Spine and orthopedic care has long been paid under fee-for-service arrangement, which reimburses physicians and facilities for each visit, test and procedure. Payers, employers and CMS are increasingly pushing toward value-based payment models, which tie reimbursement to patient outcomes and the total cost of care through bundled payments, shared savings and quality-based incentives.
Spine and orthopedic leaders said value-based care makes sense in principle but is difficult to put into practice. Many said the industry has yet to agree on how to define and measure value, particularly for spine procedures whose success may not be clear until years after a standard 90-day episode ends. Others said models must include meaningful risk adjustment, protect surgeons from shouldering risk while other stakeholders keep the savings, and require payers to ease administrative barriers such as prior authorization.
Becker’s connected with 11 spine and orthopedic leaders to get their insights on the shift.
The question: Should spine/ortho care move to value-based payment, and if so, what would it actually take to achieve that transition?
Editor’s note: Responses have been lightly edited for clarity and length.
Kevin Bozic, MD. Chair of Surgery and Perioperative Care, Dell Medical School at the University of Texas at Austin: As surgeons, our goal is to help patients reduce their pain, restore function and improve their quality of life. We should be strong advocates for payment models that reward outcomes that matter to patients relative to the resources required to achieve those outcomes. Fee-for-service pays more for doing more, regardless of whether those services improve health outcomes. In a budget-neutral system, every additional service also drives down payment per service, contributing to the “death spiral” many clinicians feel in today’s predominantly fee-for-service environment.
That said, much of what is labeled ‘value-based care’ today is really cost containment disguised as payment reform. Discounting episodes, adding reporting requirements and shifting risk to physicians are not true reform.
The real challenge is delivering the right care at the right time for each patient’s condition and circumstances. A technically perfect, low-cost operation that leaves a patient no better off is still low-value care. Models that start the clock at the decision to operate, such as procedural bundles, largely miss that point. We need payment models organized around the patient’s condition, with integrated teams accountable for the full spectrum of musculoskeletal care, including surgery when appropriate, and recovery.
That requires rigorous measurement of pain, function and quality of life, using those outcomes to guide shared decision-making and holding clinical teams accountable for results. Payment should follow those outcomes. If we say we value outcomes but continue to pay surgeons primarily based on RVUs, we should not be surprised when volume is incentivized and reimbursement per procedure continues to fall.
Payers also need to be part of the solution. They cannot demand accountability while withholding useful data, increasing administrative burden and offering contracts that make high-value care financially unsustainable. Meaningful risk adjustment and protection for clinicians who care for complex patients are also important considerations.
Surgeons should lead this change, not resist it. If we do not define value around outcomes that matter to patients, insurers and investors will define it in ways that serve their interests. We should be building a system where helping a patient avoid an unnecessary operation is valued just as much as performing a necessary one exceptionally well.
Shivi Dixit, RN. Orthopedic Senior Clinical Program Manager, Providence St. Joseph Hospital (Orange, Calif.): Spine and orthopedic care should move toward value-based payment because reimbursement should reward meaningful patient outcomes rather than procedure volume alone. However, spine care is clinically heterogeneous, with wide variation in diagnoses, comorbidities, baseline function and treatment needs. Accordingly, any value-based model must incorporate robust risk adjustment and measure safety, pain, function, quality of life and durability of improvement — not simply reductions in cost.
Achieving this transition would require coordinated accountability across surgeons, hospitals, payers, primary care, rehabilitation providers and patients. Shared standards are needed for patient selection, preoperative optimization, discharge planning, post-acute placement and follow-up. Reliable patient-reported outcome measures and interoperable data should track recovery across the episode. Patients should receive clear education and support to address modifiable barriers, while rehabilitation services should be based on consistent clinical and functional criteria. Patient accountability may also be appropriate when a preventable readmission is directly attributable to a documented failure to follow an agreed-upon care plan; in such cases, a modest copayment could be considered. Any policy should include independent clinical review, clear advance disclosure and exemptions for complications, financial hardship, limited health literacy and barriers to obtaining recommended care.
