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Bundled payments are gaining momentum in orthopedics, but can they work in other specialties?

If the bundled payments program proves successful for orthopedics, other complex conditions and diseases could apply these best practices to improve health and reduce costs, too.

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Despite pressure on hospitals to reduce readmissions and studies showing that patients who are supported after leaving the hospital are better equipped to self-manage, care continues to be disjointed, leading to poor outcomes for patients, and higher costs for hospitals.

Can bundled payments serve as a solution? For certain conditions, yes. Orthopedics is pioneering this new kind of payment model and if proven successful, other complex conditions and diseases could apply these best practices to improve health and reduce costs, too.

Bundled payments to initiate better coordinated care

The Bundled Payments for Care Improvement initiative (BPCI) was launched by Centers for Medicare & Medicaid Services (CMS) to support the transition to value-based care by developing a Medicare payment system that emphasizes quality instead of quantity. Essentially, this system links payments for a myriad of services patients receive during an episode of care, as opposed to making separate payments to providers for a single illness or courses of treatment.

Holding the provider financially accountable for patient outcomes leads to higher quality of service and increased collaboration between care teams. According to CMS, “Research has shown that bundled payments can align incentives for providers—hospitals, post-acute care providers, physicians, and other practitioners—allowing them to work closely together across all specialties and settings.” The hope is that this leads to lower spending, improved care and a better overall experience for patients.

As the transition to value-based care advances, bundled payments are gaining momentum, particularly in orthopedics where the CMS instituted the Comprehensive Care for Joint Replacement (CJR) initiative?a mandatory bundled payment program for total hip/knee replacements that is pioneering more innovative payment and healthcare delivery models. Risk-sharing models for example, which reimburse based on the success of treatment goals, provide an incentive for all stakeholders including the device manufacturer to work cohesively throughout the entire episode of care. Creating mutual accountability for benchmarks (such as reduced costs and improved patient outcomes) ensures all parties are working towards the same endgame.

Hip and knee replacements, the most common inpatient surgery for Medicare patients, often require long periods of recovery and rehabilitation. Under the CJR, the period for which Medicare would pay hospitals a lump sum begins at admission and ends 90 days after discharge. In 2014, hospitalizations for the more than 400,000 procedures performed cost in excess of $7 billion dollars. In order to rein in expenditures and avoid patients being readmitted with expensive, potentially dangerous complications, hospitals need to pay closer attention to the patient recovery process after they are discharged. Bundled payment programs ensure this level of engaged aftercare.

Using tools such as remote patient monitoring and designating a care coordinator or health coach can help reduce post-care risks. Care coordinators and coaches work with and support patients and families throughout treatment from pre-op through follow-up care. They seek to reduce the likelihood of hospital readmissions while reducing utilization costs and improve both patient outcomes and overall experience.

With these promising initial results, we can start applying lessons learned from bundled payments in orthopedics to the treatment of other complex and chronic conditions that require ongoing care.

Many medical devices companies are trying to make the process more successful for their customers. For example, Zimmer Biomet’s purchase of RespondWell, a telerehabilitation technology that enables at-home, clinician-supervised post-surgical physical therapy, “addresses the emerging need for healthcare providers to oversee and optimize post-surgical recovery outcomes in order to maximize value across the entire episode of care,” according to David Nolan, Group President.

Using tech to amplify value

Given the initial success seen with bundling payments for orthopedics, applying the model to other complex and chronic disease states seems logical. We’ve seen some exploration here, specifically in cardiac rehabilitation as well as with diabetes. For example, we know that about 1 million patients are hospitalized every year with heart failure, costing $31 billion in direct and indirect costs. Half  of those patients will be readmitted within 30 days at a cost of more than $8,000 per patient, yet average reimbursement is only around $6,000. Preventing even one of these readmissions for 10,000 patients would save $20.7 million. Implementing strategies such as remote patient monitoring and health coaching to support patients with heart failure after the initial episode of care would reduce unnecessary readmissions by 50 percent, significantly lower death rates and hospitalizations, and as a result, lower overall costs.

Because of the uniquely challenging nature of heart failure, device manufacturers have a special opportunity to create value beyond the products they manufacture, improving outcomes and cost savings. Technology can be the ally that payers and healthcare organizations need to amplify their ability to meet, or even bypass their success metrics.

Wireless glucometers, scales, heart rate and blood pressure monitors—more and more devices are becoming increasingly connected, changing the industry landscape. As a result, payers and healthcare organizations have a greater opportunity to capitalize on reimbursement, such as it relates to bundled payments for example, because they have the benefit of being more informed as to the behaviors and struggles that affect the overall health of their patients.

It’s not entirely certain what the future holds for healthcare, but what is clear is the need for better coordinated care, especially for patients with complex diseases. Bundled payments, coupled with the endless potential that connected devices offer, will help foster environments where payers and healthcare organizations can succeed in value-based care—by delivering healthier patient populations.

Photo: andreypopov, Getty Images


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Chase Hensel

Chase Hensel is the CEO and co-founder of Welkin Health, a patient relationship management software and services company which empowers health professionals with the tools they need to reach patients efficiently and effectively.

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