April 25, 2024 • 39 mins
Five Surprising Facts About Bundled Payments in Healthcare
In Episode 434 of 'Relentless Health Value,' host Stacey Richter interviews Dr. Ben Schwartz, an orthopedic surgeon and prolific writer, about bundled payments in the healthcare industry. The discussion focuses on four key surprises related to bundled payments: the all-encompassing nature of the 90-day post-surgery cost coverage; the reluctance of commercial payers to engage with bundled payment models; the shifting dynamics towards more integrated care between primary care physicians and specialists; and the complex realities of Centers of Excellence (COE) programs. The episode also highlights lessons learned from existing bundled payment models and potential future directions for more sustainable and efficient healthcare practices.
To read the full article and show notes with links mentioned as well as a full transcript, click here.
Love the show? Please consider signing up for our weekly newsletter. We'll send you an article covering the latest episode with show notes, mentioned links and a transcribed intro. Join the RHV Tribe.
06:07 Where are we in the development of the bundled payments space?
08:09 What are the four types of bundled payments?
09:52 How can bundled payments create perverse incentives?
11:04 What are the positives in bundled payments, and how can they help push us toward value-based care?
13:02 What is surprising about bundled payments?
18:50 EP415 with Rob Andrews.
27:03 How do Centers of Excellence connect back to bundled payments?
29:00 EP346 with Peter Hayes.
30:29 EP294 with Steve Schutzer, MD.
33:38 EP331 with Al Lewis.
33:43 EP372 and EP373 with Cora Opsahl.
37:13 What does Dr. Schwartz think the future is for bundled payments?
Recent past interviews:
Click a guest’s name for their latest RHV episode!
Justin Leader, Dr Scott Conard (Encore! EP391), Jerry Durham (Encore! EP297), Kate Wolin, Dr Kenny Cole, .css-j9qmi7{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:row;-ms-flex-direction:row;flex-direction:row;font-weight:700;margin-bottom:1rem;margin-top:2.8rem;width:100%;-webkit-box-pack:start;-ms-flex-pack:start;-webkit-justify-content:start;justify-content:start;padding-left:5rem;}@media only screen and (max-width: 599px){.css-j9qmi7{padding-left:0;-webkit-box-pack:center;-ms-flex-pack:center;-webkit-justify-content:center;justify-content:center;}}.css-j9qmi7 svg{fill:#27292D;}.css-j9qmi7 .eagfbvw0{-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;color:#27292D;}Mark as PlayedTranscript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:01):
Episode 434, "Five SurprisesAbout Bundled Payments".
Today, I speak with Dr.
Ben Schwartz.
American Healthcare Entrepreneurs andExecutives You Want to Know., Talking.
(00:24):
Relentlessly Seeking Value.
I've been in a couple of meetings lately.
In one case, a healthcare company cameup with a strategy and deployed it,
and the strategy didn't go as planned.
The other one, it did go as planned.
It worked great.
Of course, I'm coming in on the back endslike a Monday morning quarterback here.
But the plan that failed, Ihave to say I wasn't surprised.
(00:45):
Had they asked me ahead of time, I wouldhave told them to save their money because
the plan was never going to work, eventhough the strategy looked like kind
of a straight line from here to there.
Nor was I shocked by the success ofthe other plan, even though this one,
the triumphed, had what looked likefive extra steps and was slightly
counterintuitive if you looked at itcold without understanding the way the
(01:05):
healthcare industry actually works.
Here's my point.
It might feel like the healthcare industryis chaos monkey central and impossible
to predict actions and reactions.
And for sure, there's always unknownsand intersecting variables, but
it's not a complete black box.
The trick is, as you know, and Iknow because you're listening to
(01:25):
this podcast, you got to understandwhat other stakeholders are up to.
You got to get a bead on what they'redoing and what their incentives are.
Because then you can better predictactions and potentially reactions.
So let me state the obvious.
That's why listeners tuned into theshow, as I just said, and it's what
we aim to shine a light on hereat Relentless Health Value, the
(01:46):
pushes and the pulls and the forces.
What's going on outside ofthe organizations or the silos
that we work within day to day?
Because if you're looking to sell to,partner with, not be obstructed by,
insert some stakeholder here, then it'svery vital to be keyed in on what they're
doing or what their customers are doingor what their customers vendors are doing.
(02:06):
This show should feel like itgives you a measure of control or
at least that's my hope or method.
To find the measure of control.
And I hope you succeed.
That's why I continueto put out these shows.
The RHV tribe members want the samething I want to fix the healthcare
industry for patients and for members.
So thanks for being here and formaking actionable the insights
(02:27):
that you might find here.
I have been looking so forwardto doing a show with Dr.
Ben Schwartz, orthopedic surgeon andprolific writer of deeply thoughtful
and insightful posts on LinkedIn.
Today, we are talkingabout bundled payments.
And today's your lucky day if youthink you know a lot about bundles,
because most people who listen tothe show at least know enough to be
(02:48):
dangerous, so that's our starting point.
Which is why I asked Dr.
Schwartz to talk to me about whatmost people find surprising about
bundles and bundled payments.
There are four surprises that we gothrough in the show today, and listen
to the show or read the transcriptto find out exactly what they are.
So no spoiler alert, alert.
But relative to these surprises, weget into the four types of bundles
(03:12):
that may or may not be available.
And those four types of bundlesare number one, CMS bundles, such
as the BPCI and the CJR bundles.
And we talk about the current stateof said BPCI bundles, which are being
sunsetted, probably, because so manyefficient clinical teams are being
penalized for getting too efficient.
(03:33):
They become victims of their own success,the way the program is currently designed
wherein the goalposts just keep shifting.
The second type of bundle that wetalk about are commercial bundles, i.
e.
a bundle that is offered by acommercial carrier, such as a BUCA, i.
e.
Blue Cross Blue Shield, UnitedHealthcare, Cigna, Aetna, Anthem carrier.
Number three kind ofbundle is a direct bundle.
