Blue Cross Blue Shield of North Carolina has just started testing out its bundled payment model for knee replacement surgeries, and if performs well, the model could be pushed out to include hip replacements.
Elaine Daniels, the plan's senior strategic network consultant, says BCBSNC started modeling orthopedic bundles in 2010, began a pilot project in 2011, and recently announced two bundled payment initiatives with physician-owned Triangle Orthopaedic Associates (TOA) and Duke University Health System.
"When you're looking at doing bundles on a first pass, orthopedic procedures were easier for us because there aren't that many complications," says Daniels. "There's not a lot of leakage, you know who the care team is going to be, so there's more continuity of care for that member or patient."
Both bundled payment arrangements were announced within the last two months and apply to BCBSNC members who have knee surgeries performed at North Carolina Specialty Hospital, a facility jointly-owned by TOA, as well two Duke-affiliated hospitals, Duke University and Durham Regional.
Orthopedic procedures are generally seen as one of the easier episodes of care to fit in a bundled payment model, says Minoo Javanmardian, PhD, and co-author of a recent study showing strong consumer support for bundled healthcare.
"It appeals to patients and to providers and payers," she says. "If you get a knee replacement, there is beginning, there is a middle, and there is an end. Ortho bundles are attractive to patients because they want the problem solved and they're more likely to take a risk with a new payment model... it's easier for them [patients] to wrap their heads around it, 'I walk in, I get my surgery, my rehab, then walk away.' "
The way BCBSNC structured its knee replacement bundle includes more pre-operative care. Daniels describes the process as a "roadmap" for patients. She says the plan's utilization management nurses and TOA's pre-operative care team work together to determine the date of surgery as well as several things to reduce variability and cost while increasing quality.
"TOA has a physical therapist go into the patient's home look at the home setting to see how they're going to navigate at their home after the surgery," says Daniels. "They give them [patients] PT exercises to strengthen their core, and they've got a special prep kit [for patients]... to reduce infection."
The new payment model means patients will pay one, fixed-rate bill for 30-days pre- and 90-days post-surgery for knee replacements.
Daniels gives credit to a prospective payment model for easing payment negotiations between BCBSNC and Duke and TOA, as well as determining appropriate measurement targets.
"We're using the PROMETHEUS model; it does a potentially avoidable complication analysis, and... the contract we have is we want to see a reduction in the percentage of patients who have potentially avoidable complications, also patient satisfaction is key," says Daniels. "We've got outcome measures that are built into the hospital stay, and then we've got outcome measures that are built into the contract post-discharge."
Daniels says BCBSNC is looking at other bundles, including chronic conditions, which is trickier because of the increased variability. But Daniels says chronic conditions "dovetail" with Accountable Care Organizations and Patient Centered Medical Homes.
"We still have a start and end date with our chronics—it's a one-year time period—and we're just starting to model it, but when you're contracting with an ACO, you're basically looking at episodes of care."
Daniels also says the plan is looking to bundle payment initiatives with outpatient care, particularly arthroscopy. In the meantime, BCBSNC is focusing on knee replacements, with hips not too far down the road.
"At TOA, we're going to review after 60 days how the knee is going, but they're right on board with moving forward on hip replacements," she says.
The reason BCBSNC decided to partner with Duke and TOA on its bundled is because it had a good working relationship with both organizations. She says getting senior management on board early on in the process helped the negotiations along, as well as in-depth study of who was likely to work best as a partner.
"We did an analysis to see 'Where's the biggest bang for our buck?' We wanted to choose partners that were doing a fair number of these procedures to begin with, and folks that we had a really good, strong working relationship, and then also those that kind of think outside the box," says Daniels.
Daniels cites TOA's place of setting and care innovations as "ahead of the curve," and Duke University is one of only seven sites in North Carolina participating in the federal government's massive bundled payment care initiative (BPCI) announced by the Centers for Medicare & Medicaid Services recently. Duke will participate as a Model 2 site, which will look at the retrospective care for an acute hospital stay plus post-acute care for percutaneous coronary interventions.
"We're still in the early stages," says Daniels. "We're going through a learning curve. We are wide open to looking at new ideas."
Jacqueline Fellows is a contributing writer at HealthLeaders Media.