UnitedHealthcare, a subsidiary of UnitedHealth Group, followed in the Centers for Medicare & Medicaid Services (CMS)’s footstep by recently announcing that they would be adopting bundled payment models for spinal surgeries, hip and knee replacement surgeries in over 40 markets next year.
When it comes to knee replacement and hip surgeries, some payors have seen a great increase in prices. To lower overall healthcare spending and improve care, CMS, the largest payor in the country, implemented the Comprehensive Care for Joint Replacement (CJR), a bundled payment model pilot for hip and knee replacements. “This model tests bundled payment and quality measurement for an episode of care associated with hip and knee replacements to encourage hospitals, physicians, and post-acute care providers to work together to improve the quality and coordination of care from the initial hospitalization through recovery.” (CMS, December 2016).
Traditionally, payors make separate payments to providers for each of the individual services they furnish to a patient for a single illness or episode of care. This fee-for-service approach “can result in fragmented care with minimal coordination across providers and health care settings. Payment rewards the quantity of services offered by providers rather than the quality of care furnished.” (CMS, December 2016). Under a bundled payment model, all providers involved—including the physician, post-acute care providers, hospitals, and other practitioners—receive a single, fixed payment. “Research has shown that bundled payments can align incentives for providers, allowing them to work closely together across all specialties and settings.” (CMS, 2016)
According to Sam Ho, M.D., Chief Medical Officer of UnitedHealthcare, “Knee, hip and spine surgeries are among of the fastest increasing categories of medical procedures, so this program provides a new way to help improve the quality of care, produce better outcomes for patients and better manage costs for employers. Our partnership with participating health care providers and facilities is an important step toward achieving better health outcomes while reducing the overall cost of care.” UnitedHealthcare also has a bundled payment program in spine and joint surgeries that started in 2015 as a pilot program and is now expanded to 28 markets and more than 40 hospitals.
Other payors have followed suit and tested a bundled payment specific to an area of care for pilot implementation:
- The Pennsylvania Employees Benefit Trust Fund (PEBTF) had a pilot to focus on total knee replacements and total hip replacements
- CMS recently published a Notice of Proposed Rulemaking for Bundled Payment Models for High-Quality, Coordinated Cardiac and Hip Fracture Care
- UnitedHealthcare is expanding bundled payments for orthopedics
Some of the key metrics that payors are tracking as a result of implementing the bundle payments model are outcomes, readmissions, and complication rates at a member level. Chip Howard, Vice President of Payment Innovation at Humana, when asked how Humana would reimburse for hip and knee replacement surgeries across the continuum of care, he answered: “We will have data and reporting that shows, at a member level, what occurred during the bundle. [W]e will be able to track all that and share that information with our providers. Clearly, having that ability drives the opportunity to track outcomes and look at potential opportunities for where to improve.” Other national payors like Aetna, Blue Cross and Blue Shield, Anthem, and Cigna have goals of transitioning to value-based care reimbursement platforms.
The adoption of bundled payment models among payors like UnitedHealthcare shows how the healthcare industry is embracing value-based care reimbursement. The transition from fee-for-service to value-based reimbursement is seen as necessary to reduce wasteful spending and improve care and outcomes.
One of our goals at GIRS is to advise our clients about having the right strategy that incorporates clinical and economic endpoints for their product so that they have a compelling story that showcases results through outcomes. Hence having the data to show value and proven clinical and economic outcomes for providers and payors to ensure maximum product adoption and reimbursement regardless of the payment model.
Contact us so that we can assist you with tracking these payment changes and the best reimbursement strategies to better position your product or technology for optimal coverage and payment.