Payment arrangements should distribute savings and risk fairly and reward appropriate patient selection, effective coordination and high-quality outcomes. Bundled payments may work for well-defined episodes if they include safeguards against avoiding medically complex patients and exceptions for unavoidable complications. Fee-for-service may remain appropriate when episodes are difficult to define or risk cannot be assigned fairly. Therefore, the most defensible approach is a measured transition supported by transparent data, aligned incentives, equitable patient engagement and shared responsibility across the continuum of care.
Thomas Fondren. CEO, Advanced Orthopedics of Oklahoma (Tulsa, Okla.): Value-based care is probably inevitable. It is vital that we all agree on what exactly value-based care is. Right now, under fee-for-service, we get paid per visit, test and procedure. In my opinion, value-based care flips that. We should get paid for the result: Did the patient get better, and what did it cost to get them there? In spine and ortho, that could mean a bundled price for an episode of care, shared savings or penalties tied to quality. The premise of value-based care is to pay us for getting patients better, not for how much we do.
Here’s the problem. Surgeon reimbursement in spine and ortho has been going down for years. Medicare keeps cutting, commercial payers follow along and our costs keep going up. So when a payer says ‘value-based care,’ a lot of surgeons hear ‘another way to pay me less.’
Then there’s prior authorization, which has taken over our surgical process. We have people whose whole job is fighting payers to approve MRIs, injections and surgeries the surgeon already knows the patient needs. More than 98% of our peer-to-peer discussions end in approval. If payers want us to take on risk, they should ease the barriers to treatment. Right now, most of them want it both ways.
We are building nonsurgical bundles for self-funded employers, starting at the first visit. Employers can sign a direct contract with us and get transparent pricing with quicker access. If surgery is indicated, then a surgical bundle will be purchased. Our customers’ biggest concern is getting employees back to work, so that is what we focus on.
Value-based care can work in orthopedics. But payers must bring something transparent and feasible to the table. The devil is in the details.
Robert Hirschl, MD. Neurosurgeon, Orlando (Fla.) Health Neuroscience Institute: Value-based payment is one of those concepts that sounds excellent in theory but is extremely difficult to implement in practice. One of the biggest challenges is agreeing on how to define and measure ‘value.’
Most of the parameters we currently use focus on the acute-care setting — for example, whether a patient was readmitted or developed an infection within 90 days. However, in spinal fusion cases, we may not know whether the surgery was truly successful for years.
For example, suppose Surgeon 1 performs an operation that costs X, and the patient does well for 18 months before developing severe pain due to a pseudarthrosis and requiring revision surgery. Surgeon 2 performs the same operation at a cost of X + Y, but the patient achieves a solid fusion and remains asymptomatic for 10 years. Which surgery provided the greater value? The answer may not be apparent until years later.
A second concern is access to healthcare professionals. We already have a shortage of providers. If we fail to incentivize surgeons to work long hours, weekends and holidays, access could become a serious problem, and patients will not be satisfied with the resulting delays. Many patients are already frustrated that they must wait six weeks, often in significant pain, just to see a surgeon. Moving away from fee-for-service could make those wait times even longer.
When we discuss replacing fee-for-service with value-based care, we are often talking — at least in part — about reducing the number of procedures performed. That is the primary mechanism through which these models lower costs.
My personal belief is that meaningful reductions in healthcare spending will not come primarily from providers, who account for only a small portion of total healthcare costs. Instead, greater savings could come from insurance reform and reducing administrative bloat. The healthcare system continues to focus on lowering costs by placing more pressure on providers, even though a better return on investment may come from reforming insurance practices, reducing excessive insurance company profits and administrative complexity, and streamlining the processes required to deliver care.
