of some of the established ACOs have dwindled among physicians and hospitals. That leaves bundling and outcomes-based payments as the other two reimbursement models to be implemented and tested to replace FFS. It appears mandated bundling is emerging as a big part in the administration’s attempt to demonstrate savings by the 2018 goal.

Should orthopedists be involved in public policy, my answer is “yes.” However, changes in the ACA were written and passed with very limited input, if any, by the organized surgical specialties. The American Medical Association (AMA) endorsed the ACA early for a promise to reform the scheduled progressive reduction in Medicare reimbursement. As I understand the discussions, it was the AMA’s main input request that was considered by the policymakers.

Being realistic, the way current health policy in the United States is being written, decided and implemented, orthopedists, and even physicians in general, have limited initial input and impact. Public policy represents a large arena with many politicians and bureaucrats on both the federal and state levels who introduce, enforce and make changes. However, we need to be as involved in the delivery of medical care as possible. This requires us to be selective in what we choose to influence and change, and we must have staying power.

There will always be delays in implementation, needs for modifications and improvements that we can consider and lobby to implement. The American Association of Orthopaedic Surgeons makes a good effort and is more effective than most surgical specialties. The success they have had to date has been enhanced through building coalitions and pooling resources.

We must be vigilant and carefully review proposals, and try to make corrective suggestions before legislation is passed. This did not work with the ACA. Once public policy is determined, it is the role of organized surgical specialties to document and present problems seen by patients. Unless the process of public policy making is more open in the future, surgical specialties do not control enough votes or donations to have a major impact when dealing with politicians. Unfortunately, it is my opinion that the potential number of votes, the available funds and special interest lobbying have too much influence over legislation. Orthopedics can provide advice, good science to back up recommendations, suggested improvements and evaluation of potential negative impacts. My answer is “yes” we need to be involved, but unless things change, we need to be realistic on what we can accomplish. However, through sustained effort, we can learn from what has been effective and propose well thought-out alternatives and changes.

Douglas W. Jackson, MD, is Chief Medical Editor Emeritus for Orthopedics Today.
Disclosure: Jackson reports no relevant financial disclosures.

Cost-effectiveness

My strong opinion is that bundled payments are evidence-based awesome for orthopedic surgeons, but with one concern. Surgeons must be compensated at a fair rate.

First, for the evidence as published 2 decades ago, Lanny L. Johnson, MD, and Ruth L. Becker, LPN, teamed with an HMO and a hospital to manage a capitated population with a single-payment bundling arthroscopy, “if indicated” unlimited office visits with radiographs and a 2-year postoperative warranty for subsequent services. Under this, payment was made only if a patient had surgery. Strict indications to limit the incidence of surgery obviously resulted in saving money. Shared savings resulted in increased reimbursement for the HMO, the hospital and Johnson.

Bundled payments work for arthroscopic surgeons because we are cost-effective and show few complications, so we can share the financial risk of providing a 2-year warranty. Other orthopedic surgeons could similarly benefit if we show high cost-effectiveness and few complications.

Second, hospital administrators consider surgeons, hospital-employed or otherwise, merely as providers. Speaking anecdotally, administrators attempt to compensate providers at rates as low as possible, which results in financial difficulties. As to the role of orthopedic surgeons in public policy, the academic perspective is that orthopedic surgeons must prospectively collect data, determine costs and outcomes, publish our results and advocate aggressively for compensation commensurate with our value, so we may best care for our patients.

• References:
• Johnson LL, et al. Arthroscopy. 1994;doi:10.1016/S0749-8063(05)80200-2.
• Lubowitz JH, et al. Arthroscopy. 2011;doi:10.1016/j.arthro.2011.06.001.

James H. Lubowitz, MD, is the editor in chief for Arthroscopy: The Journal of Arthroscopic and Related Surgery and is the director of Taos (New Mexico) Orthopaedic Institute and Taos Orthopaedic Institute Sports Medicine Fellowship.
Disclosure: Lubowitz reports he receives research and educational grant support from Arthrex, Breg, DonJoy, Smith & Nephew, Stryker and Tornier.