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Bundled payments present alternative reimbursement scheme for hip and knee arthroplasty: Part 2

Issue: March 2016

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This second part of a two-part Orthopedics Today Round Table continues the dialogue involving four orthopedic surgeons who, along with their institutions, are participating in the Bundled Payment for Care Improvement (BPCI) program, with some expecting to engage in the Comprehensive Care for Joint Replacement (CJR) program as well. The topic is of contemporary relevance as alternative payment models expand particular to hip and knee replacement. Click here, to read part 1 of the discussion.

A. Seth Greenwald, DPhil (Oxon)
Moderator

A. Seth Greenwald, DPhil (Oxon): The fastest growing cost component of the episodic patient care experience is post-acute care. To what degree have you, as the orthopedic surgeon, been involved in determining which pathway is optimal for a specific patient when considering discharge to home, rehabilitation or skilled nursing facility (SNF)? What are your practices?

Stephen B. Murphy, MD: Even controlling for risk factors, SNF disposition is associated with higher risk of readmission, higher risk of emergency evaluation and higher cost. Increasing the likelihood of safe disposition directly to home begins on the day of initial evaluation by the treating surgeon at the latest.

Richard Iorio, MD: We use the Risk Assessment and Prediction Tool to help predict the need for post-acute inpatient care. We have “beefed up” services in the home to facilitate home discharge. We have reversed the ratio of home to sub-acute rehab discharge from 30/70 to 70/30. Patients need to understand admission to post-acute care facilities doubles their chance for readmission, even after adjusting for comorbidities.

Mark I. Froimson, MD, MBA: This is something we and others have focused on through a variety of mechanisms, including better management of patient expectations, better education and recruitment of family, optimization of medical and social determinants of health and selective utilization of lower acuity venues when safe. Most patients can be managed at home following total joint replacement. Evaluation of the home environment, reduction in medications that cause confusion and active connection with care navigators facilitates this. In addition, when a SNF is used, managing the utilization is key and can be accomplished without declining outcomes. In fact, outcomes are improved.

C. Lowry Barnes, MD: We are absolutely involved in deciding where our patients are discharged after joint replacement. Our patients are told at the time of scheduling we expect them to go home postoperative day 1 without home health. We send 96% of primary joint patients straight home without home health services, and some of us were doing so before bundled care.

Greenwald: Has the cost of the hip and knee implants used in your practice been affected by the introduction of the BPCI? Has this effected supplier services?

Murphy: External and internal costs are fundamentally different issues and are best viewed independently. Internal Cost Savings (ICS) is a secondary aspect of our BPCI project. Since hospitals are paid on a diagnosis-related group basis, higher or lower implant prices does not affect savings related to the overall external cost of care. Rather, implant prices affect hospital contribution margin. If implant pricing has already been reduced previously, this is an area of potential improvement, but one with diminishing opportunity. The greatest opportunities are related to expenditures outside of the acute care hospital.

Iorio: We have implemented implant selection guidelines, negotiated ceiling prices for our implants and significantly reduced implant costs while maintaining freedom of choice for our surgeons.

Froimson: We have managed this independent of the BPCI program, but it is recognized as an important target. The facilitated relationships that result from BPCI can lead to better discussions regarding other factors including implants. We have seen no decrement in service, as the reps are seeing their opportunity fade without close attention to their business.

Barnes: We have always had an interest in decreasing the cost of implants and have become even more interested in value-based orthopedics. In addition to significantly decreasing implant costs, we have implemented real cost savings in cement and cement products.

Greenwald: Heretofore market-driven improvements in hip and knee products are often associated with increased cost with minimal mid- to long-term clinical outcome justification. How do you and your institution address increased technological costs that claim to reduce the probability of a revision procedure? Do you think bundled payments will hurt evolving technologies?

Murphy: This factor is markedly affected by who is managing the bundled payment project. If the project is a hospital-driven one, there may be a tendency to suppress adoption of potentially improved technology since the hospital would bear those costs and the contribution margin to the hospital could potentially be reduced if not offset by other factors. Conversely, if the project is a private surgeon-driven one, as in our case, the primary focus is on the overall quality and total external cost of care. Thus, potentially improved technology is not inherently suppressed since this is an internal cost issue.