Stephen Hochschuler, MD. Co-founder, Texas Back Institute (Plano, Texas): Value-based care is already occurring. Healthcare at 18% to 22% of GDP is absurd, and with an aging population, it can’t be sustained, so things have to be done. Value-based care makes sense, but it has to be based on what you do: the indications, the contraindications, your results and what it costs to get there. When it first started, it was, ‘Do you like your doctor?’ That’s not enough. AI is going to change that. We’re going to measure things and learn very quickly why the same procedure costs one amount in New York, another in Texas and another in LA. Physicians are good at looking at data and responding. If one surgeon is using an antibiotic that costs 10 times what another surgeon uses, he’s going to question why, especially if he owns part of the production. If value-based care is built on the right things, AI will make all the difference, and entrepreneurial physician organizations will take that and go at risk.
I was in the military for two years, and what I loved about it was that you had to justify to your department why you were doing something, and if you had a complication, you reported it. You didn’t need insurance approval. You did what was necessary, nothing more. And no one could say you did it for the money, because you got the same salary whether you operated or not. If we were ever to move toward a government system, what worked in South America is a model I actually like: In the morning, you work for the government, and in the afternoon, you have your own private practice. It’s a mix.
Leslie Jebson. Systems Administrator, Orthopedics and Sports Medicine Network, Prisma Health (Greenville, S.C.): I think there is utility in advancing spine and orthopedic care toward value-based payment models, because traditional fee-for-service models reward procedure volume and do not tie payment to patient outcomes. However, the transition is far more complex in spine and orthopedics than in other specialties due to variability in patient populations and longer recovery windows that do not fit neatly into standard 90-day episodes.
Michael McCaslin. Managing Director, CBIZ Advisors (Indianapolis): I believe the answer is ‘yes’: Spine and orthopedics should be moving toward value-based care. The ultimate issue is the lack of alignment among all of the players involved in healthcare.
The first question to be addressed is, ‘Should healthcare be driven for the benefit of patients?’ The obvious answer is yes, but the core of the problem is that healthcare is driven by suppliers whose self-interest far exceeds their interest in the patient. These include:
Payers, which are publicly traded and answerable to shareholders. When there are savings in the cost of care, those never make it to the patient population, because payers say they need to raise rates the next year due to expected increases in healthcare usage and related costs.
Device companies, which are publicly traded and answerable to shareholders.
Pharmacy companies, which are publicly traded and answerable to shareholders.
Hospitals, many of which are tax-exempt but clearly for-profit, or are publicly traded and answer to shareholders, or employ physicians to ensure continued use of their expensive inpatient ORs and HOPD departments.
ASC management companies and joint venture owners, many of which are publicly traded and answer to the stock market or investors rather than just patients, or that bring in capital partners.
Private equity-owned healthcare entities.
And lastly, physicians, who are really the only people qualified to make appropriate healthcare decisions on behalf of patients: the right care, by the right provider, at the right time, in the right facility, for the right cost and with the right outcome.
No one in the care supply chain wants to take a reduction in their economics. Value-based care makes a reasonable assumption that outcomes will be the same or better at a lower cost to the patient or employer. Payers are not interested in this unless they control the first dollar to ensure they still meet Wall Street’s profit expectations. The same goes for PBMs; hospitals, which don’t want care moving from their inpatient facilities to less expensive outpatient facilities and so hire physicians to guarantee inpatient surgeries; and ASC companies that are joint ventured with physicians. ASC companies generally refuse to publish prices under bundled payment programs, which are popular in direct-to-employer contracting, because they refuse to take less than their current contracted rates, which vary case by case. A fixed rate per case may leave money on the table for ASC entities.
And maybe the worst of all are the politicians. Healthcare entities are some of the largest financial contributors to politicians, all in the name of protecting their economic interests.
The sad part of all of this is that average healthcare spending per U.S. citizen is around $15,000. If this were cut in half, employers and citizens would have more disposable income that would certainly be plowed back into the economy and replace all of the jobs politicians fear will be lost if they don’t preserve healthcare the way it is.
