Value-based care, hospitals vs. ASCs & more: Rothman surgeons answer key questions in spine

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Spine surgeons from Philadelphia-based Rothman Orthopaedic Institute discuss topical issues in the field today, including practice challenges, bundled payments in spine and how hospitals will react to orthopedic procedures accelerating toward ASCs.

Note: Responses are lightly edited for style and clarity.

Question: What is the biggest challenge facing your practice now?

Alexander Vaccaro, MD, PhD: The biggest challenge facing our practice is promoting value-based care with appropriate incentives for all stakeholders. Value-based care has been shown to provide savings to the payer and provider when utilizing appropriate incentives. This can be achieved through alignment of the payer, health system and provider through demand matching point-of-care strategies and strategic partnerships. These strategies can result in a reduction of cost by almost 20 percent per episode, which not only translates to savings for the provider, but also better outcomes for patients.

In these models, we have been able to discharge a much higher percentage of patients to home (97 percent discharged) as well as reduced infection rates (99 percent reduction) and reduce complications by more than half (56 percent reduction). Still, promoting value-based care remains challenging because of the payment structure and difficulties aligning all stakeholders. Because the baseline target in CMS bundles are adjusted from the previous year's total cost of care, providers experience diminishing return and are not incentivized to improve dramatically — as doing so could significantly alter target prices and potentially reduce share savings significantly. Therefore, under the current bundle payment scheme, the dramatic diminished marginal benefit to the provider must be rethought to maintain alignment in order to further flatten the cost curve of medicine today.

Q: How do you see value-based care developing in spine in the next two to three  years?

Dr. Vaccaro: In the next two to three years, value-based care will change due to the rise of popular bundle payment scenarios and the beginning of population health management paradigms. Bundle payments today should be reflective of diagnosis-related groups, which can vary drastically. The average DRGs for cervical and lumbar surgical cases vary significantly, from $11,000 to over $100,000 for the same diagnosis, yet these differences in costs are not reflected in current CMS bundled payment reimbursement schemes.

Value-based care must better align with specific CPT coding, as there is great variation in surgical procedures, especially in deformity surgery, where number of levels or complexity is not factored into bundle reimbursement. Costs also vary dramatically across locations, yet the impact of geography on reimbursement is not fully factored into CMS bundle cost. Lastly, technology advancements, which may result in improved patient outcomes, is actually penalized financially, as it is considered an additive cost, which is actually counterproductive to value-based healthcare.

Q: What actions do you expect hospitals to take as more spine and orthopedic procedures migrate to the outpatient setting?

Michael Smith, MD: There is a significant payer pressure on the high cost of procedures done in hospitals and hospital outpatient departments. One of the major payers in New York just sent notice to our affiliated health system that they would refuse to authorize payment for procedures in HOPDs that could reasonably be done in standalone ASCs. Regardless of the legality and/or practicality of this move, and understanding there will be ongoing legal/regulatory/political battles, the rationale is quite obvious and clear: Standalone ASCs typically offer substantially lower overall costs for a given procedure compared to hospitals or HOPDs. This is a clear and present threat to the ongoing domination of hospitals and their affiliated health systems given the major contribution margin musculoskeletal procedures provide.

Physician-owned and -run ASCs allow reasonable physician reimbursement and controlled overall cost for the payers to coexist. As well, there are opportunities to maximize workflow efficiency and patient experience given the small, onsite and potentially nimble management structures of these facilities compared to those run by hospital administrations.

The COVID-19 pandemic also helped crystallize that hospitals are needed for sick people and vulnerable to disruption. Many of us were unable to access our hospital facilities for various lengths of time during the pandemic. People needing outpatient musculoskeletal procedures are generally not sick, and providing their care in standalone ASCs minimizes their exposure risks.

So, how will hospitals, hospital systems, hospital associations respond to this trend and to the cost pressure? Some possibilities:

1. Fighting the trend. Restrictive arrangements with physicians, especially employed physicians.

2. Delaying the trend. Political pressure to limit approval of licenses and certificates of need. Compromising with payers to reduce cost on certain procedures while maintaining high cost structures where they can.

3. Joining the trend. Creative structuring, minority co-ownership of ASCs, collaborating on diverting patients appropriately to hospital/HOPD versus standalone ASCs based on the clinical needs of each patient.

The huge cost of the U.S. healthcare system demands we pursue rational ways to provide high-quality, high-value care. Physician-owned and -run ASCs have a clear role to play in evolving our healthcare system to a more sustainable future.

Q: What is the most exciting technology in spine today?

David Kaye, MD: Today, I believe the most exciting technology in spine surgery is in artificial intelligence and machine learning and their applications in predictive analytics. For example, in spinal deformity, algorithms have been developed, capturing over 100 variables, which can quickly and accurately — in real time — inform the surgeon of the risk and benefit of a particular operation for a specific patient. Similar algorithms have been created to suggest 'ideal' alignment parameters for a specific patient based on their unique profile, and tools such as patient specific rods have been developed to help the surgeon achieve these end goals.

As outcomes from these surgeries are collected and added to the datasets, machine learning allows the algorithm to become even more accurate. In a drive to improve patient outcomes, AI allows for assimilation of big data and interpretation in a meaningful and trainable way. These tools will become an increasingly important part of the preoperative, intraoperative and postoperative management of our patients, and may allow safer, more effective and more cost-efficient surgery moving forward.

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