Specialty physician directed bundled payments

Bundled Payment Initiatives
:
Regaining control of your specialty practice?
Louis McIntyre, MD
Orthopedic Summit
Nov, 2014
Las Vegas, Nv
Presenter Disclosure
Information
Louis F. McIntyre, MD
Disclosure Information
The following relationships exist:
Stock Options: Tornier Medical
Speaker Fees: Depuy-Mitek, Quintiles Medical
Research Grant: Depuy-Mitek
Board Member: AANA, AIM, FairHealth PAB
Editorial Board: Orthopedics Today
Ownership: OPMI
Member Coding, Coverage and Reimbursement
Committee of AAOS
The Challenges….
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Decreasing and changing reimbursements
Increased regulatory burdens
Mandated IT
Auditing liability
Provider consolidation and employment/
Loss of referrals
Clinical Practice Guidelines limiting MD
decision making
LOSS OF AUTONOMY!
How to deal with the
challenges...c. 2000
Add Ancillary
Services!
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MRI
PT
DME
Pain Management
IME
ASC
OUCC Clinic
Consider:
“Disruptive Innovation”:
..
“Disruptive Innovation”:
what are private groups
doing now….c. 2014!
Specialty physician directed bundled
payments
 Physician-Hospital JV’s: co-management
agreements that make sense
 Developing a hospital beyond 2010..
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Bundled Payments:
Who will direct them??
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“The treating specialist is the ONLY person
qualified to control costs”
Specialists initiate 85% of cost but only receive 6%
of payment
As of 3/31/13, 3,490 TJAs have been performed
by 21 orthopedists using bundled payments with a
commercial payer
Personal comm, SH Care Grp., 4/25/2013
Bundled Payment
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Define an episode
of medical care
Price the episode;
all inclusive
Mitigate risk
Control cost in the
episode/bundle
Measure outcomes
with economic and
clinical metrics
Bundled Payments
Orthopedics is well positioned to take
advantage of bundled pricing !
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Elective Procedures
Broad, predictable cost and outcomes
experience
Low complication rates
Definitive start and endpoints of patientcentered outcomes: pain resolution and
functional improvement
Wide variation in cost indicating huge
potential for savings!
Current Economics of TKA
Medicare Database
270,000 TKA in 2011
 Cost varies from $20,000 to
$60,000+
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Will increase 673% in next decade!
Current Economics of TKA
Luft CORR 2009
Mean Episode Cost $22,545
 $18,596 Inpatient
 $ Outpatient services
 $ Rehab inpatient
 Ancillary Service Variability: 141%
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Current Economics of
Surgery
Miller Health Affairs 2011
Total Procedural Cost vary 49-130%
 Greatest variability was in post acute
 85% in THA
 Concluded that BP methodology could
significantly reduce costs
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Bundled Payment Experience
Nelson L, CBO, 1/2012
Cutler & Ghosh, NEJM, 3/2012
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Episode based bundled payments would
save 82% if the 50th percentile standard
were used.
Medicare
Bundled Payment for Care
Improvement
(BPCI)
200 participants involved in the four models
Project started 2013 and last until 2015
Private Insurance
Bundled Payments
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Several groups doing this with TJA; California,
Wisconsin, Illinois, Missouri, Minnesota, NC…….
Considerably less than the hospital
reimbursement for the same procedure AND
ALSO includes 60 to 90 days of global care!!
MD group 100% at risk for ALL costs associated
with the procedure UNLESS negotiated with
private payer otherwise the group can super
insure itself for costs >$50K
Private Insurance
Bundled Payment in ASC
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Wisconsin
Utilization of postoperative recovery areas
overnight with staffing for 23 hour stay
Femoral or adductor nerve blocks for OP pain
control (liposomal DepoFoam long acting local
anes. inj.)
MD owned PT and local “fitness center” referral
after 1 week of PT
Physician group getting preferential referrals
from insurers as a result of cost savings
Specialty MD directed
bundled payments
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In Wisconsin, BCBS and state WC is preferentially
referring patients to this orthopedic group. Their
business has 25% over the past 2 years!!
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In Illinois & Missouri, the payers are offering
$1,000 cash to patients to utilize the orthopods in
this large group for their TKA procedure
Specialty MD directed
bundled payments
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If the physician group is in control of the
ancillary service costs, they can render care
more inexpensively similar to the Medicare
58% of HOPD reimbursement rate for
stand alone ASCs that is currently saving
Medicare millions of dollars for OP surgical
cases!
