Value-based payments are coming for orthopedics: Are you ready?

There is no doubt that the government is accelerating its shift to value-based payments, where physicians are rewarded — to an increasing extent — for quality, rather than quantity of care. And it's likely that private payers will follow suit. So, how have orthopedists been affected? How will they be affected in the future? What should they be doing now to prepare for success?

The government initially developed programs such as Meaningful Use with primary care providers in mind, marginalizing specialists. "Orthopaedists, and other specialists were accommodated as an afterthought and many managed to meet meaningful use by claiming multiple exclusions," says Lynn Scheps, Vice President, Government Affairs and Consulting Services for Montvale, N.J.-based SRSsoft, an EHR and HIT solutions provider. Clinical quality measure reporting for meaningful use, and even PQRS (if providers report electronically, which the government encourages), requires that orthopaedists report extraneous measures. They must report on nine quality measures, but only four, or possibly five, are directly relevant to their specialty.

But now the government is shifting focus to value-based payments. Having implemented the Value-Based Payment Modifier over the last few years, this shift is now taking the form of bundled payments, accountable care organizations and the Comprehensive Care for Joint Replacement programs. The CCJR began on April 1 and impacts 67 geographic areas.

"Medicare is trying to shift the risk for cost and quality to the providers and away from Medicare," says Ms. Scheps. CMS recently stated that it is meeting its goal of 30 percent of 2016 payments being value-based; by 2018 the agency intends to increase that number to 85 percent.

Effective in 2017, the Medicare Access & CHIP Reauthorization Act of 2015 will replace the current MU, PQRS, and V-BPM and reward physicians based on their ability to improve quality and lower costs. Medicare payment adjustments associated with MACRA will begin in 2019.

Under MACRA, physicians will either participate in the Merit-Based Incentive Payment System or the Alternative Payment Models. Medicare claims the new program will prove more meaningful for specialists and offer more flexibility.

Initially, most physicians will operate under MIPS, which is a combined weighted score of quality, resource use, meaningful use and practice improvement scores. The exemptions from MIPS include physicians who are in their first year of Medicare billing, providers whose volume of Medicare payments or patients fall below a still undefined threshold and providers qualifying for payments under APMs with associated MIPS-exempt bonuses.

APM participants must reach a volume threshold of Medicare payments or beneficiaries paid through the APM. This model involves ACO participation and the Medicare Shared Savings Program. Nearly 40 percent of primary care physicians and 31 percent of specialists are involved in ACOs, with 6 percent of primary care physicians and 5 percent of specialists planning to join ACOs this year, according to Medscape's "Physician Compensation Report 2016."

Between 2019 and 2024, APM participants will receive 5 percent lump-sum bonuses and transition into more risk-based payments.

"Because of the volume requirements, I don't think many orthopaedists will initially be evaluated under the APM option; most will have to participate on the MIPS side for the first few years," says Ms. Scheps. "But physicians are trying to position themselves for success in the future by dipping their toes into the APM/ACO world where opportunities exist." (Update: In the proposed MACRA rule, released on 4/27/16 subsequent to the writing of this article, CMS specifically excludes CCJR and other bundled payment programs from the list of qualified APM options, with obvious implications for how orthopaedists will participate in MACRA.)

Managing the data
The new payment models rely on quality and cost data to inform value. No one in the healthcare industry is crystal clear on what data analytics implies — from the data needed, to what to do with the gathered data. "It's still early, but physicians are, thinking, planning and critically observing what other practices are doing," says Ms. Scheps.
‘Ultimately, they want to position themselves to be valuable participants in ACOs and other risk-sharing arrangements in the future.”

Orthopedists are first focusing on understanding how their patients are doing right now. Current quality measures tracks only the rate at which patient outcomes surveys are completed, but physicians want the tools to analyze the actual outcome itself. By analyzing their current performance and outcomes, orthopedists can strategize how to improve outcomes and control costs.

"Knowing what you need to capture is the first step and that's where we have a deviation from the current regulation," says Lester Parada, Senior Implementation Manager at SRS. "What the practice wants to capture and analyze is different than what they are currently required to capture and analyze."