(03:54):
This is a bundle that is paidfor directly by a plan sponsor,
such as a self insured employer.
And then number four type ofbundle we talk about is a condition
or diagnosis specific bundle.
These types of bundles donot spiral around a surgical
intervention at their core, whichmost of the current bundles do.
So, this last type, this fourth bundletype, may describe CMS's recently
(04:19):
announced Making Care Primary initiative,but we'll have to see about that.
Speaking about the number three kindof bundle, the Employer Direct bundles,
especially for musculoskeletal, MSK.
Let me read a post by Moby Parsons,MD, that I thought captured the
entrepreneurial spirit of some of theseorthopedic surgeons who are seeking
employers to direct contract with and cutout the middleman , et cetera, which, by
(04:42):
the way, is the main topic of an entireshow upcoming with Elizabeth Mitchell from
the Purchasers Business Group on Health.
But Dr.
Parsons wrote, When our bundle businesshas sufficient growth to ensure the
absolute sustainability of our practiceagainst declining in a fee for service
system, I'm going to get this tattoo.
"Don't tell my wife.
And the tattoo is free yourself."
(05:04):
My guest today, aforementioned, is Dr.
Ben Schwartz.
He's an orthopedic surgeonin the Boston area, still in
full time clinical practice.
He's grown very interested in healthcareinnovation, healthcare technology,
and does some advising and investing.
Dr.
Schwartz also writes a greatSubstack called "Dem Dry Bones".
(05:24):
All the links to everything Ijust said in the show notes.
After you listen to the show, pleasego back and listen to the one with Dr.
Steve Schutzer talking about how tocreate a center of excellence and also
the one with Rob Andrews about how andwhy, if you are a plan sponsor, you might
want to consider direct contracting withquantifiably amazing provider groups.
Also, if you are an ortho or involvedin MSK care, I might suggest following
(05:50):
Karen Simonton on LinkedIn as wellas Moby Parsons, MD, and for sure,
of course, my guest today, Dr.
Ben Schwartz.
My name is Stacey Richter.
This podcast is sponsoredby Aventria Health Group.
Dr.
Ben Schwartz, welcome toRelentless Health Value.
Thank you.
Thanks for having me.
This is quite an honor.
Let me ask you one questionbefore we also get into the
(06:10):
heart of our conversation today.
Where are we in the bundletime space continuum?
Sure.
So the main bundles that people knowabout are through CMS, through the
government, and that's the Bundled Paymentfor Care Improvement Program, or BPCI.
It's a mouthful.
And that started several years ago.
Now it's been through aniteration to the advanced model.
But the general idea is you getpaid a lump sum for that hip or
(06:32):
knee replacement, and any care thathappens in the 90 days after the
procedure comes out of the bundle.
And so there's been somegood lessons learned, there's
been some care improvement.
The problem is that the targetprice in the bundle tends to shift
lower, you become a victim of yourown success, and then it becomes
difficult to see upside reward.
(06:52):
You experience downside risk andthen you have to drop out of the
bundle, and that's where mostsurgeons in the BPCI program end up.
And the thinking is that's goingto be sunset by CMS probably after
2025 and replaced by something else.
We don't know what yet.
Probably some form of specialistand primary care working together
(07:12):
and being incentivized together.
There are commercial bundles, andthat's through obviously a commercial
insurer where you approach them.
Similar sort of concept of it'sa lump sum payment attached
usually to a surgical episode.
Those are harder to get, and we cantalk about why that might be later on.
There is this third arm that's arising,I think it's going to become more
(07:34):
commonplace, and that is some form ofbundled agreement with a self insured
employer that's looking for highvalue, cost effective care, and so
you can negotiate with them directly.
That's a center of excellencemodel, or there's care navigators.
So there's more of thisdirect bundled program.
The final thought is eventually weexpect bundles to shift away from
(07:56):
surgical episodes of care and maybemore towards condition specific,
whether that's attached to back painor knee arthritis or hip arthritis.
To really capture more of the careprocess outside of the surgical episode.
Okay, so you listed fourtypes of bundles there.
One is the BPCI bundle,which is a CMS thing.
(08:19):
Paid a lump sum after a surgical episode.
As you said, people become avictim of their own success because
you get paid for efficiency.
So like how efficient you are becomes thebenchmark and then you have to be more
efficient than you're, Efficient self.
You have to get down with your moreefficient self at a certain point.
You can't become more efficient.
So then, yeah, you start losing money.
(08:40):
And as you mentioned, Sunset 2025, thenyou also have your commercial bundles.
You also mentioned number three,there's some self insured employers are
contracting for bundles and a lot oftimes this happens in the context of a
Center of Excellence or a COE program.
And then lastly, there's a lotof talk I've seen around can we
(09:02):
do condition specific bundlesor diagnostic based bundles.
And you mentioned back pain and then theclinical group gets paid a certain amount,
some capitated number to take care ofthat patient for some duration of time.
I think the latter one, obviously,you know, a surgical episode, a
surgical bundle just says I dida good job of doing that surgery.
(09:23):
The patient didn't have a complicationor readmission at 90 days.
It doesn't really say a whole lotabout, well, did I manage that
appropriately up to that surgery,was that surgery indicated?
So, I think the hope for these conditionspecific bundles is it's going to
incentivize that whole episode of careattached to that diagnosis, and not
just the surgery, but non surgicalmanagement if that's appropriate.
(09:44):
That surgical episode might beso called nested into that bigger
bundle, but it's not going to bethe only focus of the bundle itself.
Well, what you're bringing up,it's been discussed as a potential
perverse incentive with these bundles.
A surgeon also gets paid a bundle if thesurgeon does an inappropriate surgery.
So one of the things that is apromise of value based care is care
(10:06):
is appropriate and we don't havean incentive to do too much care.
Bundles don't do anything to address that.
Correct.
The hope of these conditionspecific bundles is that they kind
of incentivize more appropriatecare throughout the care journey.
Again, whether that's non surgicaltreatment, physical therapy,
an injection, medications, notjust around a surgical episode.
