Tips and Tricks for Making Bundles Work in Your Practice

Providing value-based care continues to be a hot button issue in healthcare in the United States, as both public and private payers push for better accountability for care quality and reductions in cost with bundled payment reimbursement models.

The savings can amount to as much as $5,577 per joint replacement case!

According to a study, “Cost of Joint Replacement Using Bundled Payment Models,” published in the February, 2017 issue of JAMA Internal Medicine, Comprehensive Care for Joint Placement programs (CJR) saved U.S. taxpayers $5,577 per joint replacement care episode for 3,942 patients.

The Medicare Bundle Payment for Care Improvement (BPCI) and Comprehensive Care for Joint Placement programs (CJR) are two bundle payment models offered by the Centers for Medicare and Medicaid Services (CMS).

Bundled payments allow payers to pay providers and healthcare facilities for a single episode of care with one pre-defined payment as opposed to the traditional system of paying for each expense item separately.

When done right, bundled payment models can cut costs without diminishing levels of care.

However, there is risk. If episode costs are more than the bundle price, providers eat that difference.

Walter B. Beaver, Jr., M.D., a surgeon at OrthoCarolina Hip & Knee Center shared his experiences with making bundles both profitable and fair. He originally discussed “Practicing in Alternative Payment Models” at the International Congress for Joint Reconstruction’s 2018 6th Annual South Hip and Knee Course.

He prefaced his talk by saying, “I don’t have all the answers because they are always changing. We are always getting different criteria from our Medicare and our private insurers for what goes on in a bundle.”

An Upfront Investment

According to Beaver, there are both retrospective and prospective payment options in both public (BPCI and CJR) and private value-based programs. His institution, OrthoCarolina, first got involved in bundles in 2014 with prospective bundles.

In that first year, he said they had contracts with 6 different payers/employers and performed 500 procedures (335 TKAs, 150 THAs and 16 spine surgeries).

“The return on investment for individual physicians and the group as a whole was positive and we decreased cost and improved quality for patients,” he said.

He explained that it takes a lot of work to make bundles successful. OrthoCarolina established a Quality Improvement Committee to get the physicians on board to change behavior as well as hired a Value Based Program Director and patient navigators. Patient navigators help patients navigate the healthcare system and find the right care arrangements.

“You need to be willing to make an initial upfront investment with recurring costs. It is costly in the beginning, but eventually covered by program revenue if you do it correctly. We have been very successful with prospective bundles,” Beaver said.

Other important factors in participating in bundles include:

• Determining a bundle price that is fair to all involved
• Figuring out internal and external costs to deliver that bundle
• Contracting with outside entities for purchased services
• Aligning incentives for all
• Setting strict inclusion/exclusion criteria
• Measuring quality–if you do not, you will lose bundle

“The provider group is responsible for all costs during the episode of care. They are going to be the one to manage the bundle so they must manage it efficiently to remain profitable,” he said.

“You must identify all costs to determine bundle price with the payer so you can negotiate something fair for you and your group.”

This includes establishing a pre-determined price for each “care partner” who will care for the patient during the episode including the hospital, internal costs (surgeon/physician assistant/administrators), anesthesia, radiology, post-acute rehab, durable medical equipment (DME) and any unexpected costs.

Beaver explained that your internal costs include the physician fee, the physician assistant fee, administrative costs (contracting resources and data analysis as well as salaries for the program manager and navigators) and salaries for billing support staff.

“Our physician fee is 125% of the customary professional fee plus share of the profit based on the value returned to the program. Each of our surgeons earned 242% of the professional fee in 2016.”

Controlling External Costs

Determining external costs, he said, is all about negotiation. When contracting with outside entities like anesthesiologists and physical therapists, you want to be fair to them but don’t want to bust the bundle. And when negotiating with the facility, you need to set standardized protocols to be shared by all surgeons to decrease variations of practice as well as length of stay of patients. If you do all this successfully, you will increase the direct volume of patients.

