Bungled Payments

Paul KeckleyThe proposal involves a five-year bundled payment model across 75 geographic areas whereby hospitals would be eligible for a bonus if their costs and outcomes were optimal or be penalized if not based on results 90 days post-discharge. The agency noted that in 2013, it spent more than $7 billion on hospitalization for these procedures with the payments for hospitalization and recovery ranging widely from 16,500 to $33,000. Comments about the proposal will be received by CMS through September 8, 2015, aiming for implementation January 1, 2016.

Their rationale, according to Secretary of Health and Human Services Sylvia Burwell, in the HHS statement announcing the proposal: “By focusing on episodes of care, rather than a piecemeal system, hospitals and physicians have an incentive to work together to deliver more effective and efficient care. This model will incentivize providing patients with the right care the first time and finding better ways to help them recover successfully. It will reward providers and doctors for helping patients get and stay healthy.”

A year ago, I had total knee replacement. My symptoms were classic: degenerative mobility from an arthritic joint that suffered from college football and years of jogging. I finally succumbed to the reality that a new knee might be a good possibility. I did my homework.

I chose a surgeon whose reputation was solid– thorough, cautious and methodical. I participated in pre-operative counseling by the surgical team and followed orders as prescribed. I was in the hospital 51 hours and then physical therapy for four weeks. I used pain meds for nine days and reached 120 degree flexibility within three weeks post-surgery. And by all accounts, my results are good. I can walk without a limp, sleep through the night, and am relatively pain free. Jogging and knee bends are problematic, and getting through airport scans is always eventful. So overall, I’d say my experience was good.

But a year later, I can honestly say some of my questions remain unanswered.  Did pay too much? I was charged $77,000 and between the insurance company and my out of pocket, we actually paid $45,000)? Is my outcome good, not so good or just Ok? And all things considered, would I do it again?

Going through this ordeal, I learned things that, even after 40 years as a health services researcher, I really didn’t appreciate. So as hip and knee replacements move toward bundled payments, here are a few thoughts CMS might consider as it develops its final plan:

Dear Secretary Burwell:

Congratulations on CMS’ timely announcement of the proposed bundled payment program for hip and knee replacement surgery in hospitals. Having had a total knee replacement in July, 2014, I have some observations for your consideration as you finalize this rule:

1.    The penalties associated with suboptimal outcomes and avoidable costs should be significant. The joint replacement industry is lucrative, and every actor is benefiting from increased demand, insensitivity to price and optimal outcomes by consumers, and lack of coordination in managing these cases.

2.    The hospitals chosen to participate in the program should be held accountable for verification that every joint replacement procedure done in their institution is medically necessary and evidence based. Other alternatives should be pursued first with knee or hip replacement a last resort, not the starting point.

3.    The proposal should specifically address the critical role played by pharmacists and physical therapists. To focus primarily on the surgeon, anesthetist and hospital is to miss critical determinants of an optimal outcome.

4.    Information about actual prices and expected outcomes should be readily accessible to every consumer before surgery. The 64 page “Instructions” provided by my surgeon provided no specific information about pain medication options, the physical therapy regimen, non-traditional therapeutic options, expected costs and what my insurance covered. And online searches are a zero-sum game: lots of “stuff” that’s conflicting, contradictory and confusing. If CMS is serious about rewarding bundled payment success, it should provide consumers tools to be proactive and require candidates for joint replacement to affirm they understand their options and expected role.

5.    Information about surgeon competence, adherence to evidence and avoidance of unnecessary procedures, outcomes, patient experiences, business relationships with prostheses’ manufacturers, fee splitting with care team members, ownership interest in diagnostic and surgical facilities and charges should also be readily accessible to consumers. And the fees paid the surgical team should reflect better the significant role they played: only $8000 of the total outlay went to the surgeon and anesthesiologist—somehow that seems too low.

