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ASCs, value-based care and the race to the bottom: key thoughts on what makes a winning bundled payment

As payers navigate the value-based care landscape, they are continually seeking ways to provide better member experiences that deliver higher quality at lower costs.

One avenue to achieve these three goals is to move procedures from the outpatient hospital setting to ASCs.

At Becker's 17th Annual Future of Spine + The Spine, Orthopedic and Pain Management-Driven ASC Conference in Chicago, Humana hosted and moderated an executive roundtable with Brian Covino, MD, an orthopedic surgeon at Knoxville-based OrthoTennessee, and Donald Schreiner, CEO of Rockford-based OrthoIllinois, to discuss barriers to using ASCs and how to overcome them.

Patient access to ASCs may be limited

In some markets, there isn't enough capacity in ASCs to meet patient demand. Dr. Covino's ASC recently added two procedure rooms to the existing six, which has helped. "Last year, we handled between 4,100 and 4,700 cases. This year, we've done almost that many procedures during the first five months alone. We are doing about 40 more joint cases per month and all our other procedures have increased too," said Dr. Covino.

Another aspect of ASC access relates to payer policies. Medicare does not currently reimburse for total joint replacements in the ASC and commercial insurers are just beginning to realize the benefits of outpatient total joint replacement for appropriately selected patients. Some Medicare Advantage programs include a waiver that allows members to use ASCs, but without approval from a cooperative insurer, surgeons are unable to receive payment for total joint replacements in the ASC.

Not every patient is a good candidate for outpatient ASC procedures

To identify patients who would be a good fit for an outpatient ASC procedure, OrthoIllinois uses a scoring system that evaluates factors like body mass and various comorbidities. Before surgery, conditions like diabetes and sleep apnea must be managed and smokers are typically placed in a cessation program.

Although selection processes are designed to find patients who are best suited for outpatient procedures, ASCs still have protocols in the event that a patient can't go home within a few hours after surgery. Depending on state regulations, ASCs may be able to build a 23-hour stay unit, but that can be expensive.

In the future, OrthoIllinois may decide to add a skilled nursing facility on the surgery center campus. The building would be connected to the ASC but would be owned and operated by a separate company. "This solution could turn the ASC into a virtual hospital. We are seriously considering it," said Mr. Schreiner.

Controlling the entire patient experience can control costs

One way that ASCs control costs for procedures is to manage each stage of the patient experience. OrthoIllinois, for example, has its own therapists who provide pre-op evaluations for patients, as well as postoperative therapy. The pre-operative meetings are helpful because the therapists may discover that patients are not good candidates for an ASC.

OrthoIllinois encourages patients to return to the ASC for postoperative visits. "We have nurse navigators or case managers. In addition, each physician has a primary nurse. The more you take control, the more you can control the costs," Schreiner explained.

Value-based payments and avoiding the "race to the bottom"

Payers involved in value-based systems share data with providers in an effort to show where they are doing well relative to their target prices and where they could improve performance. Dr. Covino explained, "The data we get from Humana is very actionable. It's easy to figure out where the savings is across the group."

Mr. Schreiner agreed. "Humana's quarterly reports tell us how we're doing in terms of where money is spent by each doctor. We get a clear score by doctor."

In some cases, payers' target pricing can be frustrating. Twenty years ago, in Knoxville, hospitals were losing money on Medicare patients. In response, healthcare providers lowered the costs significantly. When Bundled Payments for Care Improvement was introduced, Medicare looked at those costs and then created targets that were even lower.

"Over three years, we saved Medicare $11 million and then we had to pay them back, as a reward. When you talk about fair targets, that is unfair. With Humana, we've had more reasonable targets for bundles. It's a win-win because it saves money for members and for Humana," said Dr. Covino.

Brent Stice, panel moderator and associate vice president for value-based program operations and analytics at Humana, added, "We've tried to be thoughtful about the 'race to the bottom.' We want to drive change, while also creating targets that are realistic."

The future of bundled payments

Almost every payer is starting to adopt bundled payments. To date, most insurers have focused on high-ticket, high-acuity procedures like spine, joint, shoulders and knees. Some have expanded to more routine procedures such as colonoscopies.

Humana, which offers a maternity bundled payment program in addition to its orthopedic bundled payment programs, is taking an incremental approach as it plans to implement additional types of bundled payment models. "We don't want to launch 50 different bundles and then not be able to manage them. So far, we have rolled out bundles that we think will be successful and will generate learnings for us," said Mr. Stice.


While some obstacles exist to transitioning patients to ASCs, the evidence suggests that careful patient selection in combination with thoughtful payer policies can benefit insurers, patients and providers. Humana's work with OrthoIllinois and OrthoTenessee illustrates the power of ASCs to transform today's healthcare market.

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