Leverage low-cost site of service!
Hospitals can’t do this!
Specialty MD directed
bundled payments
OPMI CMCS Innovation Challenge 2013
TKA in ASC Setting
3 year pilot program with Medicare to
begin in 2014….
 Groups representing 405 orthopedists
have agreed to participate IF the grant is
accepted by the Medicare Innovation
Project group which has $1 billion in grant
money
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CMS Innovation Challenge
OPMI Round II
TKA (27447) in ASC setting
 Bundle: Day of surgery, 23 hr
observation plus 90 day global
 ASC, Surgeon, Anesthesia, Implants,
Rehab, Access related to procedure
 Inclusion Criteria:
BMI <35
Hgb A1c <6.5
No psych meds
No anticoag Rx
Primary
No Hx DVT
No CVA or TIA
No EtOH dependency
CMS Innovation Challenge
OPMI Round II
TKA (27447) in ASC setting
400 Surgeons
 17,000 TKA
 8500 eligible for the bundle
 Save $1800 per case (9%)
 Total savings $15,000,000+
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Bundled Payment Experience
Froimson J Arthroplasty 2013
ACE Demonstration
Tulsa
ACE Demonstration
San Antonio
(1000 cases)
(500 cases)
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10% cost savings
7% increase net
revenue per case
Increase in volume
MDs received 25%
bonus all cases
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10% cost savings
1% decrease
revenue per case
Increase in volume
MDs received 25%
bonus all but one
case
Bundled Payments
WSJ June 6, 2014
350 Provider groups
involving 48 conditions
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Specifically note TKA
Slow insurance adoption
“change way they
process claims”
Looks great on
paper…..very, very hard
to do
Bundled Payments
The nuts and bolts
Rigorously define the bundle and all
services included
 Specifically exclude non-covered
service
 Evidence-based inclusion criteria to
maximize outcomes and prevent
complications
 Access historical cost data for
accurate pricing
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Bundled Payments
The nuts and bolts
Mitigate risk through contractual
witholds, caps and/or insurance
 Develop relationships with vendors
for price and referrals
 Leverage low cost sites (ASCs)
 Leverage process and volume with
suppliers; most important with
implants
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Bundled Payments
The nuts and bolts
IT component essential for tracking
costs and measuring outcomes
 Can’t negotiate without
demonstration of both economic and
clinical value
 Bundled methodology applicable to
many other orthopedic procedures
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“Disruptive Innovation”:what
are private groups doing
now?
Specialty physician directed bundled
payments
 Physician-Hospital JV’s: comanagement agreements that make
sense….
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JV: Responsibilities
Management LLC
Need medical director(s), operations
director, outcomes measurement
director
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Strategic planning
Staffing, equipment and supply management
Negotiations of contracts (payer and service)
Pathway/protocol development
Case management
Quality control/improvement
Management Services
Fixed Reimbursement
Reimbursed hourly, FMV rate for MD
management services
 Reimbursed for other administrative
salaries and expenses
 Overhead allowance
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Management Services
Performance Reimbursement
Patient satisfaction
 Medical records compliance
 Medication reconciliation
 Systems measures (throughput time)
 Complication reduction
 Readmission reduction
 Outcomes collection/measurement
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Hospital Board
Management fee
Group
A
Group
B
$$
Hospital
Management Co LLC
$$
Indies
Service Line
Management Fee:
% fixed, % performance
Conclusions
Bundled payments are being done
with commercial payers and soon
with Medicare.
 Medicare’s goal is to abolish fee for
service in 5 years
 Only real question is, will the bundle
go to the hospital or to the private
specialty group, or both?
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Conclusions
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Hospital/MD JV’s with orthopedists are
currently being done in multiple
communities with the blessing of both
physician and hospital attorneys without
violation of Stark II & III.
Conclusions
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These are all operational concepts that are
being employed in both CON and non CON
states
Conclusions
Health care spending is clearly a
major issue that must be addressed
 Bundled payment mechanisms to the
physician groups should be explored
as a method to reduce expenses and
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restore economic and clinical control
to the true experts in healthcare:
Physicians!
Thank You!