He also suggests “encouraging” the implant vendor to work with the hospital, although he said, personally he stays out of that negotiation process and just tells the hospital what he needs and that he expects it to be ready when the time comes so he can take care of his patients.

He added that managing a bundle also requires controlling the sometimes uncontrollable, such as patients’ visits to the Emergency Department (ED) after being discharged. To reduce ED visits for OrthoCarolina, they use the group’s Orthopedics Urgent Care and direct care through the navigators and providers on call.

They also contract with other specialists such as hospitalists to manage complications during acute admission, vascular specialists for Doppler ultrasound and treatment if needed, durable medical equipment (DME), and home health and outpatient physical therapy.

He said, “To reduce ED visits, patients can also be held accountable for non-life-threatening services provided without direction from the provider. You want them to follow your system of care.”

Retrospective Bundles

Next Beaver discussed retrospective bundles, both public and private, and how they differ from prospective bundles. For instance, in retrospective bundles, there is still the standard fee that applies to a defined episode of care, but the provider now must meet quality and cost metrics defined in the bundle agreement. If metrics are achieved, the provider receives a portion of the savings retrospectively.

For these types of bundles, the biggest savings are at the back end after patients have been discharged from the hospital.

“The largest portion of the savings comes from acute care by ensuring the patient is in the appropriate level of care for the appropriate length of time. Pre-op risk assessments and preferred skilled nursing facilities/care navigators are key!”

He added, “A little bit of trouble with this bundle is that you are not doing all the accounting. A lot of times the hospital is doing the accounting and you don’t know where their costs are. Their cost of accounting is different from ours and they don’t like to share it with you.”

Challenges with payer adjudication include:

• Working with the billing software vendor to configure claim formats because each payer has different requirements for the types of claims they want, the dollar amount on each claim, and in what order they want to receive claims
• Developing in house software to manage bundles and acting as your own third-party administrator to pay each vendor according to the contract rates
• Negotiating patient inclusion/exclusion criteria with individual payer. This is a challenge because bundle definitions are not uniform. Each payer has their own approach.

“The more inclusive the definitions, the higher the risk, the higher the price. The more exclusive the definition, the lower the risk, the lower the price. Regardless of the inclusion criteria, the physician has the final decision from a clinical perspective to perform the operation,” he said.

Beaver emphasized that following quality metrics is also essential for you to successfully practice in a bundle. Examples include:

• Hospital-reported outcomes
  • 30-day readmission
  • Infection
  • Unplanned return to the OR
  • deep vein thrombosis/pulmonary embolism
  • Transfusion rate
  • Discharge to home
• Patient-reported outcomes
  • General Health Utility
    • VR-12 (The Veterans Rand 12 Item Health Survey)
  • Region specific
    • Hip and Knee
      • HOOS Jr. (Hip disability and osteoarthritis outcome score short form)
      • KOOS Jr. (Knee injury and osteoarthritis outcome score short form)
      • .
    • Spine
      • ODI (The Oswestry Disability Index)

Beaver also advised that managing the bundle successfully relies on physician engagement to help create and follow protocols that decrease variations affecting outcomes and to optimize surgery as a way to mitigate risk. Navigators are also important for regular pre-and post-op phone contact and directed utilization of the appropriate site of care for any and all post-op issues, including the office, Orthopedics Urgent Center and ED of a contracted facility.

Meet Dr. Beaver at the Upcoming ICJR South Hip and Knee Course

Beaver’s discussion on private payer bundles was originally presented at the International Congress for Joint Reconstruction’s 2018 6th Annual ICJR South Hip and Knee Course.

Beaver’s presentation is also on the agenda for the 7th Annual ICJR South Hip & Knee Course which will be held June 27-29, 2019 at the Ocean Reef Club in Key Largo, Florida.

The conference is designed for orthopedic surgeons and allied health professionals looking to learn the latest in orthopedic technology, surgical technique and optimum patient care. The course will include current controversies in total knee arthroplasty and total hip arthroplasty, enhanced recovery and outpatient arthroplasty, and perioperative patient management.

To register, click here.