Initial Experience With Bundled Pay for Total Joint Arthroplasty Procedures

By Navid Alem, MD, Leslie Garson, MD, MIHM, Zeev Kain, MD, MBA    May 5, 2017

Navid Alem, MD

The current healthcare landscape is evolving to yield paradigms that improve patient care and curtail cost.[1] Patient-centric and collaborative models that accentuate “value” as opposed to “volume” are gaining impetus.[2-4] This is exemplified by the Bundled Payments for Care Improvement (BPCI) initiative of 2013 that aims to study if holistic “episode-based” payments can diminish Medicare payments for total joint arthroplasty (TJA) procedures while perpetuating quality.[5-6] The purpose of this review is to outline initial experiences with bundled payments for TJA procedures and potential implications on anesthesiology practice.

There is consensus that existing healthcare paradigms in the United States are plagued by unsustainable cost inflation that does not parallel enhanced patient outcomes.[7] The current

Leslie Garson, MD, MIHM

system has been characterized as a broken model with widespread waste, redundancy, and care fragmentation.[7-8] Rather than accepting the status quo, the Affordable Care Act (ACA) has a multitude of initiatives and incentives that strive to strengthen partnership amongst practitioners.[8-10] A prominent element of the ACA is savings and enhanced care achieved via accountable care organizations (ACO); defined by Epstein et al. [10] as models “in which various constellations of providers agree to assume collective responsibility for the care delivered to a defined Medicare population.” The Medicare Access and CHIP Reauthorization Act of 2015 further manifests the Centers for Medicare and Medicaid Services (CMS) goal of transitioning to merit-based incentive payment systems or advanced alternate payment

Zeev Kain, MD, MBA

models (such as Accountable Care Organizations). CMS also instituted the Hospital Readmissions Reduction Program in 2013, which includes explicit provisions for payment reduction after elective TJA procedures for hospitals with 30-day readmission rates above national benchmarks.

Health care delivery redesign is being accelerated by a long-needed transition in payment systems towards value-based paradigms. Porter et al.[11] elucidate, “The clear message is that hospitals, health care centers, and clinicians should no longer be spending time discussing whether to participate in bundled payment programs but instead focusing on how to do the work necessary to succeed under them. In contrast to a fee-for-service model, an integral feature of ACOs is a progression toward bundled payments that encompass comprehensive episodes of care.[6[ In an ACO, it is incumbent upon hospitals, physicians, and post-acute care providers to collaborate and restrain both the quantity and cost of unnecessary and non-evidence based services.[12-13] Demonstrating patient-centric “value” contribution is paramount in so-called “incentive compatible” paradigms that aim to marginalize individual predilections.[14] “Value” is essentially a global assessment of quality in relation to cost.[3-4, 15] In the context of perioperative care, appraisal of quality is linked to longitudinal patient dispositions such as the haste with which patients return to baseline function.[3]

While there is timely evidence that demonstrates both cost-savings[16] and improved patient experiences[17] in ACO paradigms, outcomes in the setting of surgical procedures are only recently materializing by analyzing the experience with BPCI for TJA.  In 2016, CMS made bundled payments for total hip and knee replacement mandatory in 67 regions under its Comprehensive Care for Joint Replacement model.[18] Within this context, Lee et al.[18] report maintained clinical outcomes and an 11% cost decline for TJA procedures. One key step toward enhanced efficiency was modifying physical therapists’ schedules so that virtually all patients were out of bed on the day of surgery. This translated to a 9.5% decrease in average length of stay.[18] An original investigation by Dummitt et al.[5] demonstrates that in comparison to non-participating hospitals, significant Medicare payment declines are observed for lower extremity joint replacement episodes in BPCI-participating hospitals. Notably, these savings are achieved without negotiation of important quality metrics including unplanned readmissions, post-discharge emergency department visits, and perioperative mortality. Iorio et al.[1] are similarly able to exhibit positive fiscal experiences for TJA procedures in a BPCI model. Here, cost savings are primarily attained via decreasing the average length of hospital stay and diversion of post-discharge care from inpatient facilities. A study by Bozic et al.[19] reveals that the cost for TJA procedures is highly contingent on post-discharge care, noting it contributes to upwards of one-third of total episode payments. Enabling tailored intervention, Siracuse and Chamberlain[20] validate that a risk stratification scale can effectively identify elevated-risk patients scheduled for TJA.

