UCHealth prepares for the future of health care reimbursements

Medicare mandates bundled payments for hip, knee replacements
December 2nd, 2015

Turns out it’s not required that four of UCHealth’s five hospitals prepare for the end of Medicare fee-for-service joint replacements — but they are moving forward with a plan anyway.

“We’ve already done all this planning, and it really represents an improvement in care,” said Jason Amrich, UCHealth northern Colorado senior director of orthopedics.

On Nov. 16, the Centers for Medicare and Medicaid Service released its final ruling on the Comprehensive Care for Joint Replacement Model mandate. Beginning April 1, 2016, numerous hospitals across the country will receive a bundled reimbursement for each Medicare patient joint replacement procedure based on quality measures from three days prior to the surgery to 90 days after.

Hip and knee replacements are the most common procedures that Medicare beneficiaries receive, according to CMS. On average, Medicare payments for the procedure — including the hospital stay, surgery and recovery — range from $16,500 to $33,000. CMS expects the new mandate will save $343 million over the five performance years of the model.

Up until the final ruling, all five of UCHealth’s hospitals — Medical Center of the Rockies in Loveland, Poudre Valley Hospital in Fort Collins, University of Colorado Hospital in Aurora, and Memorial Hospital’s two locations in Colorado Springs — were included in the 75 geographical areas that fell under the mandate. However, the new ruling pared down the list to 67, excluding northern Colorado and Colorado Springs but continuing to include University of Colorado Hospital.

“I think it’s where health care is headed,” said MCR and PVH Chief Operations Officer Marilyn Schock about bundled payments. “(This mandate) is an attempt to get us to where health care is pay-for-performance, and that means we have to be good. We have to provide the highest quality and patient experience, and we have to do it at high efficiency and with cost effectiveness.”

The path that got us here

In the United States, the health care payment system has long been structured to reward volume. Health care providers get paid for each admission, office visit, test and procedure. It’s called fee-for-service, and although providers want to see positive patient outcomes, they have little influence on compensation.

CMS has been slowly changing that payment model, and in 2012, it started to tie reimbursements to performance. By 2013, 30 percent of reimbursement was based on the patient’s experience, while 70 percent dealt with the clinical process of care. In 2014, CMS tied 25 percent to outcomes. And by 2015, the pie was split 20 percent based on efficiency, 30 percent on outcomes, 30 percent on the patient experience and 20 percent on clinical process.

Similar value-based strategies are intrinsic to the new joint replacement mandate, as Medicare is tying each hospital’s reconciliation payment or repayment responsibility to a composite quality score, according to Amrich. That score will be based on complications, such as infections or blood clots, within 90 days of hospitalization for elective total hip and total knee replacements, he said. It also will consider patient satisfaction scores (HCAHPs survey) and a voluntarily submitted, patient-reported outcome measure. This voluntary PRO will likely be filled out by patients toward the end of their 90 days as a way to assess their post-surgery condition (such as how well they are returning to daily activities), Amrich said.

The voluntary program

CJR is a mandatory program. However, some hospitals and private practices have been using a voluntary program in preparation for the mandate, including the Orthopaedic and Spine Center of the Rockies in Fort Collins. OCR is an independent practice that partners with UCHealth for such things as hip and knee replacements. In July, OCR decided to join the Bundled Payments for Care Improvement Initiative (BPCI), a program that operates in a very similar manner to CJR but puts the financial risk on those who opt to participate.

Health care providers in the voluntary program are not subject to the mandatory CJR program, so had UCHealth’s northern Colorado and Colorado Springs hospitals remained on the CJR list, not all their procedures would have been subject to the mandate as some of their partnering orthopedic services are participating in BPCI instead.

That’s not the case at UCH, however. Between 150 and 200 joint procedures done annually by UCH will be part of the new bundled payment mandate.

“This new program provides UCH with a couple of opportunities,” said Michael Torpey, Director of Orthopedics UCHealth metro Denver. “We are setting up the structure for effective change in the delivery of health care at our organization. The majority of these cases (orthopedic surgeries) are predictable such that we can establish a reliable process to positively impact the outcomes for our patients.”

Managing costs and quality after a patient leaves the hospital is a key component to being successful in the new pay structure. According to Amrich, 30 to 35 percent of the cost of care comes from the post-acute stage, but that’s also where about 80 percent of the variation in costs occurs.

