If you are an orthopedic provider considering entering into a bundled payment relationship with a commercial or private payer, you need to power-up. This week, a seasoned and successful administrator experienced in bundled payment from the Hoag Orthopedic Institute, Gabrielle White, RN, CASC, helps OTW readers do just that.
Risk Shifting
There is only one reason a payer would agree to a bundled payment for an orthopedic procedure—shifting the risk monkey off their back onto yours. And the only reason a provider would agree to a bundled payment is if they think they can cut expenses through a more efficient and redesigned care system with improved quality and outcomes.
When a clinic or physician enters into a bundled payment program with a commercial payer, they are playing the game with the masters of risk management. Providers can’t win in this game unless they know how to manage and reduce their risks.
If you are a provider, to reduce your risk, White says, you have to pick high volume and predictable procedures. Hip and knee replacements, for example. You must also pick the right patients and the right surgeon. The patients need to meet predetermined selection criteria. The surgeons need to stay within the metrics of a standardized delivery program and meet quality metrics.
Then, you have to have great data to know what things cost.
Only then are you ready to start.
White has clinical, business and administrative oversight of the Orthopedic Surgery Center of Orange County, California and leads Network Development for Hoag Orthopedic Institute (HOI) with a primary focus on bundled payment programs and growth strategy with self-insured employers. Her roadmap will save you money, time and aggravation. Hoag Orthopedic Institute has bundling programs with private employers as well as commercial insurers like Blue Shield, Cigna and Aetna.
The Push to Bundle
Let’s start with the basics. A bundled payment is an all-inclusive price that covers the cost of facility and professional services related to a specific procedure over a specified period of time.
It may include a warranty!
As Medicare pushes pilot programs to move away from the fee-for-service model and healthcare reform legislation demands more data and quality metrics, providers are jumping on the bundle bandwagon. According to a March KPMG poll, 44% of respondent providers said they are already working with bundled payments. And that percentage is growing as 20% said they plan to do it in the near future.
Standardization and the Surgeon
Controlling expenditures and harnessing performance data was listed as the main reason for not yet jumping into the pool. In a word, that is about “standardization.”
Standardizing processes within episodes of care has been a tough pill for some physicians to swallow because it takes away options that fall outside predetermined procedures.
White told us that a bundle shouldn’t take away a surgeon’s autonomy for delivery of care. “When we work on standardizing they could feel this way. We share the data and results peer-to-peer to demonstrate what happens when we use best practices. When surgeons compare their results to others and when they see that they have room to improve, then they usually are happy adjusting to what works best for their patients.”
She says when the standardized care results in better care it makes a big difference. “It really depends on what the goal is for the individual surgeon. I think sharing outcomes or quality data with a surgeon can result in demonstrably solid results and reduced risk of error. That helps him or her reconcile the feeling of simply being a mechanic. Joint replacement is pretty standardized and predictable already so it comes down to the individual physician and how we present the information to them.”
Also, she adds, make sure that the physicians contribute their ideas. “While the ideas may not always be accepted the opportunity to help is especially important.” She says the pathways for standardized care do not fit every patient, and there are some outliers for whom the care must be modified. “But the objective is always the same—proven outcomes.”
Show Me the Money
White also addressed a major concern raised about bundling—rationing care to save money.
“Cutting the level of care doesn’t necessarily cut costs, ” says White. Providers need to provide all necessary care because if they don’t they are “shooting themselves in the foot.” The clinic and the physician, under a bundling type of program, owns the risks of complications and will only pay for them in the end if they cut out necessary care. Results are gained when managing or removing waste within the care process.
The payers know these objections and therefore don’t want to pay as much.
“That’s not realistic, ” says White. “Bundling doesn’t mean you have to charge less for what you do. You might even add a percentage to cover the risks and costs of the warranty.”
The savings to payers is in the provider carrying the warranty, the complications and managing the costs and waste. Payers are also not billed for ancillary services. “They’ll save money right there, ” says White. “What they want is predictability and the bundle gives them that.”
The most important piece of advice White gives is to start small. Try to find a large employer and offer bundled services for a small number of procedures as a pilot.
To keep it simple, White offers up an example of a total knee arthroplasty.
Getting Started
First identify the DRG, CPT and ICD codes and decide on a timeframe for the episode. Do you include pre-admission and post-discharge costs? White says stay with only care related to the index procedures and only what you can control. She also cautions to make sure it’s clear, unless you can cover the risk, that skilled nursing, home health and services not related to the index are excluded. You don’t want to assume risk for services you can’t control.
You are warrantying the outcome and will keep paying until you have completed the episode of care. Hoag Orthopedic Institute keeps some of each payment to cover the outliers. But others chose reinsurance. If there are pieces of the bundle over which you don’t have complete control, seriously consider reinsurance, says White.
Then make sure that the payers, facility, professional and administrative staffs all understand the episode. They will manage the risks and costs, track outcomes, manage and submit claims and monitor the overall program.
Care Redesign
Care redesign by the clinical team is a critical component in ridding the episode of waste and poor outcomes. “Poor outcomes are one of the biggest cost items today. Reduce complications, reduce your costs, ” says White.
Care redesign must align all the providers from the surgeon to the surgeon assistant to the anesthesiologist. You must also account for other providers in the hospital including the hospitalist, radiologist, pathologist and cardiologist consults.
Qualified Surgeons and Patients
The redesigned care model begins in pre-admission screening with the patient’s medical history and various healthcare measures for safe, elective surgery. If patients don’t meet the benchmarks you’ve set, exclude them from the bundled program.
Same thing for surgeons. Hoag Orthopedic Institute only allows surgeons to participate in the program if he or she is at or above the quality benchmarks established by the clinical team.
The bundled program is no place for experimentation in the operating room.
The added benefit of care redesign, adds White, is that it applies to all patients, not just those in the bundled program. The clinical team doesn’t treat a bundled patient any different from a fee-for-service patient. But the administration office does. So make sure the billing office is in the loop.
Squeezing Device Makers
Managing vendor relationships is particularly important for orthopedic devices because surgeons have favorite devices and vendors. White says only the surgeons know which new technologies are valuable and which are fluff. Hoag Orthopedic Institute surgeons have played an active role in working with vendors and they have been successful in limiting the number of vendors and have cut good deals for hips and knees. But not yet in spine. “Too many vendors, ” said White.
Vroom, Vroom
White suggests that the entire bundle team meet for an hour once a month at the start of the program so that all the dots are connected and as the process becomes more understood and stable, taper down the meetings.
If you decide to go bundling, White’s engine: keep it simple, start with a pilot, know your costs and benchmarks, keep the clinical, professional and administrative teams on the same page and keep your eye on the costs and data, will give you the power to swim with the sharks.
If you want to listen to Ms. White’s 60 minute presentation courtesy of Wellbe, Inc., and view her slides, click here: http://www.orthoserviceline.com/free-webinar-getting-started-with-bundled-payments-for-orthopedics/
