Utilizing an optimization roadmap to leverage orthopedics during the transition to risk

Practice Management

The Centers for Medicare and Medicaid Services (CMS), the Federal government agency in charge of the Medicare and Medicaid programs, is the largest payer in the U.S. healthcare system.

Many have noted that CMS typically is the first mover on important changes in the healthcare system and that, due to CMS' stature as the dominant payer, commercial insurers generally follow CMS' lead. The Patient Protection and Affordable Care Act of 2010 contained funding for important demonstration programs which change the current fee-for-service payment system and introduce value and risk-based programs such as the Pioneer ACO Program, the Medicare Shared Savings Program, another ACO program, and the Bundled Payment for Care Improvement Program.

 

While commercial insurers and self-insured employers have begun to institute ACO and bundled payment programs, their adoption has been quite limited due to a number of factors, including smaller patient populations at any given hospital which can make it harder to reach the critical mass necessary to make such programs practical. Many commentators have noted that commercial insurers will likely adopt such new payment mechanisms more broadly once CMS broadens its programs. The Pioneer ACO program was geared for health systems that already had experience with population health management and CMS created the MSSP Program to encourage more widespread participation. CMS has transitioned the MSSP program from a demonstration project to a standard Medicare program and has recently changed the regulations governing it to create more financial opportunity and reduce the risks involved and encourage broader participation. Because BPCI allows participants to take risk on episodes of care they select rather than on the entire healthcare spend for a population of patients (as required for ACOs), the BPCI program has been more widely adopted than the MSSP. While the BPCI Program is still a demonstration project, CMS has stated that it is in the process of transitioning it into a standard Medicare program.

 

Despite all of this activity by CMS, many have speculated that the ACA would be repealed, or questioned whether or not CMS will move aggressively to more broadly utilize these new payment mechanisms. Those questions were recently answered with startling clarity by CMS and the private sector. On January 26, 2015 CMS announced that by 2016 it will tie 30 percent of all fee-for-service payments to providers to quality initiatives through alternative payment models — particularly ACOs and bundled payments. This percentage will rise to 50 percent by 2018.1 This rapid pace of change is more aggressive than many expected and demonstrates CMS' commitment to transitioning away from the fee-for-service system to these alternate payment models at a more rapid rate than most would have dared to predict.

 

The private sector is not only following suit but is upping the ante. Only two days later, on January 28, 2015, The Healthcare Transformation Task Force (several of the nation's largest health systems and insurers) announced the goal of shifting 75 percent of their business by 2020 to contracts with incentives for quality and lower-cost healthcare. Initial efforts will focus on accountable care, bundled payments and management of the cost and quality of care for high-cost patients.2

 

As can be seen from these important announcements, these new payment systems can no longer be viewed as experiments that may have meaningful impact at some future date. They are here today, here to stay, and will be the predominant payment methodologies in just two or three years. It is imperative that health systems and physicians begin to engage in such contracts to learn how they work so they can remain competitive. These programs typically give not only the health system, but also physicians groups and third parties the ability to take the healthcare risk and profit from (or pay for) the results. In both the MSSP and BPCI programs health systems initially took the risk in the early stages of the program, but as physicians learned of this opportunity they began to take risk more frequently until the majority of entities taking the risk were physician groups. This trend is expected to continue and is likely to disrupt long-standing relationships between physicians and hospitals.

 

At Stryker Performance Solutions we believe the orthopedic service line is optimally positioned to serve as health systems' starting point for driving the transition from volume to value. Orthopedics represents a marquis service line for volume (with growing market demand projected), contribution margin and patient satisfaction. Successful orthopedic programs usually drive high volumes of procedures with relatively defined courses of care and lesser complexity than other chronic conditions. Patients enter the hospital with an explicit musculoskeletal problem, not a complex illness, and leave happy to have their problems fixed. Because orthopedic episodes of care are comparatively reliable, they can also be easily measured, benchmarked, and tracked to drive standardization and performance improvement efforts. Organizations that proactively work to optimize their orthopedic service lines will be well positioned to maximize profitability in today's fee for service and volume based world while building the framework for success in tomorrow's value-based care models. In starting the transition to risk with the relative “system in control” that orthopedics represents, health systems can develop the foundational knowledge, experience and tools to optimize care and then leverage those learnings to: a) apply to other service lines, and b) scale across the system's hospital orthopedic service lines.

 

Given that orthopedics accounts for one of the largest portions of Medicare spending, it is certain these changes will have disproportional impact on that specialty. Stryker Performance Solutions' Optimization Roadmap Program helps health systems and physicians group navigate this fast changing landscape by starting with their orthopedics strategy. The Optimization Roadmap Program begins by analyzing and benchmarking your service line's current clinical and financial performance against our proprietary database (300,000 cases and counting), then assesses your market position, and evaluates your organization's physician alignment and payment reform readiness. The results from these diagnostics inform the development of an Optimization Roadmap with actionable next steps for service line optimization and longer term business strategy in the transition to value-based care. In this rapidly evolving healthcare market, those who proactively develop and execute well-informed optimization strategies will lead their markets, while those that react to market and regulatory demands as they happen will fall victim to the changes happening around them.

 

Healthcare organizations no longer have the luxury of taking a "wait- and-see" approach regarding these new payment systems. If an organization is not already gaining experience in these new systems, its competitors are. By failing to learning these new systems, an organization risks ceding a critical advantage to its competitors that may be difficult to overcome. The future of these new payment systems is not some far off date; the future is today!

1http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/26/the-obama-administration-wants-to-dramatically-change-how-doctors-are-paid/
2 http://www.modernhealthcare.com/article/20150128/NEWS/301289934/major-providers-insurers-plan-aggressive-push-to-new-payment-models

 

Paul Jawin, JD, Vice President, Alignment, Strategy and Reform

 

Paul brings more than 30 years of legal, business, financial and capital markets experience to his role in developing physician alignment and payment reform programs. A co-founder of Comprehensive Care Solutions—acquired by Stryker in 2012—he has helped physician organizations and health systems align and turn reform into opportunity by utilizing new payment and delivery structures, including Accountable Care Organizations (ACO) and bundled payments.

 

Paul is a regular speaker at industry conferences and events, including the American Academy of Orthopaedic Surgeons Hospital-Physician Alignment Symposium. He co-founded and served as Senior Vice President and General Counsel of Secured Independence, Inc., and has held senior executive positions with public and private companies involved in real estate and senior housing. Paul has a Bachelor of Arts degree in History from Ithaca College, and practiced corporate, securities and real estate law in New York City for more than 10 years after graduating from Syracuse University School of Law with a Juris Doctor degree.

 

Lisa Fraser, MHA, Program Manager

 

In her role as a Program Manager, Lisa consults with clients on innovative payment reform strategies, such as co-management arrangements, bundled payment initiatives and accountable care organizations. Her extensive experience in organizational strategic planning, project management and program implementation allows her to help customers improve service line performance and turn healthcare reform into opportunity.

 

Previously, Lisa was a Strategic Management Consultant on the Organization and Strategy team at Booz Allen Hamilton in Washington, D.C. She graduated from Duke University with a Bachelor of Arts degree in Public Policy and earned a Master of Health Administration degree from the University of North Carolina at Chapel Hill.

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