Bundled Payments are coming to Joint Replacement Surgery

Bundled Payments Are Coming To Joint Replacement Surgery (Forbes-Dave Chase ,CONTRIBUTOR)

The handwriting is on the wall that the “do more, bill more” era is waning. It’s being replaced by the “no outcome, no income” era. One of the logical places to start is surgery with bundled payments. It’s been accelerated by the pain of out-of-control healthcare costs felt most acutely by employers and their employees. This has led to the creation of Transparent Medical Networks to slay the healthcare cost beast.

The trend began with smaller organizations and is now being extended to much larger organizations. Pioneering surgery centers and employers have shown that they can solve healthcare’s most vexing problem—pricing failure. To the surprise of many, this has led to the largest nonprofit health system heading toward fully transparent pricing. This is a core element of the Health Rosetta approach that has shown to reduce per capita healthcare costs 30-50% for employers and is a huge improvement over the horrible status quo of health benefits.

[Disclosure: As I’ve disclosed many times, the Health Rosetta is a non-commercial open-source project that provides a reference model for how purchasers of healthcare should procure health services. In my role as managing partner of Healthfundr, a seed stage venture fund, the Health Rosetta is the foundation of our investment thesis.]

Meanwhile, Medicare moved faster than many expected and announced that 67 metropolitan areas will be mandated to move to bundled payments for joint replacement. If there were any remaining doubts about Medicare’s seriousness about moving away from the flawed reimbursement models of the past, they have been laid to rest. This was reinforced in CMS’ announcement of the joint replacement program.

This alternative payment model will contribute to the Medicare goals set by the Administration of having 30% of all Medicare fee-for-service payments made via alternative payment models by 2016 and 50% by 2018. Effective implementation of the CJR model will improve the quality and efficiency of care for Medicare beneficiaries, which is essential to creating a healthcare system that delivers better care, spends our dollars more wisely and leads to healthier Americans.

In parallel, forward-looking healthcare organizations recognize that patient reported outcomes (PROs) are central to ensuring that quality and appropriate care is being delivered. It’s not hard to read the tea leaves to see that PROs will factor into payment in the U.S.—it’s already happening outside the U.S. In the meantime, superior care and outcomes can be delivered when PROs are woven into surgeons’ workflow.