September 10, 2012

Bundled payment model was tough sell

Contributed Photo
Contributed Photo
Dr. Steven Schutzer, co-director of the Connecticut Joint Replacement Institute, spent more than two years trying to convince an insurer to try the bundled payment model.

As Connecticut's health care industry experiments with new models of care, getting everyone to buy into the changes isn't always easy.

Just ask Dr. Steven Schutzer, the co-director of the Connecticut Joint Replacement Institute (CJRI). It took him more than two years to find an insurance company to buy into a bundled payment contractual model his organization developed that reimburses their medical providers a preset price for hip and knee replacement surgery.

The contractual model hit the market in 2010, but CJRI didn't get its first contract inked until a few months ago when Farmington insurer ConnectiCare agreed to a deal.

"We spent a lot of time marketing this, but we couldn't get insurers to buy into it," Schutzer said.

CJRI's experience is an example of how challenging — and slow — implementing changes to a health care system can be.

The bundled payment arrangement established by CJRI — called the Step Ahead Plan — is different than the traditional fee-for-service model. It is being experimented with around the country as medical providers and insurers look for ways to improve care quality and reduce costs.

The Step Ahead plan is a collaborative effort among St. Francis Hospital and Medical Center, The Connecticut Joint Replacement Surgeons, and Woodland Anesthesiology Associates. As part of an integrated continuum of care, all three providers are responsible for guiding patients through the entire hip and knee replacement surgery until they are discharged from the hospital.

ConnectiCare will reimburse the providers one value-based price. The reimbursement goes to St. Francis Hospital, which then divvies up the payment among the three providers based on a contractual agreement they've established among themselves.

Many bundled payment arrangements are a type of risk-contracting, where the providers are paid a set fee and are responsible for absorbing losses or gains if the medical care they provide goes over or under that amount.

If a patient who has heart surgery, for example, suffers a complication and has to be readmitted to the hospital, providers may not get reimbursed for some or all of that extra care.

The Step Ahead Plan doesn't go that far, at least for now. Cost overruns, if they do occur, would get reimbursed based on a fee schedule, Schutzer said.

"You have to take baby steps," Schutzer said. "There is no post-acute care warranty."

Schutzer said he started thinking about the contract form about three years ago and modeled it, in part, on a "basket of care" concept that was developed in Minnesota, in which all patient clinical services are packaged into one price for all providers.

Over the last few years, Schutzer said he approached several insurers and large self insured corporations, including Lowes and United Technologies Corp., to get a buy-in from health care payers. But no one came on board initially, so CJRI experimented with the concept on patients who were paying for surgery out of their own pocket.

Getting buy-in wasn't the only challenge. Determining the bundled payment price and getting legal and contractual agreements among all the providers, took more than a year to figure out, Schutzer said.

The process required the providers to map out each clinical step to get the patient through the hip and knee replacement surgery and identify the costs associated with them. A key component of that process included the use of a database registry that has outcome and cost information on the 12,000 or so patients CJRI has served over the years.

"Armed with this information we could form a package price for a primary hip and knee replacement," Schutzer said.

The contractual model also changes operational workflow, Schutzer said. St. Francis Hospital, for example, now acts in an administrative role as it distributes payments from ConnectiCare.

Schutzer said they have performed about 20 surgeries since their contract with ConnectiCare went into effect, and there have been no cost overruns so far. They are negotiating with two other insurance companies with the hopes of getting more deals done soon.

Schutzer said he is also interested in expanding the program to post acute care providers like nursing homes, extended care facilities or physical therapists, which would allow them to consider a more risk-based approach within the contract.

But it will take some time and experience before a continuum of care that extensive can be established, particularly in the land of steady habits.

"It's a tough nut to crack," Schutzer said. "This is all a cultural transformation."

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