(10:27):
Bundles do nothing really todisincentivize inappropriate care.
What else might be an issue?
They also can potentially lead tocherry picking and lemon dropping.
So, you operate on the healthier patientsthat you know are more likely to do well
or less likely to have a complication.
So, they're less likely to bea downside risk in the bundle.
(10:48):
And then you don't operate onthe more complicated patient
because the bundles don't do agreat job of risk stratification.
So that higher risk patient that maybe ismore likely to have a complication or more
likely to use post acute services, maybeyou're less likely to offer surgery too.
So it definitely sounds like the bundlesdo have disadvantages, but if we're
thinking about the promise of a bundle asmaybe a first step into value based care,
(11:13):
we talked about a bunch of negatives.
Let's talk about some positives now.
What are the, what's the good news?
Yeah, the good news is we have learneda lot of lessons from the bundles.
We learned patients tend to do betterif we treat them more holistically.
So, if we take an active role inoptimizing patients for surgery, making
sure their diabetes is well controlled,making sure any anxiety or depression
(11:35):
is taken care of, because we knowthat affects outcomes from surgery.
We've learned that one of the biggestcost drivers is post acute care, so if
the patient is discharged somewhere otherthan home after the surgery, that's very
expensive and guess what, they also havea higher readmission rate, they also tend
to have a higher complication rate if theyend up in a nursing facility or rehab.
(11:57):
So we've learned that it's safefor patients to go home, it's cost
effective for them to go home,it's better for them to go home.
So there are lessons we've learned abouthow to take better care of patients, how
as orthopedic surgeons to see and treatthe patients more holistically, how to
optimize their health for surgery, sothey have better outcomes, and that's
an enduring lesson from the bundles.
In an enduring way, we haveorthopedic surgeons who are
(12:21):
thinking about a whole person here.
As you just said, if theirdiabetes is uncontrolled.
So just the outcome isnot going to be as good.
And now everybody is on the sameteam, making sure that the patient
is prepared for the surgery andthen gets the right aftercare.
One of the most interesting thingswe've learned is that patients
who stop smoking specifically toget their hip or knee replaced.
(12:44):
A lot of them don't go back tosmoking after their procedures, and
so these are the ripple sustainableeffects that we've learned.
What I would like to do is to gothrough a few things that people
might find surprising about bundles,things that they may not realize or
may be a little bit counterintuitive.
So if we're thinking about whatis surprising about bundles, you
(13:07):
mention it and people are like, what?
One of the things that comes as a surpriseto a lot of people in that 90 day window,
and this is for the CMS BPCI bundles.
Anything that happens to that patientmedically that Medicare has to pay
for in that 90 day window aftersurgery comes out of the bundle.
Two of my examples of quote unquotelosers, meaning that we experienced
(13:29):
downside risk, one patient within 90days of their procedure was diagnosed
with a head and neck cancer thatobviously needed to be treated.
That came out of the bundle.
So I was on the hook for that even thoughit had nothing to do with their surgery
they did well from their knee replacement.
I had another patient that hadinflammatory arthritis, they were on
a biological infusion like Humira orEnbrel, and we typically skip a dose
(13:53):
before and after surgery for a month toreduce the risk of infection, then the
patient goes back on that medicationmonth two after their surgery, so
that's two doses in that 90 day window.
That infusion at $7000 a pop,and that comes out of my pocket.
$14,000 out of the bundlebecause it was paid for by
Medicare in that 90 day window.
Is this how to get the orthopedicsurgeon to pay for oncology
(14:16):
care or infusions for 400, Alex?
Yeah, unfortunately, it seems a bitunfair to put people on the hook for
things that are unrelated to the surgery.
So surprising thing number one isthese bundles are all in for all
downside risk in the next 90 days.
Somebody gets hit by a caror something like that.
But if there's medical care, theorthopedic surgeon is paying for it,
(14:39):
even if it's quite clear that it'snot, that had nothing to do with the
surgery is what I'm understanding.
Correct.
For the CMS bundles, that's correct.
All right.
So that is surprising.
What's the surprising thing too?
I think that maybe the second surprisingthing, maybe a cynical take, but as
much as we talk about value based care,commercial payers, you could argue that
maybe incentivized for pursuing bundlesor agreeing to do bundles with orthopedic
(15:05):
surgeons because of medical loss ratioand whether or not that's really in
line with their typical business model.
But commercial bundles, again, as muchas we talk about value based care,
can be difficult, not impossible.
A lot more difficult to get involvedwith if you're an orthopedic practice.
Surprising thing number two, despite alot of talk, commercial payers are really
(15:26):
not overly interested in doing bundles.
There are pockets where people have beensuccessful, but it takes a long time.
It's hard to get in frontof the right people.
It's hard to get engagement.
I think people might think, hey, they'd bewilling to do anything that's value based.
But it is a challenge to getinto these commercial bundles.
It takes a lot of work to getthem to come to the table.
(15:47):
Well, I will say that take has beencorroborated from the employer side.
I did have a conversation with theleader of a very well respected
employer coalition and the employercoalition got a bunch of employers
together in a particular region.
So the employers worked out a bundlearrangement that they all agreed to, then
(16:07):
they went to local providers in that sameregion and brought the providers along.
So now you have the employers andthe providers themselves who were
like, okay, we have agreed on abundle that we want to do together.
The two of them, those two stakeholders,then went to the TPAs that were
serving these self insured employers.
(16:28):
And they said, hey, we need youto administer this bundle that
we worked out with our providers.
And those TPAs said,nah, not going to do it.
Can't do it.
Won't do it.
The end.
That was the end of the story.
I think what we're going to see as aresult of that is the self insured
employer is then going to figureout a way to do it themselves.
(16:50):
If it's not the commercial payers,we are going to see other people
step into that void to helpadminister that, to help make those
connections, to help collect that data.
To help the self insured employermake sure they're pointing their
employees in the right direction ofhigh quality, high value providers.