Iorio: Our institution will not be paying increased prices for technologic improvements in implants in the future. If anything, new implant manufacturing and delivery paradigms will cause implant prices to decrease dramatically. The ability to demonstrate technological changes that result in significant outcome improvement will be difficult and take a long time to justify price increases.

Froimson: We have taken the stance that new technology is unproven technology and should not claim a premium price. We cite the many recalls and failures of overhyped technology to live up to its claims as evidence that higher prices are not justified. As a system in 21 states, we see significant variation in the types of conversations that occur between surgeons and company reps and have tried to ensure that such dialogue is productive and results in added value to patients. We believe rather than innovation being stifled, the bar to prove an innovation is adding value has been raised. That is not a bad thing.

Barnes: We no longer “buy in” to these technology improvements. Joint replacement continues to be surgeon- and technique-dependent rather than implant-dependent. The orthopedic companies are smart and they are also likely to move toward value orthopedics. I suspect they will no longer be developing new implants “because it is time to,” but rather because technology-related changes might truly add value to the equation. For instance, “smart implants” may someday offer remote monitoring that might decrease the cost of postoperative surveillance.

Greenwald: What impact will the growing enthusiasm for “same-day surgery” have on the BPCI program?

Murphy: With respect to CMS BPCI, joint replacement is an “in-patient only” procedure. This means patients are admitted to the hospital even if they are discharged the same day. At this point, CMS “same-day surgery” patients can only be treated in association with an in-patient facility. Of course, patients and BPCI would eventually benefit from including, free-standing outpatient surgery centers. Our expectation is emerging commercial bundled payment contracts will be the first to capture savings related to these procedures moving from the inpatient to the outpatient setting. This is much more likely to happen with physician-led programs than with hospital programs.

Iorio: Eventually, CMS will allow Medicare beneficiaries to participate in same-day programs when safety and efficacy has been sufficiently demonstrated. CMS will need to understand there is a significant work component for the surgeon in same-day discharge total joint arthroplasty (TJA) which will need to be quantified.

Froimson: As the BPCI program is currently a Medicare program and TJR is on the inpatient-only list, these procedures will be done in inpatient centers. It has been our strategy to reduce length of stay to the degree safe for the patient, including same-day surgery, but to do so in a setting that allows a patient the flexibility to stay overnight or 2 nights if their course demands it. Centering the program in the hospital, especially for elderly patients, adds a level of security for patients, their families and our surgical teams.

Barnes: Same-day surgery will expand and total joints will eventually be removed from the Medicare inpatient-only list.

Greenwald: As the CJR program evolves and it appears bundled payments are increasingly becoming the method of reimbursement for hip and knee reconstruction, what perceived negatives arise particular to orthopedic surgeons and the hospital they practice in? Will this limit the number of hospitals and joint reconstructive surgeons performing these procedures?

Murphy: As opposed to BPCI, CJR hands all control over joint replacement to the hospital. This is inherently a poor direction from the point of view of the joint replacement surgeon who received all of the specialized education and training to perform these procedures, who makes all of the critical orthopedic decisions and who assumes the majority of the medical risk. Today, a surgeon who performs a joint replacement may care for the patient for 30 years whereas the hospital may care for the patient for 1 day. In contrast to CJR, BPCI was a voluntary program open to physician group practices. If the BPCI window re-opens, it will be important for surgeons to participate so they can have more control over the comprehensive improvement of quality and cost of care for their patients.

Iorio: There is no downside for the surgeons. Poorly performing hospitals may need to reexamine their practice patterns if they cannot be successful in an at-risk environment. The access of high-risk patients to qualified care could be jeopardized if CMS is not forward thinking. CMS must recognize that well performing hospitals that take care of high-risk patients at the same level of quality as standard risk patients need to be rewarded for that excellence.

Froimson: We welcome the expansion of the program but have worked with the American Association of Hip and Knee Surgeons, American Academy of Orthopaedic Surgeons, CMS and others to more clearly define the inclusion and exclusion criteria. For example, lumping hip fractures in with elective joints makes little sense and both should have their own episode-based payment. In addition, we are concerned hospitals with low volumes will not be able to mitigate the risk of outliers. Also, hospitals that have already taken cost out of the episode may have little room to move and will be disadvantaged until the community-based pricing sets in.

Barnes: Both the perceived negative and the real risk is that market forces could drive the bundled rate too low to provide excellent care to patients. Those surgeons and hospitals with increased complication rates, readmissions and costs will either improve their practice patterns and ability to deliver value orthopedics or they will quit doing total joints.

