Bundled payments in the ASC arena — Healthcare professionals discuss key components for profitability

Bundled payments still possess a veil of mystery — the term means a variety of things to different people.

"There are no standards in bundled payments," said Julie Greene, CEO and administrator of Muskegon (Mich.) Surgery Center. "When someone says 'bundled payment,' you have to ask what they mean by that."

Ms. Green and other healthcare professionals discussed their experiences with bundled payments in ASCs during a panel titled, "Key thoughts on bundled packages and services for ASCs," at Becker's 14th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference + The Future of Spine in Chicago.

Lise' Mundwiller, RN, director of clinical and surgical services of Peoria, Ill.-based Great Plains Orthopaedics Ambulatory Surgery Center; and Tim Fox, PT, DPT, GCS, CCI, founder and chairman of Cherry Hill, N.J.-based FOX Rehabilitation, joined Ms. Green on the panel.

"When you're putting bundles together, you're also creating synergies between groups that are going to work effectively together for a better patient experience, a very high quality of care," said Ms. Green. "Long-term, it's going to better for the payer because of how that care is coordinated."

Working with bundles
In the current landscape, Mr. Fox's private physical therapy practice still bills in a fee-for-service model within the bundles. He noted a 50 percent to 85 percent reduction on post acute costs by going directly to a house call model, in contrast to home health model.

"We've added some tremendous value to our partners in bundling models by educating and having them not go for the 'easy button' home healthcare to reduce costs and expenses surrounding bundles," said Mr. Fox.

For total joints, Ms. Mundwiller's center has bundled services with implants and anesthesia carved out of the bundle. The bundle includes preoperative first 90 days, surgery and post-operative.

"We were able to work out a very good, lucrative deal for us," said Ms. Mundwiller. "Our COO negotiated with this particular payer for all patients upcoming." She added the payer has stayed true to the initial contract.

To test costs, Ms. Mundwiller said her lead physician visited other centers and spoke with various colleagues about bundled payments, garnering an understanding about what the center would need to be profitable under this model. Ms. Mundwiller then completed a case cost analysis.

She said bundling would catch on at a greater rate if more payers would get on board. "It's just very frustrating to get self-funded groups to really move forward that bundle," she added.

Ms. Green's orthopedic practice decided not to take part in some CMS bundling. Instead, the practice entered a co-management agreement with the hospital who wanted the bundles.

"We are still doing well in a fee-for-service world, although its' going down drastically," said Ms. Green. Still, she expressed excitement about the future because ASCs are starting to interact and develop relationships with employers. Bundled payments present great opportunities in the commercial world, she added.

"The employers are very receptive, however, we're all trying to figure out what the methodology from a claims standpoints. And I think that's the challenge," explained Ms. Green. "Self-funded employers want [claims] to go through the insurance product, so that it hits the stock cost coverage, so that it hits the information that we need from a data standpoint." Payers often don't possess this ability with the typical coding and system structure, she said.

Margins in bundled payments
Many centers will start small, bundling a few procedures with payers to start. This allows centers to avoid taking on a significant amount of risk at first, as they are testing out a few bundles to learn how to effectively manage the bundled costs.

Ms. Green chimed in that at the beginning, "you're not taking the same kind of risks that you do as you learn exactly what your margin can be, and you're willing to take a little bit more risk to do more patients in this model."

On the practice side, she noted they have opted out of the Bundled Payments for Care Improvement model because they do not see a positive margin in their market for cost-shared savings. "You do have to be very careful about what kind of risk and what population you're talking about, in the bundle payment," said Ms. Green.

As a rehabilitation group, Mr. Fox said they dive into how post acute care is managed, with a particular focus on the outcomes and patient experience. "That's where we see a pickup where we can deliver to our partners," he said.

Careful selection of patients
Within bundled payments, patient selection is crucial.

Ms. Mundwiller said her center not only considers the patient's health, but the patient's caregiver's ability to help throughout the recovery process. "Do they have buy-in? Are they going to support this patient coming home immediately, post-op?" asked Ms. Mundwiller. Of the small number of total joints they've performed, Ms. Mundwiller's center has seen no readmissions, transfers or infections.

"We really have a good selection process of our patients, and that's the main driving force," Ms. Mundwiller said. "It has to be someone who is highly motivated, someone who wants to get back into the workforce or back into their normal routine."

Mr. Fox agreed, noting more physicians are aware of where their patients are heading post-discharge.

In-house or outsourced services?
Groups that choose to offer physical therapy services in-house may face challenges in new regulations in the increased audit of Medicare Part B and CMS scrutiny, said Dr. Fox. "These orthopedic groups are not going to have the standards and policies in place to be able to regulate their staff the way that they need to," he added.

If vertical integration makes sense economically, it may be wise to put everything under one roof, added Ms. Green. "Can you build that core competency and do it just as well as what you can if you are clinically integrated network with very good partnerships, but it's not internally vertically integrated?"

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