I think we're going to see thatbecome more commonplace because
(17:10):
I think the desire is thereon the part of the surgeons.
I think the desire is there on thepart of the self insured employers.
I think it's beneficial for thosetwo parties, and if the commercial
insurer doesn't want to play ball,I think that you'll find those
other two parties figure out howto work together to make it happen.
Yeah, I mean, it does surprise mea little bit, honestly, that the
fully insured plans aren't scopingaround for bundles from you.
(17:35):
Just because from everything thatyou've said with the improved surgical
outcomes, as well as the, you'reon the hook for the next 90 days.
It feels like something a fullyinsured payer would be interested in.
A part of it, again, is the cynicaltake is that you don't want to get
too many different arrangementswith too many different providers.
(17:56):
So as it becomes sort of choppy andfragmented and how do you approach
practices in order to do that?
And does it look the samefrom one practice to the next?
What kind of data do you want or need?
To see, to make that worthwhile, isit a big enough provider that it makes
sense to go through that process?
The point that you're making isyou've got this big national player
(18:16):
who's offering fully insured plans.
Ah, maybe they spy some upsiderelative to this whole bundle thing,
but from a, you know, I'm going touse the efficiency in air quotes.
It's very inefficient.
You have to do all these contracts.
It's really hard to administer.
So the view ain't worth the climb.
It sounds like, or they just can'teven figure out how to do it from
an administration standpoint.
Yeah, I think that certainlyis a big part of it, right?
(18:38):
I mean, that's the one thing about feefor service as much as it has downsides.
It is clean, it's very transactional,it's a little bit easier to wrap your
head around than, you know, a bundlewhere there's different moving pieces.
On the other hand, as Rob Andrews, said inepisode 415, this is their day jobs, these
payers slash third party administrators.
(19:00):
This is what we're paying these entitiesto do to figure out how to get the
best health care for plan members.
And we all know full on FFSis bad scene from a actually
producing health standpoint.
So yeah, I'm going to chalk myself up assurprised that not being able to pull off
(19:21):
something as kind of basic as a bundle.
I mean, there's some valuebased care arrangements that are
really complicated, but a bundle?
So not being able to pull off abundle efficiently is a conversation
that we're actually having in 2024.
Alright, so we've got two surprises aboutbundles that we've already talked about.
One is the whole 90 daything, the orthopedic surgeon
has to pay for everything.
(19:42):
Secondly, commercial payers are a littlebit behind the curve, maybe not fans.
Some combination of both.
Is there a third surprise?
Yeah, I think looking into thefuture, part of what we're going
to see is the evolution of bundlesor specialty value based care.
Medicare kind of tipped itshand announcing the Making
Care Primary program last year.
(20:05):
There's going to be a move to number one,try to coordinate specialty and primary
care a bit better and incentivize that,but it's curious to me, I think some
of the expectation, maybe even some ofthe concern on the part of orthopedic
surgeons is that they're incentivizingprimary care doctors maybe to do more
of the specialty care delivery ortake on more of specialty type stuff
(20:28):
and will incentivize them to do that.
The question is, what does that look like?
For Are primary care doctors goingto feel comfortable doing that?
Is there going to be maybe a little bitof a battle between primary care doctors
and specialists if the bundles becomemore general or more open to everybody?
If you control a condition specificbundle and the surgical episode is
nested within that, that's going togive more power to direct the bundle.
(20:52):
Okay, surprising thing here is that inthis new condition specific or diagnosis
specific bundle model, you could actuallyhave primary care taking ownership
for bundles and then bossing aroundthe orthos who might have a surgery
nested in the middle of said bundle.
(21:13):
So it's no longer the MSK specialistswho are the leader of the bundle or
the owner of the bundle, you're goingto have somebody else, potentially
primary care, who's the owner.
And that's different . I can certainlysee if we're trying to figure out areas
where there are opportunities, To savemoney, considering most of the money
(21:35):
is being spent in the specialty arena.
I mean, one of the reasons is becauseprimary care is just so woefully
underfunded trying to figure out howto do more coordination could help
reduce the spend having primary caredo more, which isn't like a new idea.
You want to do what'sright for the patient.
If it's, hey, let's manage this in aprimary care setting until it becomes time
(21:58):
for the patient to see the specialist.
I think that's a good thing, certainlymore care coordination between primary
care doctors and specialists is agood thing, and figuring out a way to
incentivize both sides of that equationto work together is also a good thing.
I think the concern comes in ofjust making sure that the patient
is getting the appropriate care.
I think that will create potentiallyan opportunity for somebody, some
(22:23):
entity, to bridge that gap to makesure the right decision is being made.
The primary care doctor feels comfortable,they are making the right decision.
And then the specialist feels comfortablethat the patient is coming to them at
the appropriate time and not too late.
So I think there's going to be anopportunity to bridge that gap between the
specialists and the primary care doctors.
I think we will see somecompanies start to fill that gap.
(22:45):
So you're talking about somekind of MSO type entity.
Yeah, either an MSO or perhaps some typeof a care navigator, a care coordinator
who has some experience and can helpmake that decision to say, you know,
yes, it's time for the specialistand we can point you to high value
specialists or you know what, whatever.
(23:06):
You know, maybe you haven't tried this,maybe it's not time for imaging yet.
And so you can continue to manage thisin the primary care setting will help
you to do that so that the patientis still getting good care, but it's
not quite time to see the specialist.
I'm of a couple of minds as I'mlistening to you, you talk there.
On the one hand, I'm like,there are entities right now
(23:27):
that are kind of in that space.
For example, you've gotthe virtual console gang.
So a primary care doctor can get ahold of a specialist and ask that
specialist questions as opposedto doing a full on referral.
And as you were talking about navigators,obviously there's a plethora of them.
There are entities that arealready in the mix there.
On the other hand, I would hateto see specialists in primary
(23:49):
care disintermediated from workingtogether when there's just such an
opportunity just to work together.
First of all, like we'rejust talking about knee pain.
