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Orthopedic surgeons should lead the process of bundled payment initiatives
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During the next decade, The Advisory Board Company projects increases in both inpatient and outpatient orthopedic care. Knee and hip replacements will continue to lead the growth of inpatient procedures. Furthermore, due to modern anesthesia techniques and increased sophistication of patient care in an ambulatory setting, a transformation is underway, which will drive more than half of these procedures into an outpatient setting in time.
Many forces have affected the expansion of orthopedic care — aging population, increasing rates of osteoarthritis, comorbidities such as smoking, diabetes and obesity, more revision procedures and continued innovation of medical devices and techniques. With the predicted increases in the number of people age 65 years or older, the overall expenditures for orthopedic care will continue to increase dramatically and, as such, have become targets for ways to reduce health care spending. Arguably, most current methods have not controlled costs and the value of care is not well defined.
Comprehensive orthopedic care
Many components, including the surgeon, hospital, implants, OR equipment, anesthesia and rehabilitation, comprise the resources needed to provide each episode of comprehensive orthopedic care. Each member of the team has a vested interested in the care of patients and provides services and creates expenditures specific to various components of the episode of care.
Anthony A. Romeo
CMS recently required hospitals in 75 geographic areas to participate in the Bundled Payment for Care Improvement (BPCI) initiative. Hospitals, physician groups and others are transitioning from a preparatory period to a risk-bearing implementation period in which they assume financial risk. For bundled payments related to joint arthroplasty, there must be a a relationship between the hospital administrators and the orthopedic surgeons organizing and providing care. This is already in place at academic medical centers with the employed-physician model. However, more than 75% of all total joint replacements are performed at non-academic community hospitals by low- to mid-volume joint replacement orthopedic surgeons who typically do not have close working relationships with their hospital management, including financial data, which is necessary to have a fair process for developing a bundled payment that assumes shared risk and potential shared benefit.
Value of participation
Outside of hospital-employed physician models, hospitals have struggled to develop relationships with providers of care, especially orthopedic surgeons. Typically, a bundled payment proposal from a hospital will focus on the changes required for the surgeon to be part of the program. However, the value of participation and the ability to accomplish the necessary steps to effectively care for patients is not aligned with surgeon incentives. A relationship built on trust is not always possible if surgeons believe hospital incentives at the highest administrative levels remain primarily focused on the financial health of the institution. From the hospital perspective, administrators may feel there is too much risk-sharing when there are uncontrollable components in the bundle and the promise of profit or gain from any savings may be too small to be worthwhile.
Conceptually, the bundled payment initiative focuses on four major components of care: preoperative, surgical, early postoperative (0 days to 30 days), and 31 days to 90 days postoperative. In a Medicare patient model, the overall cost for an episode of total hip or knee replacement is typically less than $30,000. In many countries of Europe, the same episode of care is less than $15,000 using government insurance plans. The most expensive part of the care model is the surgical care and the most expensive part of this segment is the facility fees, that include OR expenses and implant costs. In the Medicare model, surgeon fees represent less than 10% of the overall cost of care. Outpatient care after discharge is associated with one-fourth to one-third of overall cost, and the physical therapy facility may receive the Medicare fees that surpass payment to the surgeon.
Orthopedic surgeon leadership model
Although less than 1% of all commercial insurance payments are made under a bundled care agreement, CMS is aggressively pushing forward to require bundled payments for a variety of episodes of care, especially total joint replacement. The bundled payment model is clearly an effort to control costs from the government perspective, with early programs demonstrating 10% to 15% reduction in overall expenses. Development and implementation of a bundled payment program can be a great opportunity for orthopedic surgeons to develop a coordinated, multidisciplinary approach to care, which can enhance the patient experience and satisfaction, help to reduce outliers of care and complications, and maintain the leadership role of the orthopedic surgeon in providing best practice musculoskeletal care.
With the orthopedic surgeon leadership model, alignment of all aspects of the episode of care is possible. Practices can provide appropriate preoperative education so patients and their families are prepared for procedures and postoperative care. The surgical procedures can be increasingly performed in an ambulatory surgical center, lowering costs and improving patient experience. Implant and durable medical equipment costs can be negotiated and controlled. Anesthesia care is more effectively delivered when there is a true partnership between the surgeon and anesthesiology services, which is a significant challenge in many teaching hospitals and large medical centers. Surgical techniques can be fully assessed to ensure best practices of care are used. After discharge, physical therapy and rehabilitation can be continually monitored to minimize excessive use of services and order earlier transitions from supervised therapy to home exercise programs.
A joint venture model with a hospital or institution is certainly possible and has been successful. The government seems to be more comfortable offering opportunities for hospitals and health care delivery systems to create bundle payment programs. CMS has clearly stated the goal is to shift Medicare payments away from fee-for-service models to alternative payment programs, such as the bundle payment initiative, by 2018.
Based on the powerful forces that affect our ability to provide orthopedic care, we must be involved in the process to ensure patients receive the best care possible. We need to define best practices for orthopedic care, including outcomes, patient experience and reasonable costs. Orthopedic leadership in the bundled payment initiative will allow us to continue to define the value of the care and ensure patients’ goals, as well as ours, are aligned with the future of health care.
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- Anthony A. Romeo, MD, is the Chief Medical Editor of Orthopedics Today. He can be reached at Orthopedics Today, 6900 Grove Rd., Thorofare, NJ 08086; email: orthopedics@healio.com.
Disclosures: Romeo reports he receives royalties, is on the speakers bureau and a consultant for Arthrex Inc.; does contracted research for Arthrex Inc. and DJO Surgical; receives institutional grants from AANA and MLB; and receives institutional research support from Arthrex Inc., Ossur, Smith & Nephew, ConMed Linvatec, Athletico and Miomed.