Insight into Bundled Payments for Orthopaedics

“Alternative payment models are here to stay,” according to an AOA Critical Issues article by Greenwald et al. in the June 1, 2016 issue of The Journal of Bone & Joint Surgery. The article identifies successful implementation strategies related to the Bundled Payments for Care Improvement (BPCI) initiative launched by the Centers for Medicare and Medicaid Services (CMS) in 2013.

Alternative payment models represent an opportunity to reduce costs by eliminating waste and unwarranted variation in care by finding efficiencies within the system. One way to achieve this is through gainsharing incentives that align hospitals, physicians, and post-acute care providers in the redesign of care. But participants also assume financial risk.

Orthopaedics plays a big role in the BPCI risk-reward initiative. Sixteen of the 48 clinical “episodes of care” included in BPCI are orthopaedic-related. Moreover, three episodes (major lower-extremity joint replacement, femur/hip/pelvis fractures, and “medical non-infectious orthopaedic”) account for 40% of the 16 orthopaedic episodes being evaluated.

The nuts and bolts—and risks and rewards— of the initiative are well-described in the article, but here are several pearls extracted therefrom:

“Care improvement activities and care redesign…are the necessary prerequisites before entering into bundled payment arrangements.”

“The financial risk is real [because] outliers, those patients whose cost is substantially higher than the mean patient cost, cannot be controlled.”

“It is important that the physician or surgeon responsible for the patient is involved in all stages of the episode of care and interacts with all of the parties involved.”

“Specific to orthopaedics, there are substantial opportunities for cost savings by integrating preoperative and intraoperative processes, reviewing implant purchasing options, and negotiating post-acute care costs.”

“Changes in care delivery often require … managing patient expectations.”

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