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Orthopedic Bundles and Acute Care Providers

Mar 10, 2016

Hospitals in 67 geographic areas must participate in the federal Comprehensive Care for Joint Replacement (CCJR) bundled payment model for episodes that start on or after April 1, 2016. (See Six Key Points About the Orthopedic Bundled Payments Initiative.) Although your acute care facility may not be in this first wave of participation, there’s much your organization should be doing now to prepare for its inevitability.

To successfully address the expected CCJR bundled payment challenge requires some serious strategic analysis in order to support meaningful objectives and measures. Keep in mind, it is possible to borrow ideas from those health care systems that recently participated in the CMS Bundles Payments for Care Improvement (BPCI) initiative, since the two programs are similar.

In any event, here are some of the high-level activities that your organization should strongly consider undertaking now.

Evaluate the Financial Effect

The mandatory bundled payment model holds participant hospitals financially accountable for the quality and cost of a CCJR episode of care. It also incentivizes increased coordination of care among hospitals, physicians, and post-acute care providers.

Therefore, it becomes critical to first establish the cost structure per episode in order to price the bundled services. Many hospitals start by understanding historical costs and claims and evaluating current episode costs (supplies, care settings, etc.) to then identify opportunities for cost savings. For instance, standardizing supplies and equipment can be one key way to generate cost savings.
Devices contribute greatly to joint replacement costs, and many BPCI participants have achieved significant savings by negotiating with vendors, contracting with a single source for devices, or merely standardizing the devices used.

Naturally, the overall goal is to decrease costs while increasing quality. Many acute care providers are regularly in pursuit of finding ways to reduce the patient length of stay and reduce hospital readmissions. There’s also a growing desire to decrease discharges to skilled nursing facilities and a trend toward home health as the primary post-acute care delivery. Regardless, the consequences of any post-acute route will require quality considerations and cost analysis.

Another part of the financial equation in this new bundled model may be a need to add resources not previously part of the orthopedic episode. For example, you will need reporting and analytics capabilities designed to support the move to orthopedic bundled payments, as well as the ability to monitor data, both yours and the data from post-acute providers. That may require new or additional technology investments.
You may also need additional resources to support the continuum of care and reduce readmissions, such as resources that can help coordinate the efforts of physicians, enhance preadmission, ensure a standardized patient experience, and help educate patients both on pre-op instructions and vital post-op care as hospital stays become shorter.

Understand Current Clinical Pathways, Then Redesign Them

Redesigning care by standardizing clinical pathways for joint replacement procedures is another crucial hurdle under the bundled payment model. In addition, using best practices at the core of the redesign can reduce the cost of inpatient stays and help prevent readmissions.

However, before you can redesign clinical pathways, you must first evaluate the current state—from initial office visits and physician appointments to surgical activities and care in the hospital, to patient discharge and follow-up. Once the existing pathways are mapped out, improvement areas can be identified.

The biggest challenge will be encouraging changes preoperatively at the physician practice level and within post-acute environments, as well as ensuring accountability. That includes getting patients onboard with their own post-acute care responsibilities.

Another challenge? Reshaping discharge protocols so that patients are directed to the most appropriate post-acute care environments. That can include stressing more cost-effective home health versus higher-cost skilled nursing facilities. It also means having care navigators or coordinators who follow up with post-acute care partners as well as patients for the first 30 days to ensure patient compliance and to monitor their progress.

Understand Current Referral Patterns, Then Align Partners

Hospitals will need to align providers across the continuum. This may require you to negotiate new agreements with skilled nursing facilities and physicians in order to increase the chances of your success with bundled payments.
Outreach and engagement is key to understanding what is needed to transition physicians from fee-for-service to fee-for-value. It’s also vital for aligning physicians with care coordination efforts and for implementing evidence-based care pathways and variation reduction programs.

Therefore, many hospitals provide incentives based on quality and other performance metrics. Gainsharing is one such popular compensation tool. Hospitals also use quality and utilization performance reports to then help drive process improvements.

Altogether, the move to bundled payments should represent a welcome opportunity for specialists like orthopedic surgeons to become part of an important population health movement, particularly at a time when most programs are targeted toward primary care physicians. It also provides a mechanism for providers to participate in savings when the value of care improves.
On the post-acute side of the equation, you will need to identify partners that can deliver high standards of care, especially when it comes to skilled nursing facilities used by those patients who will still require that level of care. Defining quality expectations and then working together with high-quality facilities to coordinate care will help reduce lengths of stay and bring down total episode costs.

Develop Key Performance Metrics for Partners

For now, hospitals and only hospitals under the bundled payment model will be held accountable for overspending targets. You will need data that can be measured and that will also allow you—and your partners—to better manage care and costs while supporting continuous improvement. Therefore, it’s crucial that your organization drive conversations with both physicians and postacute care providers.

Key performance metrics can be almost anything in support of better patient outcomes and lower costs. National benchmarks that illustrate costs per case can be one form of metrics that can be used with surgical partners. Readmissions and patient satisfaction surveys can help form post-acute metrics. The key is to determine those metrics that will be meaningful to results and will engage your partners.

Start Assessing Your Abilities

Whether or not bundled payments are in your immediate future, you can bet you’ll have some kind of interaction with some form of the model eventually. CMS has vowed to shift 50% of Medicare payments to alternate forms by 2018. Your organization can benefit today by preparing.

Why not begin to address your abilities to participate under the model? You may need more data infrastructure or greater care coordination. By assessing these and other factors now, you can take positive actions that allow you to become more cost-effective with greater patient satisfaction. You’ll not only be ready for the model should it become mandatory, but you will have already reaped bottom-line benefits along the way.