Blog Post

The big reason you need to be ready for bundles: Private payers

August 14, 2017

    Recent studies support that Medicare bundled payments have reduced joint replacement costs, with one system reporting cost reductions of more than 20%. It's no surprise, then, that private payers are creating their own orthopedic bundles—even as CMS debates the future of the Comprehensive Care for Joint Replacement (CJR) program.

    Read on for three recent examples of how private payers and provider groups are embracing bundled payments in orthopedics, which show the need for all providers to prepare to succeed in this space.

      1. Private practice groups pursue their own orthopedic bundles

    The Centers for Advanced Orthopaedics, the largest orthopedic private practice group in the country, is currently in negotiations to develop payment bundles for seven orthopedic procedures, including for hip and knee replacements. The practice aims to drive value by moving physicians toward a risk-sharing environment. Leaders plan to have an agreement in place with Blue Cross by the end of this year.

    As one of the largest private sector attempts to create a payment bundle, Centers for Advanced Orthopaedics serves as a blueprint for other practices. While this bundle would require the practice to carry significant risk should the cost of care rise above pre-negotiated rates, it would also incent providers to track their own patient data, giving them leverage to effectively negotiate with payers and control costs.

      2. Large payers see value in payment bundles and collaboration with providers

    Through the use of enhanced analytics and robust population health management strategies, payers and providers are partnering on their own bundled payment arrangements.

    For example, Humana recently announced that it will partner with eight orthopedic specialty groups in Indiana and Kentucky to expand its own Total Joint Replacement Episode-Based Bundled Payment Initiative for Medicare Advantage members. Under the program, providers are responsible for all costs associated with the entire episode of care, and Humana will offer partner organizations patient data, analytics, and chronic disease management and wellness programs.

      3. Private payers add spine to bundles

    Although most developments in the bundled payment space are focused on joint replacements, private payers are also adding spine to their bundled arrangements. For example, in January, UnitedHealthcare implemented the Spine and Joint Solution, a bundled payment model for hip, knee, and spine surgeries. So far, UnitedHealthcare has partnered with 40 health facilities across the country that have demonstrated excellent outcomes and reduced complications. Since the program''s introduction as a pilot in 2015, participating employers have seen average savings of $10,000 or more per operation. Given these results, expect to see more payers take on spine procedures.

    Despite the challenges inherent in developing orthopedic bundles—such as a lack of data analytics and the difficulty in negotiating terms—private payers and providers are increasingly participating and succeeding in these models.  As such, consider whether your organization should participate—even if you're outside of CJR's mandatory markets.

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