Orthopedic practice among the first to pursue bundled payments with private payers

The largest orthopedic private practice group in the country hopes to be among the first to negotiate bundled payments for seven surgical procedures.

Louis Levitt, M.D.

The Centers for Advanced Orthopaedics, which is centered in Virginia, the District of Columbia and Maryland, is currently working to develop seven initial bundles for various orthopedic surgeries, Louis Levitt, M.D., the centers’ vice president, said in an interview with FierceHealthcare.

It will be among the first orthopedic private practice groups to participate in a bundled payment program, which Levitt said is expected to decrease patient costs and improve clinical outcomes by putting doctors in control of the patient’s entire episode of care.

Levitt, an orthopedic surgeon, has taken the lead in building the group’s bundled payment offerings which will initially include total hip, total knee, partial knee, knee scope, cervical spine fusion, anterior cruciate ligament and rotator cuff procedures.

“This is the value-based medicine,” Levitt said. “You’ve got to get the best value for the amount of effort and dollars you spend now on healthcare. Engaging the doctors in a risk-sharing environment is the only way to make it happen.”

The practice is currently negotiating with payers in the region and expects that by the end of 2017 it will have an agreement in place with the largest, Blue Cross, to begin the bundled payments, he said.

The effort is separate from mandatory joint replacement bundle program set up by Medicare. Healthcare providers in the Virginia, Maryland and Washington, D.C., region are excluded from participating in those bundles because of state self-referral laws, Levitt said.

But that hasn’t stopped the practice, which employs 169 physicians, from engaging private payers and presenting them with the seven bundles independent of the Medicare bundles. It is probably the largest attempt in the private sector to create bundles, which will be performed principally in the outpatient surgery centers and will tie reimbursement to quality, Levitt said.

How it works

“Our whole approach with the payers is if everybody wants the best clinical orthopedics at the lowest price and that’s the goal, then our negotiations with them are really a partnership. They were always our adversary," he said. "Now we are saying ‘let us partner with you. Let us take control.’”

Under the bundled payment system, the medical practice and payers will agree on the cost of the seven procedures, based on the historical costs of care. Then it will be up to physicians to manage the care of patients, not only the surgery, but the entire episode—from the pre-operative stage through to rehabilitation for 90 days after surgery, he said.

If doctors can be innovative and reduce complications and prevent hospital readmissions, the practice will benefit. But the practice also takes on risk.

“Our goals are to reduce the cost of care and still provide the same excellent customer service,” he said. At the end of the 90 days, the practice will sample and survey patients to ensure they have good functional outcomes and also report a good experience.

Levitt said the practice believes it can offer bundles for the procedures at a better price than hospitals. However, if the practice agrees to a hypothetical $10 bundle and the patient’s care costs it $15, it will have to write a check to the payer for $5 at the end of the bundle, he said.

Because of those state restrictions, the practice will engage in retrospective bundles, where the insurer will pay all vendors. At the end of six months, payers will take a look back at how much was spent on care and determine the payment to the practice. The Centers for Advanced Orthopaedics intends to rehab patients in its own physical therapy sites.

With physicians invested in the process, patients should get great care, he said. The practice will track patients to see who is not achieving milestones in physical therapy, for instance, and can order interventions. In the pre-op period, a nurse case manager can follow up if patients have not had a pre-op physical exam or dental check. “The patient should see a great deal of attention paid to them,” he said.

The future of care?

“This is a whole new approach. I think eventually every surgery will be part of a bundle payment,” Levitt said.

With bundled payments, Medicare data has shown a 14% to 20% savings on joint replacements after two years, he said, and that may convince the new White House administration to remain committed to the program. In March, the Centers for Medicare & Medicaid Services released a new interim rule that delays the expansion and implementation of major bundled payment initiatives raising questions about the future of the program.

RELATED: CMS holds off on bundled payment expansion, implementation

Newly appointed Health and Human Services Secretary Tom Price is not a fan of mandatory bundled payment initiatives but may like the data showing savings.

“Tom Price was against it until the data came out. Now he’s for it,” Levitt said. “It’s really reducing the cost of healthcare. It was a government idea that, strangely enough, actually is working.”

RELATED: 10 things to know about HHS secretary Tom Price

The seven bundles represent 80% of all the surgeries done at the Centers for Advanced Orthopaedics, accounting for about 10,000 surgical procedures a year. The practice currently employs 393 care providers that include its surgeons, physician assistants, nurses and physical therapy providers.

Creating bundles is not without challenges for a practice. “The biggest challenge is you have to be able to collect data,” Levitt said. “You have to know where your patients are at all times.” Any practice taking on such an endeavor must have expertise in the benchmarking of care. The Centers for Advanced Orthopaedics has a full-time data analyst.

Negotiating with payers is also a slow process. “I’m not going to tell you this has been an easy negotiation with the payers. It’s like pulling teeth to get the payers to respond,” he said. And it helps to have a large practice. “There’s some strength in numbers when it comes to affecting change,” he said.