For value-based care to work, physicians have to be given the money and choose how it should be spent on each patient. A substantial part of their pay would then be based on quality, cost and value, giving them a significant economic stake in maintaining quality and outcomes at a lower cost. However, this cannot be like BPCI, where there was a race to the bottom and CMS kept cutting payments.
Right now, there are too many cooks in the kitchen trying to preserve their economics, which means a significant transition to value-based care faces more barriers than it has true proponents.
Richard Menger, MD. Vice Chair of Neurosurgery, Director of the USA Spine Institute and Chief of Complex Spine Surgery, University of South Alabama (Mobile, Ala.): Surgeon pay is where most value-based models fall apart. Too many of them push the risk onto the surgeon while the hospital, the payer and the device company keep the savings. Surgeons take on the downside of complications and readmissions they only partly control, carry the extra paperwork and get paid late, after reconciliation. Meanwhile, the pressure to avoid complex, high-risk patients builds quietly. If value-based care is going to work in spine, surgeons need a real share of the savings, protection from outliers they can’t control and measures they helped design. Otherwise, it’s just another pay cut with a better name.
Fee-for-service still makes sense wherever the episode can’t be clearly defined. That’s the challenge. The goal isn’t necessarily fewer operations in a cherry-picked time horizon. It’s the right operation, done once, in the right place.
Gina Rowland, MSN, RN. Director of the Orthopedic Institute, BayCare Health System (Clearwater, Fla.): I think orthopedic care has already made significant progress toward value-based care. Between CJR, BPCI Advanced, TEAM and the upcoming CJR-X model, we have had years of experience with episode-based reimbursement, quality metrics, cost accountability and care coordination across a 30- and 90-day continuum.
I do think orthopedic care should continue to move toward value-based systems; however, I believe the bigger challenge is how we sustain and evolve these operating models over time. We have spent years building capabilities around episode management, and the question is how we translate lessons learned into a sustainable model rather than continuing to build processes around each new program.
Ultimately, we need to leverage our experience in value-based care by simplifying how we deliver and measure value, sustaining the improvements we have already achieved and continuing to identify areas where we can improve outcomes, reduce variation and lower the total cost of care for orthopedics.
Neil V. Shah, MD, Orthopaedic Spine Surgeon, BronxCare Health System (Bronx, NY): I think a shift to value-based payment is a great concept in theory, but it will be very complex to implement in practice, and how ‘value’ is perceived depends on the stakeholder. Hospitals may place value on reduced lengths of stay and readmissions, while surgeons who operate out of ASCs, and perhaps own stakes in their facilities, may value streamlined costs for implants, equipment and sterile processing/CPD operations. For CMS, value may lie in reducing reimbursement without a perceived compromise in quality of care. What measures would CMS then use to support that claim?
I believe the first step would be to reach a collective agreement on where value should be prioritized. Then, steps could be taken toward shifting to or introducing value-based payments. My hope is that surgeons are equally represented at the table when it comes time to determine this.
Robert Tatsumi, MD. Orthopedic Spine Surgeon, Oregon Spine Care (Portland, Ore.): Implementing a successful value-based payment system requires a team-oriented approach that follows a standardized care pathway. The Bundled Payments for Care Improvement (BPCI) initiative for total joint replacement demonstrated that this formula leads to decreased costs while maintaining quality. Using a care navigator helps reduce health disparities by improving patient communication and providing preoperative and postoperative resources throughout the episode of care.
Accounting for patient risk is a hurdle for value-based payment model success. Some programs implement exclusionary provisions to keep the costs or complications associated with higher-risk patients from reducing bonuses. Creating a risk adjustment factor is important to prevent adverse patient selection for the sake of increased physician compensation.
Applying a value-based spine pathway is most successful for a subset of elective surgical procedures where operative time, operative costs and postoperative resources are similar. A risk adjustment provision will incentivize surgeons to strive for excellent patient outcomes regardless of health disparities.
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