There's some shocking percentageof patients who go to their primary
care doctor for musculoskeletal pain.
I was reading a study just howlittle musculoskeletal training
primary care doctors tend to get.
(24:10):
In fact, if you read Dreamland or any ofthose books about the opioid crisis, one
of the reasons for the opioid crisis,according to some, is that primary care
doctors felt really pretty powerless.
in the face of patient pain.
So when, you know, opioids showedup, they were like, sure, and started
prescribing them because they didn'tknow anything else to do amongst
(24:33):
a whole bunch of other factors.
I totally agree with you.
I think the disintermediation pointis very valid and the ideal situation
is let's bring specialists and primarycare doctors together, let's not
pit them against one another, right?
Can we design some type of bundledpayment program, capitation program,
where we really get primary care doctorsand specialists working together?
(24:57):
You're right that at least in my medicalschool, unless you really sought out
musculoskeletal education, we gotlike two lectures on musculoskeletal
topics in medical school and thetraining isn't necessarily there
later on as well in residency.
So you don't want to put primary caredoctors in a situation where they're
(25:17):
sort of incentivized not to refer tothe specialist, but at the same time
they want to feel like they're doingthe right thing for the patient.
And that can lead to, you know, overtreatment, under treatment, over
imaging, under imaging, wrong imaging.
So, I think the ideal is to developa program that coordinates those
two things and has them incentivizedto do the right thing together.
(25:41):
I think one of the concerns about thesenavigators or these entities that exist
that you've mentioned is unfortunately,a lot of them, their value proposition
seems to be, hey, let's keep that patientaway from the specialist because that's
where the cost really lies, and that'sokay if it's appropriate, but making sure
that the patient does see the specialistwhen it is necessary is number one.
(26:02):
And number two, making sure that theprimary care side of the equation has
resources that they feel comfortableat, hey, I'm doing the right thing for
the patient, or I have a resource I cango to if I'm not sure that maybe isn't
referring completely to the specialist,but is making sure that I'm on the right
track, that I'm not missing something,that I'm not delaying care, that I'm not
(26:23):
doing the wrong things for that patient.
And that's a lovely promise, right?
And I mean that full throatedly,that one of the things we've been
striving for is to get primary careand specialists working together.
Obviously, the whole lack ofdata could be a factor here.
There was recently a hospitologynewsletter about this , just that
(26:44):
primary care doesn't have the data alot of times to know who the specialists
are that are performing the best.
But the promise is veryinteresting and it seems like it
could be a way forward for sure.
All right.
So that was our third surprisingthing about bundles, Dr.
Ben Schwartz.
Is there a fourth?
Yeah.
Tangentially related to the bundles isthe concept of centers of excellence.
(27:07):
Those have become also very commonplace.
A lot of promise.
There was a pretty landmark HBRarticle written several years ago about
Walmart's experience in the COE program.
I think if you dig into thatand you parse it a little bit,
the Centers of Excellence.
Don't necessarily save money sortof on the cost of the procedure.
(27:28):
They can be as expensive ifnot more expensive in some
cases for the procedure itself.
I think the value is driventhere by surgical avoidance.
So you get sent to the Center ofExcellence and the physician at the
center of excellence says no, I don'tagree with the community surgeon.
You don't need a $100,000 back fusion.
And then that's your employer obviouslysaves money and in an avoided procedure.
(27:49):
And there is potentially some valueto that, but unfortunately, there's
a lot of gray areas and one person'sopinion may be different than
somebody else's opinion and how doyou decide whose opinion is correct.
So I think the COE model is interesting,but it's really kind of more that
decision for or against surgery.
It's not necessarily that theiroutcomes are any better, it's not
(28:09):
necessarily the cost is any less.
It's more that you're getting maybea differing opinion that says,
hey, I don't think this procedurehas indicated that this person
in the community is describing.
And then that person in the communitythat maybe has had a relationship with
that patient for years has to then dealwith that patient who was sent to the
Center of Excellence by their employer.
(28:29):
The employer says, look, theCenter of Excellence said you
don't need that procedure.
I think people assume the COEis cost controlled for the
procedure when oftentimes it'snot any cheaper than having the
procedure done in the community.
Probably less care variation at thecenter of excellence, but I think most
communities have good high quality,high value surgeons if you're willing
(28:49):
to take the effort to find them.
Okay, there's a couple ofthings I find really interesting
about what you just said.
And the first one is, and just neverreally thought about it before,
honestly, but just pointing this out.
We've had Peter Hayes on the showtalking about just the high prices
of hospital services, right?
Hospital prices are very high.
I just never really thought about that.
(29:10):
If we're talking about a center ofexcellence, which tends to be an academic
medical center, which tends to be ahospital, you know, hospital system.
So the prices are very high.
The reason why those programs are costeffective or reduce costs isn't because
the cost of the procedure is any less.
It's because there are less surgeries.
(29:31):
In a lot of cases, I think the employerand the Center of Excellence do tend to
negotiate through their own bundle price.
But even then, It's not necessarilyless expensive than if you went to,
you know, a community facility to haveyour surgery or let's say a surgery
center, which is going to be even lessexpensive than having it done at the COE.
You look at the SAGE Transparency Projector you look at any of these things, it's
(29:54):
very clear that commercial rates are quitehigh and the center of excellence model.
You're still going to those same exactentities that are charging a lot of money.
I mean, there's some upsides here.
One of them is a lot of the centerof excellence programs do require
very meticulous data tracking.
Such a small percentage of providerorganizations and or clinics measure
(30:16):
outcomes of any kind clinical or PROMS,Patient Reported Outcome Measures.
I think that's the main question here.
I mean, how do clinicians evenknow if what they're doing
is amazing or not amazing Dr.
Steve.
Schutzer talked a lot about this inEncore episode 294, if somebody really
wants to dig in, but if I'm an employerusing a center of excellence model, the
(30:38):
requirements to track a lot of differentdata elements could really be helpful
and potentially I'm not sure the worthit and valuable in and of themselves.