Greenwald: Can you share your experience to date as a reconstructive surgeon with the BPCI? Has it resulted in actual gainsharing?

Murphy: Reconciliation for participants who started on April 1, 2015 will occur early in 2016. Based on current data, all of our episode initiators have shown clinical and cost improvement, which will result in gainsharing.

Iorio: We gainshare with our surgeons and it has been highly successful. Hospitals have to understand that gainsharing with total joint arthroplasty (TJA) surgeons is critical for alignment of physicians and optimization of care.

Barnes: The experience has been positive. My patients have more involvement from me postoperatively than they have ever had and there is a complete team not only interested but invested in their success. The hospital has done well financially and the surgeons have realized the maximum “bonus” allowed.

Greenwald: As CMS expands the bundled payment programs and written CJR rules that will go into effect on April 1, 2016, what factors do think the orthopedic surgeon and team should focus on and what tips do you have for the inexperienced practice that now finds the program mandatory?

Murphy: From the surgeons’ point of view, you will see many stakeholders in the BPCI program have the misperception that gainsharing with physician group practices is capped at 0.5 RVU. In fact, direct gainsharing with the treating surgeon is capped at 0.5 RVU, but the program can gainshare with the physician group practice beyond that. This fact is important to be aware of and such gainsharing arrangements must be applied for and approved by CMS.

The surgeons should provide leadership in these programs. While the CJR program does have a hard 0.5 RVU cap, programs are more likely to succeed if the surgeons are fully engaged and given the opportunity to maximize their gainsharing potential.

Iorio: Data is king. Hospitals and surgeons must align their goals and work together. Transparency of performance, quality metrics and resource availability is critical. Orthopedic surgeons should be involved from the start as the champion of the project and the hospital must reward the surgeons for behavior modification and practice changes that improve the performance of the TJA episode and create value.

Froimson: Get help. There are many experienced programs and consultants who can help. This program is about better care for patients as well as being intentional and comprehensive in the care we deliver. Go into this with a positive disposition regarding the opportunity for being rewarded for creating value. Identify key partners such as the hospital, health system or post-acute providers who can ensure the success of the program through redesigning processes and reallocating resources.

Barnes: They should embrace the program, learn their data and measure and manage it as they go. They can probably be helped significantly by working with others who have been successful in managing risk in this situation. The surgeons and hospitals must trust each other and work together.

• For more information:
• C. Lowry Barnes, MD, can be reached at the Department of Orthopaedics, University of Arkansas for Medical Sciences, 4301 W. Marham, Little Rock, AR 72207; email: clbarnes@uams.edu.
• Mark I. Froimson, MD, MBA, can be reached at Trinity Health, 20555 Victor Pkwy., Livonia, MI 48152; email: pidgeone@trinity-health.org.
• 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.
• Richard Iorio, MD, can be reached at NYU Center For Musculoskeletal Care, 333 East 38th St., 6th Floor, New York, NY 10016; email: richard.iorio@nyumc.org.
• Stephen B. Murphy, MD, can be reached at Center for Computer Assisted & Reconstructive Surgery, 125 Parker Hill Ave., Suite 545 Boston, MA 02120; email: stephenbmurphymd@gmail.com.

Disclosures: Barnes reports he is a board or committee member for American Association of Hip and Knee Surgeons, AR Orthopaedic Society, HipKnee Arkansas Foundation and Southern Orthopaedic Association; receives research surpport from ConforMI, Liventa and Pacira; receives other financial or material support from Corin U.S.A.; receives IP royalties from DJO and Zimmer Biomet; is a paid consultant for DJO and Zimmer Biomet and has stock or stock options from Liventa and Responsive Orthopaedics. Froimson reports he is executive vice president and chief clinical officer of Trinity Health. Greenwald reports no relevant financial disclosures. Iorio reports he receives research support from POS Medical & Sports Technologies Ltd., Bioventis; is a paid consultant for DJ Orthopaedics, MCS ActiveCare and Pacira; receives research support from Ferring Pharmaceuticals, Orthofix Inc., Orthosensor, Pacira and Vericel; and has stock or stock options in Wellbe. Murphy reports he is a paid consultant for and receives IP royalities from MicroPort Orthopedics Inc., and has stock or stock options in Surgical Planning Associates Inc.