The orthopaedic episode payment model–also known as bundled payments−is a hot topic right now as the debate continues about what the future of U.S. healthcare policy should look like. A big part of the debate regarding bundled payments is how they should be structured and administered.
Broadly speaking, bundled payments refer to a single payment for all services provided during an episode of care. There were early movers in the bundled payment space even before the Affordable Care Act (ACA) became law. Integrated Delivery Networks and others in the private sector have worked on value-based care and bundled payment models for a while. But, it was Centers for Medicare & Medicaid Service (CMS) and its Center for Medicare and Medicaid Innovation’s (CMMI) launch of the Bundled Payments for Care Improvement (BPCI) program that marked a significant pivot towards the “service” mindset.
As an industry, the emphasis has been on the federal government’s various bundling programs that have been launched in the last 2-3 years; however, there has also been significant activity in this space from private payers, which has received less attention.
It’s the proverbial age-old consumer question: am I getting my money’s worth here? That model−where the payer sets a target price for all defined services related to an episode of care–sets the stage for expectations that results for medical procedures will be grounded in proven economic and clinical outcome value.
Early data from BPCI suggests episode-based payments show great potential to both increase quality and patient satisfaction and decrease total costs. The U.S. government, the largest customer of healthcare expenditures (28.7 percent and growing), saw the value in BPCI and its potential to be expanded to other types of episodes of care. CMS launched BPCI in October 2013 for hospitals, physicians and post-acute facilities who wanted to volunteer for this new healthcare model. Building on the learnings gleaned from BPCI thus far, CMS moved quickly to a mandatory bundled payment program (Comprehensive Care for Joint Replacement-CJR) for those episodes of care in April 2016. CMS has continued down this path, expanding the episodes of care last year to include additional surgical procedures, including surgical hip and femur fracture repair (SHFFT) and coronary artery bypass grafting (CABG). With both SHHFT and CABG, the risk burdens and goal sharing opportunities will be distributed more equally between health systems and their provider partners. The first performance period for both has been delayed to January 2018 and will last for five years.
CJR has now been implemented for one full year and participating health systems will learn how they performed. There is no penalty for the first year, but rather a “test and learn” approach; penalties commence in year two. There has been much written in the press about the federal bundled payment programs, but little about the proliferation of private bundles. Most public policy experts agree that value based care is here to stay. Undoubtedly, the debate is expected to continue about the “how,” and the details will likely change over time. But, value-based care is a business model whose time has come for healthcare. And, we already have some insights into what ingredients are necessary for success in an episode of care model:
• Partnership: The success of an episode of care model depends on surgeons and post-acute care (PAC) providers partnering with each other for episode performance improvement. For major joint procedures, PAC accounts for one-third of care costs and represents a huge area of opportunity to reduce costs and improve outcomes. Partnering ensures more informed medical decisions that waste less time, less resources and produce better patient outcomes.
• Care Navigation: This is still in its early stages but has the potential to make a huge difference in a patient’s outcome during and after an episode of care. Digital care navigation connects all involved during an episode of care online in one centralized location where information can be shared and socialized in real-time, almost like a Facebook or Instagram post. (Yes. Really.) From the patient to the health system to the medical team to the post-op care, all stay connected to each other as well as to the real-time metrics and patient feedback that are critical to informing the decision-making process.
• Metrics: The numbers tell the story when it comes to a patient’s health and care. An evidence-based approach to episodic improvement drives decision-making resulting in both better efficiencies and better patient outcomes.
Even with those insights, there remain variables for the industry to consider: how do you negotiate with the payer? What gets included in the episode? How do you incentivize? What outcomes do you measure, and what does “good” or “better” look like? How do you define value? And, most importantly, how will patients benefit?
It’s time for health systems to consider their opportunities, because the private bundled payment conversation is happening in earnest and that conversation will likely affect health systems’ bottom lines. Even if not in a public or private bundle now, it is not too early to examine your data and your post-acute network. Ask key questions: how well do your patients do after discharge? Do you have good or average outcomes? Are your post-acute costs competitive? How many patients experience complications? How about readmissions? Both public and private payers know your numbers. Do you?
Christine Maroulis is Senior Director of U.S. Health Policy & Reimbursement for the Johnson & Johnson Medical Devices Companies.
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