So there's definitely some upsides here.
However, the cost of the proceduresthemselves are still, as you
just said, on the high side.
But then the other issue to kindof keep in mind is, it certainly
is a second opinion, right?
(30:59):
And as anyone would tell you, whenever,before anybody gets any surgery, you
should definitely go get a second opinion.
But because that second opinion andthe surgery may be happening outside
of the patient's local community andoutside of that patients local ability
to go get physical therapy or go get,right, like they're going to have to
get aftercare within the community.
(31:20):
There may be a disruption of carecontinuity, and if they need care then in
the community, that is certainly somethingthat anybody with the Center of Excellence
network should be keeping in mind.
There's a lot of thingsthere that you mentioned.
Number one is, for sure, I mean, it'snot fair to throw shade at COEs if
you don't come with your own data.
So, if you want to keep those patientslocally, and you say, we do just as good
(31:43):
a job, and we can do it maybe more costeffectively, you have to bring the data.
That's only fair, andyou have to prove it.
So, I think that's point number one.
Number two is, yes.
In my mind, the best thing for the patientis to whenever possible keep them in
the community as opposed to somethingthat's, that can be very transactional,
they're meeting that person for thefirst time at the COE, maybe they're
(32:04):
having their surgery, and they're goingback to the community, and now it's
up to the community if that patientshows up in the ER with a complication.
The COE maybe tries to take care ofthe complications as much as they can,
but the patient's not going to travelhundreds or thousands of miles away
when they have a complication, right?
They're going to go to the local ER.
I think some of these programs comeup with agreements with primary
care doctors to do some of thepost operative care, which may
(32:25):
not be the best situation either.
The patient goes back in thecommunity, if they've had a procedure
and they're having an issue, or ifthey go back to the community and
they've been told to the COE, look,I don't agree with this surgery.
Now, what do I, as a communityprovider who maybe has been treating
that patient for a long time,now where do we go from there?
How do I reconcile that?
(32:45):
Now I have this patient that'sbeen turned away from a COE, their
employer's telling them that they'renot going to cover the cost of care.
That makes for some difficultconversations and we don't have, as far
as I know, good data on the outcomes.
What happens to patients that goto a COE and are told that they
don't need a certain treatmentand end up back in the community?
What's their ultimate outcome?
Do they end up withsurgery in the community?
(33:06):
Do they do okay?
Do they not do okay?
They not end up with surgery, dothey end up with another treatment,
do they eventually get better?
You know, that data we really don't have.
Like so many things, it's not likeany given idea is good or bad.
It's a lot of it has to dowith devils in details and the
execution really matters here.
It would be up to any employer orplan sponsor who's thinking COE
(33:32):
model to really think through someof the executional elements here.
As with so many things, and listento the show with Al Lewis, 331, for a
deep dive into this, also the show withCora Opsahl, this comes up, it's up to
the plan sponsor to take a broad viewon the actual impact of the program.
Because as you just mentioned, ifthe COE, the Center of Excellence
(33:54):
program vendor, is only measuring theimpact in cost savings or ROI on the
patients who got operated on, And thenthe patients who didn't get operated
on are tallied up as zero dollarsand no further costs are considered.
That's not going to be accurate.
A lot of things about the conceptof a Center of Excellence model
makes sense and you're right,it's all about the execution.
(34:15):
I don't think you necessarily have tosend patients hundreds or thousands
of miles away from their community.
It may take some work and again, it'sincumbent upon us in the community
to, you know, come with our data andprove that we're doing good work,
whether it's at our practices, asurgery center or local hospital.
But I think the conceptof the COE can be local.
One thing that I have heard more than oncealso from employers is this whole idea of
(34:39):
efficiency and it's very inefficient tohave lots of regional contracts, right?
So you've got a national workforce,you've got a couple of patients
in all these different markets.
It's a lot easier to set up a COEnetwork where everybody flies to
a limited number of Centers ofExcellence's, as opposed to having
(35:00):
lots and lots of local relationships.
So you can definitely kind ofsee why this winds up happening.
You know, you think about value basedcare, you kind of have to understand.
Who the quality provider organizationsare within any local market.
You can't just keep flying peoplearound for everything, right?
So as the data, maybe the qualitydata becomes more ubiquitous, it
(35:23):
becomes more possible to do someof the stuff that we're talking
about within the local community.
I think there is an opportunity sort ofon a national level for high quality,
high value providers, centers thataren't necessarily traditional Centers
of Excellence, academic medical centersas we think of them, to band together
and say, you know, as a group, asthis network, regional nationwide
(35:46):
network, we're going to follow similarprotocols, we're going to report.
Our outcomes to you, we're going tohave our own vetted providers and
vetted centers, almost like a franchisemodel or under some umbrella where
we've all kind of agreed to adhere tothese standards and report our data.
You know, we're in our own localmarkets, but we're sort of under
(36:07):
the same national umbrella that wecan approach self insured employers.
And you know that if you go to oneof the providers that's in this self
curated network, that you're goingto get good quality care because you
have the data as it's reported to you.
So, surprises that we have discussed hereis this whole 90 day thing that everything
falls on the shoulders of the orthopedicsurgeon to pay for regardless of whether
(36:29):
it's associated with the surgery or not.
Number two, commercial payers, not a hugefan of bundles, actually, it turns out.
Number three, this move tocoordinate with PCPs and specialists.
And we talked through some ofthe interesting nuances there.
And then lastly here,we talked about COEs.
Centers of Excellence, the Center ofExcellence models, not a magic bullet,
(36:53):
not that anyone thought there was, butthere is some interesting implications
here, especially as it relates totaking the patient out of the community.
Dr.
Ben Schwartz, is there anythingI neglected to ask you that
you think we should cover here?
I think, look, there's opportunity here.
We've learned some important lessons.
I think we'll continueto learn and evolve.
(37:13):
I think in the future, it's goingto be mandatory and not voluntary
as we've seen before in the bundle.