As forthcoming payment models are dynamically redefined, it is sensible for anesthesiologists to explore expanding roles that augment both the scope and quality of patient interaction during the surgical course.[21] Figure 1 presents several diverse opportunities for anesthesiologists to contribute “value-added” (as defined by either enhanced quality or decreased cost[3-4, 15]) care within the context of bundled care compensation. Notably, many of the prospects outlined in Figure 1 transcend the immediate operative period and embrace a philosophy of shared accountability for ultimate patient-centric outcomes throughout the perioperative continuum. This integration of complete and interdisciplinary care that primarily focuses on the patient, starting from the decision to pursue surgery until full patient recovery, is exemplified by the discipline of perioperative medicine.[4] Within the realm of perioperative medicine, emerging paradigms such as enhanced recovery after surgery[22] (ERAS) and the perioperative surgical home[23] (PSH) aim to unify providers for the collective goal of improved patient care provided in a fiscally responsible manner.[8] The essential foundations of a PSH include patient-centeredness, comprehensiveness, coordination, accessibility, and commitment to quality and safety.[24-26] Similarly,  the key components of ERAS include collaborative decision making, lifestyle modification before surgery, standardized in-hospital perioperative care, achieving full recovery, and using clinical data for quality improvement.[4]

In close partnership with other disciplines, the Department of Anesthesiology and Perioperative Care at University of California, Irvine (UCI) implemented an innovative PSH program for TJA procedures in 2012.[27] Encouraging results including a decreased incidence of major complications, lowered blood transfusions rates, shortened lengths of hospital stay, and reduced post-discharge readmission rates are discussed.[27] A subsequent report from UCI indicates that program success was maintained with outcomes further improved.[28] The PSH model has also been implemented in a number of other organizations including University of Alabama,[29] Kaiser Permanante,[30] and DC Children’s.[31]

Specific multimodal and opioid-sparing strategies that can be implemented throughout the perioperative course in order to optimize analgesia after TJA procedures are elucidated.[28,32] Amidst a major public health crisis[33] often delineated as “the opioid epidemic,” this presents a particularly keen opportunity for “value” added care after TJA procedures. Raphael et al.[34] also demonstrate that direct hospital fiscal burden was substantially below benchmark levels for patients enrolled in the TJA-PSH at UCI Health. The explicit strategies utilized in the program throughout the perioperative continuum to curtail repeat admissions subsequent to hospital discharge are outlined in a separate case report.[35]

Using the “burning platform” business-lexicon,[36-37] it has been said that the current healthcare landscape is at a crossroads. Paradigms that hasten surgical recovery[3] and fulfill the Institute for Healthcare’s proposed triple aim of improving the experience of care, improving the health of populations, and reducing per capita costs are gaining much momentum.[38] The BPCI initiative is a transparent strategy that is currently being utilized by CMS to clarify if episode-based payment can translate to “higher quality, more coordinated care, at a lower cost to Medicare.”[1] Early results demonstrate that there is indeed significant potential for cost-savings and improved care quality with the application of collective (“bundled”) fiscal models.[1-5] In a dynamic landscape[21] where value-added contribution to patient care is anticipated to be financially endorsed, it is prudent to integrate clinical opportunities that parallel favorable patient outcomes. An expansion in scope of practice throughout the perioperative continuum via paradigms such as ERAS and the PSH is one such means to enhance care quality while also “preparing” anesthesiologists for bundled pay.


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Navid Alem, MD, is an assistant clinical professor in the Department of Anesthesiology & Perioperative Care; Leslie Garson, MD, MIHM, is an associate clinical professor in the Department of Anesthesiology & Perioperative Care; and Zeev Kain, MD, MBA, is chancellor professor in the Center for Stress & Health & Department of Anesthesiology & Perioperative Care; all at the School of Medicine, University of California at Irvine.

Note: This article originally appeared in the ASRA News, Volume 17, Issue 2, pp. 6-9 (May 2017). 

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