After a person’s surgery, they are directed to either an acute rehabilitation center, skilled nursing facility, home health care program or home with outpatient physical therapy — the first two historically being the most expensive. Prior to bundled payments, many patients would go into acute rehab or skilled nursing facilities because that was the culture of care, said Dr. Dana Clark, an OCR surgeon specializing in hip and knee surgeries. But Clark said their research showed that patients who went to these facilities actually had higher rates of post-surgery complications. By encouraging a patient to reach out to their friends and family network for support after surgery, OCR was able to eliminate unnecessary admissions to skilled nursing and acute rehab facilities, and as a result, patient outcomes improved.

But for patients who have to use these facilities for reasons such as balance issues or other medical conditions that need managing, surgeons are working with those facilities to decrease the cost of care while still maintaining positive outcomes. It’s about improving quality of care and services to get those patients out of those facilities as soon as possible, Amrich said.

“Although we are calling it a bundled payment program, they are not really bundled payments because it still goes through the process and each entity gets paid, but then that payment is compared to the CMS target price. If OCR is less than that target price, Medicare pays them, but if not, then OCR pays Medicare,” he said.

UCHealth’s approach to the CJR

CMS is looking at the whole episode of care. Each bundled reimbursement is based on the particular location’s three-year average reimbursement for that 90-day window of care for a particular procedure — then minus 2 percent from that average payment. There is an element of regional price comparison factored in as well, Amrich said. If an episode of care doesn’t fall within that set reimbursement, then the hospital is liable for repayments.

“We have to look at the whole episode of care, break it down and make that pathway smoother, which in turn will be better for the patient and lower costs,” Amrich said.

This is challenging to hospitals because of the players involved — the hospital, labs, radiology, imaging, anesthesiologists, surgeons, rehab, just to name a few.  UCH has been leading the way with planning for the upcoming April 1 deadline, led by Dr. Craig Hogan and Michael Torpey. UCHealth’s orthopedic team has formed a committee that is identifying the different phases of care that need to be evaluated by project teams in hopes of creating efficiencies and lower costs.

Knee Surgery
Hip and knee surgeries will be the first procedures to see bundled payments from Medicare beginning April 1, 2016. The new mandate only includes UCH of the five UCHealth hospitals.

“CJR forces the value opportunity and engagement from all the key stakeholders across the continuum of care.  Alignment in developing the structure will be crucial to our success,” Torpey said.  “This includes all phases of patient care: pre-op, acute, and post-acute care.”
Optimizing post-acute care cost doesn’t just fall on those providing the after-surgery care.

“How you prepare your patient before surgery through such things as education also is very important in cutting those costs,” Amrich said. “This also includes assessing their risks, such as how healthy they are, how safe is their home environment — we need to anticipate any discharge challenges, consider preoperative medical management, such as controlling their diabetes — all those things will affect surgical outcomes and therefore recovery.”

This means that discharge planning starts at the patient’s first office visit, not when they are ready to leave, he added. One component of this will be a nurse navigator—someone who will oversee the patient’s episode of care, tracking closely how they are doing and shepherding them along. Currently, UCH has one navigator working in this capacity, and others are expected to be hired across the system to help in the bundled payment transition.

“Nurse navigators are overseeing the entire care pathway for the patient,” Torpey said. “They will collaborate with key stakeholders throughout the patient’s care pathway, reach out to the patient at critical times, and be a single source of contact.”

Navigators are an important aspect of our success, Torpey added. “But not to be overlooked is the patient, their family, and all the other people who are involved in the patient’s care and system redesign.” he said. “In our organization this also includes strong physician leadership, outpatient and inpatient clinical teams, as well as Epic, IT, finance, case management, process improvement, quality and data analysts — without engagement from all these teams, success will be challenging.  We are confident in our plan moving forward, and this collaboration should create an opportunity for a more streamlined health care system that sees lower costs and higher quality outcomes.

“That is what is cool,” Amrich added. “You have all these experts meeting together to talk about the flow of that particular patient. Yes, there is a financial component attached to these intentions, but what we’ll start to see is an improvement in the coordination of care, the quality of care and better outcomes.”