So I think it's incumbent uponthose of us, particularly at MSK,
particularly hyponatric arthritis andback pain, where a lot of the spend
is to understand this, to try to geta seat at the table, to try to be
proactive in having these conversations.
Hopefully, on the other side of theequation, the government, CMS, CMMI,
(37:37):
self-insured employers, commercialinsurance plans are willing to come
to the table with us and work withus to collaborate on these programs,
cause I think that's really where we'regoing to see the most sustainability.
There's been some fits and starts.
We haven't yet hit on the rightformula for sustained success.
I think really the only way we're goingto do that is, is to have everybody coming
(37:58):
together and making sure that everybody'spulling in the right direction.
That's a great inspirational message.
There's a collaborative opportunityhere so patients can get better care
at an affordable price and everybody'sknowledge is required to make that happen.
Orthopedic surgeons, I think, areknown for, for being entrepreneurial
and seeking out their own solutions.
(38:19):
And I think we are seeing pockets ofthat where, you know, if you can't
get traditional people to come tothe table, then you'll figure out
ways yourself to try to make it work.
And so there's a lot of, Ithink, exciting work being done.
To that end, by people who reallyunderstand this and understand where
things are going and are reallytrying to help create that future.
For sure.
And it's going to take people whoreally understand the nuances here
(38:41):
and really understand what's goingon in order to actually create
a future that's going to work.
Dr.
Ben Schwartz, where canpeople find your blog?
Yeah, so the blog is DemDry Bones on Substack.
There's a link to it on my LinkedInpage, Benjamin Schwartz, MD.
I'm happy to connect with anyone.
Dr.
Ben Schwartz, thank you so much forbeing on Relentless Health Value today.
(39:02):
Yeah, thank you, Stacey.
My pleasure.
So let's talk about going over to ourwebsite and typing your email address
in the box to get the weekly emailabout the show that has come out.
Sometimes people don't do that becausethey have subscribed on iTunes or
Spotify and or we're friends on LinkedIn.
What you get in that email is theintroduction of the show transcribed.
(39:24):
There's also show notes withtimestamps, just apprising you of
the options that are available.
Thanks so much for listening.
Episode 434, "Five SurprisesAbout Bundled Payments".
Today, I speak with Dr.
Ben Schwartz.
American Healthcare Entrepreneurs andExecutives You Want to Know., Talking.
(00:24):
Relentlessly Seeking Value.
I've been in a couple of meetings lately.
In one case, a healthcare company cameup with a strategy and deployed it,
and the strategy didn't go as planned.
The other one, it did go as planned.
It worked great.
Of course, I'm coming in on the back endslike a Monday morning quarterback here.
But the plan that failed, Ihave to say I wasn't surprised.
(00:45):
Had they asked me ahead of time, I wouldhave told them to save their money because
the plan was never going to work, eventhough the strategy looked like kind
of a straight line from here to there.
Nor was I shocked by the success ofthe other plan, even though this one,
the triumphed, had what looked likefive extra steps and was slightly
counterintuitive if you looked at itcold without understanding the way the
(01:05):
healthcare industry actually works.
Here's my point.
It might feel like the healthcare industryis chaos monkey central and impossible
to predict actions and reactions.
And for sure, there's always unknownsand intersecting variables, but
it's not a complete black box.
The trick is, as you know, and Iknow because you're listening to
(01:25):
this podcast, you got to understandwhat other stakeholders are up to.
You got to get a bead on what they'redoing and what their incentives are.
Because then you can better predictactions and potentially reactions.
So let me state the obvious.
That's why listeners tuned into theshow, as I just said, and it's what
we aim to shine a light on hereat Relentless Health Value, the
(01:46):
pushes and the pulls and the forces.
What's going on outside ofthe organizations or the silos
that we work within day to day?
Because if you're looking to sell to,partner with, not be obstructed by,
insert some stakeholder here, then it'svery vital to be keyed in on what they're
doing or what their customers are doingor what their customers vendors are doing.
(02:06):
This show should feel like itgives you a measure of control or
at least that's my hope or method.
To find the measure of control.
And I hope you succeed.
That's why I continueto put out these shows.
The RHV tribe members want the samething I want to fix the healthcare
industry for patients and for members.
So thanks for being here and formaking actionable the insights
(02:27):
that you might find here.
I have been looking so forwardto doing a show with Dr.
Ben Schwartz, orthopedic surgeon andprolific writer of deeply thoughtful
and insightful posts on LinkedIn.
Today, we are talkingabout bundled payments.
And today's your lucky day if youthink you know a lot about bundles,
because most people who listen tothe show at least know enough to be
(02:48):
dangerous, so that's our starting point.
Which is why I asked Dr.
Schwartz to talk to me about whatmost people find surprising about
bundles and bundled payments.
There are four surprises that we gothrough in the show today, and listen
to the show or read the transcriptto find out exactly what they are.
So no spoiler alert, alert.
But relative to these surprises, weget into the four types of bundles
(03:12):
that may or may not be available.
And those four types of bundlesare number one, CMS bundles, such
as the BPCI and the CJR bundles.
And we talk about the current stateof said BPCI bundles, which are being
sunsetted, probably, because so manyefficient clinical teams are being
penalized for getting too efficient.
(03:33):
They become victims of their own success,the way the program is currently designed
wherein the goalposts just keep shifting.
The second type of bundle that wetalk about are commercial bundles, i.
e.
a bundle that is offered by acommercial carrier, such as a BUCA, i.
e.
Blue Cross Blue Shield, UnitedHealthcare, Cigna, Aetna, Anthem carrier.
Number three kind ofbundle is a direct bundle.
(03:54):
This is a bundle that is paidfor directly by a plan sponsor,
such as a self insured employer.
And then number four type ofbundle we talk about is a condition
or diagnosis specific bundle.
These types of bundles donot spiral around a surgical
intervention at their core, whichmost of the current bundles do.
So, this last type, this fourth bundletype, may describe CMS's recently
(04:19):
announced Making Care Primary initiative,but we'll have to see about that.