Once a practice decides which data to gather, the next step involves obtaining the proper electronic health record system to successfully collect the data.

"Practices want the best system for each need, instead of one system that does it all poorly," says Mr. Parada. Actionable data allows orthopedists to intertwine the data from different systems to enhance how they practice medicine.

"Moving forward, it will be important to get data from additional sources outside of the practice to fully understand the quality and cost of the care you provide," says Ms. Scheps. Quality measure reporting will continue to be an important, and required, input to pay-for-performance.

Winners and losers
The shift toward value-based payments is driving two key trends among independent orthopedists: practice consolidation and vertical expansion. Larger groups benefit from:

• Pooled resources to build a data gathering infrastructure
• Benchmarking and data-sharing capabilities
• Improved quality
• Enhanced ability to manage costs
• Attractiveness to ACO partners

"It's usually hospitals and medical homes that manage the bulk of expenditures for the care of its patients, but surgeons represent a critical input to the total and want to present themselves in a positive light," says Ms. Scheps. "If they can produce high-quality care by adopting proven protocols, then cost reduction naturally follows."

The larger groups are also preparing for bundled payments and want to control as many aspects of that episode as possible. Large orthopedic groups are now expanding vertically to own MRI, physical therapy and ambulatory surgery centers.

"If the risk is at the practice level, the surgeons want to control that," says Mr. Parada. "They want to control as much of the continuum as possible and that's where the data becomes fuzzy. There isn't really good data on the average cost for the continuum or how much the outcomes should change."

This year CMS reported that under the Value-Based Payment Program, physicians in 128 groups received reimbursement rate increases due to superior performance while physicians in 5,477 groups saw a 2 percent payment cut for poor performance or not reporting. All physicians falling in between saw no change to their payment rate. However, in the future (under MIPS), it will not just be the groups at the extremes (of quality and cost) that will be impacted by payment adjustments — the adjustments will be implemented on a sliding scale, based on distance from the prior year's average performance level. "So, most physicians will see some adjustment, either positive or negative. The fact is, there will be winners and losers," says Ms. Scheps.

If the government is successful in lowering costs and increasing quality, insurance companies will likely develop more pay-for-performance programs.

Preparation for the future
Define your business strategy; is it growing through acquisitions or mergers, or service expansion to increase the continuum of care?

Additional steps for 2016 include:

• Define your regulatory strategy and make sure partners understand MACRA
• Evaluate payer mix, paying close attention to Medicare
• Define your environment — is an ACO available?
• Define your technology needs — can your current tools support your future goals?

In 2017 MACRA will begin and could require workflow changes. Next year plan to:

• Experiment with alternate payment programs such as PBCI and CCJR
• Develop clearer outcomes definitions and benchmarks with data analytics
• Optimize processes with hard data and implement changes to drive quality and efficiency

The guidance above is the result of hundreds of conversations SRS experts have had with many of the company's nearly 4,000 orthopedic specialists and their administrators. It guides the company and directs strategic investments over the next two years.

The company has several projects in the works that will continue to drive efficiency and productivity while supporting compliance with regulatory requirements. The first is the patent-pending Smart WorkflowsTM, which was recently introduced. It allows for user-specific workflows and protocoling, which streamlines data collection and visit documentation. Later this year, the company will release the first iteration of the Flexible Data Model. This will allow practices to capture as discrete data any piece of information they deem important and will make that data interoperable. Given the uncertainty about the regulatory programs or ACOs, or your local environment, this feature intentionally provides practices with flexibility and choice. Speaking of choice, SRS believes practices want technologies that fit them, which is why the company is developing APIs that will support any system with which a practice may want to integrate. The company calls this their Best of Breed strategy. They have outstanding partners with whom they already interface, but should customers have a better fit in mind, SRS empowers them to do so.

With these investments happening now and SRS’s deep knowledge of orthopedic needs, they know that they can take your practice into the future without compromising on what matters to your practice, physicians and patients.

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