The shift to value-based care and the movement away from fee-for-service payments has spurred growth in the adoption of bundled payment models. CMS and private insurers are focusing on reducing costs while maintaining care quality, paving the way for bundled payment adoption in the healthcare system.
ASCs, with their ability to provide high quality care at lower prices, can create successful bundled payment programs to adapt to the value-based care landscape if they choose the right partners and procedures and manage risk successfully.
The risk involved with bundled payments
Adopting a new payment system comes with risks, and having an idea about how much risk to take on as well as understanding expectations for payment for different services are just some of the details for ASCs to consider when developing bundles, according to Daniel Murrey, MD, chief medical officer for Surgical Care Affiliates.
"There are several aspects that help determine which specialties are most effective in the bundled payment space. One is having few compounded variables that will change the risk profile," Dr. Murrey said. "Procedures like total joint replacements or spinal fusion procedures that have a homogeneous patient population make it easier to create a single price point and expectation for what the cost expenditure is going to be."
One of the other risks involved with creating bundled payments for orthopedics is variable costs for physician preference items.
"For instance, if you are doing a joint replacement, the cost of the implant is often the most variable piece of that, so [ASCs] should address if they have a program in place that gives them the confidence that they can manage that expense," Dr. Murrey said.
Local and market-specific expenses can also create risks for ASCs when developing bundled payments, said Brian McCrone, vice president of the performance solutions division of medical device manufacturer Stryker, which helps ASCs navigate the bundled payment landscape.
"There's a lot of expenses that you would incur to create and develop a bundle, including lawyers making sure the regulatory environment within your market or state doesn't preclude these types of arrangements," he said. Expenses can also manifest in the form of not having sufficient claims data that ASCs can use to set target prices
"[ASCs] take on significant financial risk agreeing to participate in a bundled payment program if they haven't agreed to a target price that's going to work in their best interest," Mr. McCrone said. "[ASCs] who set a target price commit to all procedures on average being at or below that target price. A major risk here is the fact that if claims come in above that target price, [ASCs] are agreeing to cover that difference."
If ASCs are looking for ways to lessen the risks of bundled payments, contract negotiation is an area to pay attention to.
"Is the ASC at risk for things that are really out of its control, or is it taking on risk on based on performance?" Dr. Murrey said. "In other words, if you limit the risk to just the types of things that happen in the OR setting, then that's an easier bundle to manage than if you're taking actuarial risk. I think trying to limit those things and also think about the unforeseen circumstances are elements ASC should look into within the contract."
Beyond the contracts and the ASC itself are the physicians, who need to be on board for a bundled payment program to take off, according to Jim Reilly, senior principal at Sg2.
"New payment models, which include taking risk, are often met with concern and skepticism if physicians aren’t sufficiently educated and engaged on the strategy of the model," he said. "There also can be concern over who 'owns' the bundle — the surgeons or the ASC. Developing a trusting partnership early is critical to success."
Finding the right partners
Aside from ASC physicians, outside partners and others within the ASC can play an important role in developing a successful bundled payment program.
"I wouldn't recommend ASCs do this on their own because there's a lot of data and negotiation involved," Mr. McCrone said. "You're going to need legal support, like a law firm that understands the regulatory environment around structuring these types of relationships, making sure they can navigate Stark and anti-kickback laws along with that. You're also going to need a partner that understands data and can offload some of the risk."
Often, finding the right partners involves examining the bundle itself, including how it will be worthwhile for all stakeholders.
"It's not just the surgeon, you have to partner with the anesthesiologist, the health plan and the employer group," said Stephen Kinsley, vice president of payer engagement and strategy for Surgical Care Affiliates. "It's not just about implementing the bundle and saying 'here's the service and the rate,' it's stepping back and removing the blinders and saying, 'if we implement this bundle, what are all the parties involved in this bundle, and how does each one benefit from it?'"
Negotiating with payers
In addition to determine which partners will benefit from bundled payments, the payer will often consider how it will benefit them. The negotiation experience can vary widely between markets and the payers in them, Mr. McCrone said.
"There's really no one-size-fits-all approach to it, which is why ASCs need a partner. Generally speaking, I would say it makes sense to start with a lower overall risk structure, so you can get comfortable with the bundle and the risk you're taking as an organization," he said. "Once an ASC gets comfortable with a bundle, they can take on more and more risk. You don't have to feel like you have to have everything done at once."
Aside from direct contact with payers, ASCs need to do some internal work when developing bundles, including collecting benchmarking data, determining value created by bundles and creating a budget that details costs.
"Consider starting with a smaller day-of-service bundle and migrating to a larger episode of care. Be realistic about the administrative burden of putting the bundle in place and its long-term value and growth opportunity. Don’t just race to secure a bundle," Mr. Kinsley said.
What to expect in the next 10 years
As for what's on the horizon, ASC stakeholders can expect to see the growth of bundled payments beyond core specialties like orthopedics.
"It's just going to be a matter of time for bundles to evolve to cover a broader array of procedures to get beyond where we are now, which is largely focused on orthopedics," Dr. Murrey said. "I think as this evolves, we're likely to see procedures paid for more and more in bundled arrangements, including for those who manage chronic disease, like primary care or specialists who have longitudinal relationships with patients."
New models of caring for patients also factor into the ongoing adoption of bundled payments.
"I think the bundled payment trend is here to stay. I think as it evolves, the next step for bundled payments is a population health model, where you continue to see risk pushed down from the insurers to the providers. The sooner ASCs and physicians can get engaged in this market with partners that you're going to trust, the better off you're going to be over the next five to 10 years as the market continues to evolve," Mr. McCrone said.
"If I was running an ASC, I would be getting involved in as many different bundled payment programs as I could, and I'd be finding partners that I know are going to be there for the long term," he said.