Creating Bundled Payments for Orthopedic Treatment

Does your practice offer bundled payments for orthopedic treatment? Understand the pros, cons, and best strategies for success to get started.

Over 1,700 hospitals and physician groups joined the voluntary Medicare bundled payment program in 2020, and the Centers for Medicare and Medicaid Services (CMS) has indicated that mandatory programs are coming. So how do bundled payments work, and how can you create a successful bundled payment system for your orthopedic practice?

Key Takeaways

• Bundled payments are gaining traction and are particularly effective in specialties like orthopedics with clearly defined episodes of care. 

• The potential benefits of the bundled payment model include decreased costs, increased cost transparency, and improved collaboration across each care team.

• There are several challenges to a bundled payment system because it can disincentivize the use of costly treatments and the acceptance of higher-risk patients.

• The cornerstones of successful bundled payments are investing in quality data collection, early risk assessment, and high patient engagement.

What Are Bundled Payments?

Bundled payment is a method of paying for healthcare that combines payments for a set of services or procedures into a single payment. In contrast to a fee-for-service model, under bundled payments, a provider is paid a set amount for a given series of services regardless of the diagnosis and individual variations of the patient receiving that service. This complements a shift towards value-based care and allows participating providers to share in any losses or savings that result from the final price of each episode of care.

The concept of bundled payments is effective in orthopedics where treatments, such as knee or hip replacement, require a long series of procedures and visits to various specialists with defined start and end dates. By paying for a single episode or set of services, the bundled payment stream eliminates fragmented care and provides patients with a single price. The bundled payment model is less effective for the treatment of chronic conditions with no definitive start and end, such as diabetes. 

What is an Episode of Care?

An episode of care refers to a set of procedures and visits to various specialists that are necessary to treat a particular disorder. For example, an episode of care for a knee replacement might include preoperative preparation and patient education, a total knee replacement surgery, a procedure to remove damage to the meniscus, and a series of follow-up visits with the orthopedic surgeon for rehabilitation.

Benefits of Bundled Payments in Orthopedics

There are significant potential advantages to the bundled payment method for payers, providers, and patients:

• Decreasing the cost of healthcare
• Increasing cost transparency
• Improving coordination between specialists across the care team
• Encouraging collaboration between providers
• Discouraging unnecessary treatments
• Incentivizing prevention of avoidable complications and readmissions
• Increasing market share through preferred provider agreements

Barriers and Challenges of Bundled Payments in Orthopedics

Despite the many benefits of bundled payments, there are several barriers and challenges posed by this payment model that you should be aware of before implementing it in your practice:

• The difficulty of defining an episode of care. Identifying a discrete episode can be made challenging in patients with multiple or chronic conditions when it becomes unclear which treatments should be included in the bundle. Because orthopedic treatments often have a clear start and end, this specialty lends itself well to clearly defining episodes.
• Discouraging the use of costly treatments. Bundled payments may disincentivize clinicians from administering necessary or more effective care options due to their higher cost and lack of itemized reimbursement. This could result in poorer health outcomes and a shift away from patient-centered decision-making.
• Discouraging accepting high-risk patients. The risk of financial loss associated with higher-risk patients or those with more expensive conditions may discourage providers from accepting those patients under a bundled payment system. This could make care inaccessible to the patients who need it most.
• Incentives to delay addressing complications. The cost burden of addressing complications as part of the existing episode of care or bundle could encourage providers to delay or avoid follow-up treatment until the bundle is over and they can charge for a new episode. This could be detrimental to patient health.
• Cost differences between patients may fall outside clinician’s control. For example, adverse patient behavior such as ignoring recommendations while taking certain medications could increase the risk and cost of that patient’s treatment. This makes it more difficult for clinicians to predict and contain costs.
• Older IT infrastructure can make collecting the necessary data difficult. Because effective data collection, reporting, and communication are pivotal to the success of bundled payments, outdated technology can become a major roadblock.

Strategies for Successful Implementation of Bundled Payments in Orthopedic Treatment

Successful implementation of the bundled payment model in orthopedics is contingent on three key strategies:

1. Invest in Data Collection and Analytics

Quality data and analytics is central to the successful implementation of bundled payments. These insights help you to accurately assess risk factors, predict patient costs, and identify areas for savings and improvement. Investment in the infrastructure necessary to effectively collect, store, report, and communicate patient data will increase your return on investment.

2. Assess Risk Factors Preoperatively

Preventing complications and readmissions is particularly important in a bundled payment model. Early assessment of patient risk factors is key to communicating these risks to the entire clinical team for effective mitigation. A streamlined and efficient preoperative assessment program is an important consideration for any practice implementing bundled payments.

3. Engage Patients Effectively

High levels of patient engagement and participation have been shown to improve health outcomes, thus lowering costs and reducing inefficiencies. By effectively engaging your patients, you improve your ability to gather a comprehensive medical history, predict potential risks, increase patient compliance with pre- and post-operative care, and ultimately provide a high-value and low-cost episode of care.

How Wellbe Can Help You Create Bundled Payments for Your Orthopedic Practice

Wellbe specializes in flexible, personalized guided automation solutions that take the legwork out of hundreds of non-medical administrative tasks. ConnectedCare allows you to efficiently collect patient information and communicate with the entire clinical team, boosting patient engagement and equipping you with the data you need to create the best bundled payments for your practice.

Talk to a Solutions Specialist today to find out how Wellbe can help you create bundled payments.