What urologists can learn from orthopods: Understanding bundled payments

The Theory of Diffusion of Innovation states that, for a given population, adoption of new ideas and technologies comes in waves. There are early adapters, the early majority, late majority, and finally, the laggards. While early adapters and early majority may accrue higher risk, they frequently reap rewards while the others get left behind.

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Medicare’s Comprehensive Care for Joint Replacement (CJR) model is a smoke signal for urologists—a low-risk opportunity for us to get ahead of the curve. As a field, we will be well served to think critically about this changing reimbursement paradigm and adapt our practice to stay relevant. The orthopedic community is being thrust into this headlong and we have the terrific advantage of observing how that collision plays out. This blog provides a summary of CJR for the urologist.

The Affordable Care Act reserved $10 billion for the Center for Medicare & Medicaid Innovation (CMMI) to test novel payment and delivery system models. These include accountable care organizations (ACOs), primary care transformation, and Bundled Payments for Care Improvement (BPCI). The common theme is a systematic shift in financial incentives and a move away from traditional fee-for-service payment models. CJR is the first mandatory bundle testing BPCI for hip and knee replacements. There are 67 geographic areas—roughly 800 hospitals—that are required to participate.

Hip and knee replacements are the most common inpatient surgeries performed in the Medicare population. There is wide variation in outcomes (ie, joint infections, revisions), cost of care, and utilization. CJR financially incentivizes care coordination among hospitals, physicians, and post-acute providers to improve the quality of joint replacement care throughout the surgical and recovery period.

The episode begins with an admission for elective joint replacement, includes the surgery and hospitalization, and ends at 90 days post-discharge—including nursing facility and/or home health costs. With certain exceptions, the episode includes all services paid under Medicare Parts A and B. During the 5-year trial run, hospitals are given a target price for the episode—determined by Medicare—but payments are made in the usual fashion. At the end of each year actual hospital expenditures are compared to the target price.

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A hospital’s spending and quality metrics will dictate whether it receives a bonus payment at the end of the year or a bill from Medicare for the excess cost. Patient risk is stratified based on whether there is a concomitant hip fracture. Early in the model, which went into effect April 1, 2016, price targets will be based on hospital-specific historical figures, but this will change to regionally benchmarked price points by year four.

Next: Questions about CJR in the coming years

Whether CJR will be successful in improving value for joint replacement care and whether any urology-specific bundles are in the pipeline remains to be seen. Nevertheless, bundled payments are the reform mechanisms for specialists. Many urologic procedures are ideally suited to bundling and, most importantly, they construct a platform for urologists to realize the benefits of the value they create.

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Some important questions about CJR in the coming years are:

• How are shared savings distributed?

• What is an ideal episode for a urologic bundle?

• How will the transition to regional price points affect savings?

• What should be risk stratified in a urologic bundle?

• To what degree are quality metrics incorporated versus simple cost cutting?

Hospitals and physician groups considering these questions, initiating their own bundles, and working with payers to implement them are the face of the early adapters in this changing health care landscape.

Some concrete examples from my institution, UCLA, include lower-extremity joint replacement (Los Angeles County is one of the geographic areas for the CJR model), a surgical home project run by the anesthesiologists, an accountable care organization (ACO), a Back Pain Quality Initiative, surgical care of BPH, among others.

By most measures, the orthopedic surgeons as a field were not ready for disease-specific bundled payments. Urologists should be.

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