6.    The proposed plan should include primary care clinicians in its framework for shared savings. At no point in my journey was my primary care clinician advised of my status nor involved in my care plan. Yet, he is my most important partner in pursuit of my health goals on a day-to-day basis. What I eat, how I sleep, exercise, infection avoidance and the stress and anxiety around a life-altering event like joint replacement is bigger than the mechanics of the incision, the open-to-close time in the OR and the near-term recuperative process itself.  It seems illogical that primary care isn’t a focus.

7.    Measures of appropriateness (medical necessity), patient adherence, care team performance (surgeons, anesthetists, therapists, pharmacists, hospital, et. al.) and total cost of care should be valid and reliable, and incorporated into a simple to score so that consumers can compare options simply and quickly.

8.    Patients should review charges and attest services were performed before they’re submitted to the insurance company for payment. It would inform consumers, help spot charges for services not provided, and in that teachable moment, bring home the issue of cost to unwary patients who might not be concerned otherwise. My hospital bill went to the insurer before I saw it—does that make sense?

9.    And why stop at 90 days? In the four weeks post-discharge after my surgery, I was contacted once by the surgeon, twice by the anesthetist’ practice and that was it.  I had one post-op visit with the surgeon and no contact other than with my physical therapist thereafter. Yet my recovery continued long after based on self-direction, with no guidance from the care team.  And the recovery process continues today a year after my procedure.

I am appreciative of the complexity of joint replacement and the equally complicated process of health policy making. And bundling total joints makes perfect sense: improved coordination is sorely needed. Having gone through the surgery, I hope these observations might be useful as you prepare your final rule and as this program is implemented next year.

Paul Keckley is managing director of Navigant’s Center for Health Policy Analysis. He is based in Washington DC.

2 replies »

  1. This bundled payment initiative is a big, big deal. The fact that CMS moved so quickly from soliciting voluntary participation from hospitals to requiring participation really caught hospitals’ and doctors’ attention. The fact that it’s not just hospitals, but the surgeons themselves, that will gain from keeping costs below Medicare’s payment level or suffer for exceeding it, makes this effort far more likely spur serious changes in health care delivery than previous bundled payment programs. If this program flies and expands, it’s the beginning of having real, upfront prices to quote to patients. That’s huge! But as Paul Keckley’s thoughts indicate, the sticky thing is quality. Health care professionals can’t agree on how to measure quality. And even if they could, it wouldn’t be in a form consumers could actually use. Imagine for a moment that Keckley’s wish was a reality tomorrow: “Information about surgeon competence, adherence to evidence and avoidance of unnecessary procedures, outcomes, patient experiences, business relationships with prostheses’ manufacturers, fee splitting with care team members, ownership interest in diagnostic and surgical facilities and charges should also be readily accessible to consumers.” What consumers–other than those working in the field of orthopedics or having spent 40 years as a health services researcher–would be able to make use of that “readily available information”? Medicare should establish a system that has simple measures of quality but that is backed up by a risk-adjustment system that rewards physicians for taking on complex patients. So long as physicians aren’t financially penalized for taking on the sickest patients, the best surgeons will gravitate to the toughest cases. In that environment, reputation can still fill in some of the gaps when good quality data either isn’t available or isn’t digestible by consumers.

  2. In an ideal world, all of this information would be available but to make it so will require a significant commitment of time and resources (e.g. money). One should not expect such information to be forthcoming from the physicians, most of whom have been facing stagnant or decreasing reimbursements for the past one or two decades. The payments quoted for the surgeon and anesthesiologist, while seemingly inappropriately low to the author, are in fact actually very high when compared to standard Medicare compensation. You must have great insurance coverage! Knee replacement (CPT code 27447) is most often performed in the Medicare population (mean age of knee replacement patients is 68 years of age). The CMS website states the surgeon’s fee for such an operation (inclusive of care the day before, the day of surgery and for 90 days postoperatively) approximates $1500 (geographic variation – range from about $1400 to $1600 depending upon state in which care is delivered). If the surgeon got half of the $8000 in fees quoted (e.g. $4000) he/she did very well indeed when compared to the standard Medicare payment. In my experience, most patients (perhaps even including the health expert author) believe surgeons are making several times their actual reimbursement. When informed of the accurate figure they honestly think we are lying to them.