Speaking about the number three kindof bundle, the Employer Direct bundles,
especially for musculoskeletal, MSK.
Let me read a post by Moby Parsons,MD, that I thought captured the
entrepreneurial spirit of some of theseorthopedic surgeons who are seeking
employers to direct contract with and cutout the middleman , et cetera, which, by
(04:42):
the way, is the main topic of an entireshow upcoming with Elizabeth Mitchell from
the Purchasers Business Group on Health.
But Dr.
Parsons wrote, When our bundle businesshas sufficient growth to ensure the
absolute sustainability of our practiceagainst declining in a fee for service
system, I'm going to get this tattoo.
"Don't tell my wife.
And the tattoo is free yourself."
(05:04):
My guest today, aforementioned, is Dr.
Ben Schwartz.
He's an orthopedic surgeonin the Boston area, still in
full time clinical practice.
He's grown very interested in healthcareinnovation, healthcare technology,
and does some advising and investing.
Dr.
Schwartz also writes a greatSubstack called "Dem Dry Bones".
(05:24):
All the links to everything Ijust said in the show notes.
After you listen to the show, pleasego back and listen to the one with Dr.
Steve Schutzer talking about how tocreate a center of excellence and also
the one with Rob Andrews about how andwhy, if you are a plan sponsor, you might
want to consider direct contracting withquantifiably amazing provider groups.
Also, if you are an ortho or involvedin MSK care, I might suggest following
(05:50):
Karen Simonton on LinkedIn as wellas Moby Parsons, MD, and for sure,
of course, my guest today, Dr.
Ben Schwartz.
My name is Stacey Richter.
This podcast is sponsoredby Aventria Health Group.
Dr.
Ben Schwartz, welcome toRelentless Health Value.
Thank you.
Thanks for having me.
This is quite an honor.
Let me ask you one questionbefore we also get into the
(06:10):
heart of our conversation today.
Where are we in the bundletime space continuum?
Sure.
So the main bundles that people knowabout are through CMS, through the
government, and that's the Bundled Paymentfor Care Improvement Program, or BPCI.
It's a mouthful.
And that started several years ago.
Now it's been through aniteration to the advanced model.
But the general idea is you getpaid a lump sum for that hip or
(06:32):
knee replacement, and any care thathappens in the 90 days after the
procedure comes out of the bundle.
And so there's been somegood lessons learned, there's
been some care improvement.
The problem is that the targetprice in the bundle tends to shift
lower, you become a victim of yourown success, and then it becomes
difficult to see upside reward.
(06:52):
You experience downside risk andthen you have to drop out of the
bundle, and that's where mostsurgeons in the BPCI program end up.
And the thinking is that's goingto be sunset by CMS probably after
2025 and replaced by something else.
We don't know what yet.
Probably some form of specialistand primary care working together
(07:12):
and being incentivized together.
There are commercial bundles, andthat's through obviously a commercial
insurer where you approach them.
Similar sort of concept of it'sa lump sum payment attached
usually to a surgical episode.
Those are harder to get, and we cantalk about why that might be later on.
There is this third arm that's arising,I think it's going to become more
(07:34):
commonplace, and that is some form ofbundled agreement with a self insured
employer that's looking for highvalue, cost effective care, and so
you can negotiate with them directly.
That's a center of excellencemodel, or there's care navigators.
So there's more of thisdirect bundled program.
The final thought is eventually weexpect bundles to shift away from
(07:56):
surgical episodes of care and maybemore towards condition specific,
whether that's attached to back painor knee arthritis or hip arthritis.
To really capture more of the careprocess outside of the surgical episode.
Okay, so you listed fourtypes of bundles there.
One is the BPCI bundle,which is a CMS thing.
(08:19):
Paid a lump sum after a surgical episode.
As you said, people become avictim of their own success because
you get paid for efficiency.
So like how efficient you are becomes thebenchmark and then you have to be more
efficient than you're, Efficient self.
You have to get down with your moreefficient self at a certain point.
You can't become more efficient.
So then, yeah, you start losing money.
(08:40):
And as you mentioned, Sunset 2025, thenyou also have your commercial bundles.
You also mentioned number three,there's some self insured employers are
contracting for bundles and a lot oftimes this happens in the context of a
Center of Excellence or a COE program.
And then lastly, there's a lotof talk I've seen around can we
(09:02):
do condition specific bundlesor diagnostic based bundles.
And you mentioned back pain and then theclinical group gets paid a certain amount,
some capitated number to take care ofthat patient for some duration of time.
I think the latter one, obviously,you know, a surgical episode, a
surgical bundle just says I dida good job of doing that surgery.
(09:23):
The patient didn't have a complicationor readmission at 90 days.
It doesn't really say a whole lotabout, well, did I manage that
appropriately up to that surgery,was that surgery indicated?
So, I think the hope for these conditionspecific bundles is it's going to
incentivize that whole episode of careattached to that diagnosis, and not
just the surgery, but non surgicalmanagement if that's appropriate.
(09:44):
That surgical episode might beso called nested into that bigger
bundle, but it's not going to bethe only focus of the bundle itself.
Well, what you're bringing up,it's been discussed as a potential
perverse incentive with these bundles.
A surgeon also gets paid a bundle if thesurgeon does an inappropriate surgery.
So one of the things that is apromise of value based care is care
(10:06):
is appropriate and we don't havean incentive to do too much care.
Bundles don't do anything to address that.
Correct.
The hope of these conditionspecific bundles is that they kind
of incentivize more appropriatecare throughout the care journey.
Again, whether that's non surgicaltreatment, physical therapy,
an injection, medications, notjust around a surgical episode.
(10:27):
Bundles do nothing really todisincentivize inappropriate care.
What else might be an issue?
They also can potentially lead tocherry picking and lemon dropping.
So, you operate on the healthier patientsthat you know are more likely to do well
or less likely to have a complication.
So, they're less likely to bea downside risk in the bundle.
(10:48):
And then you don't operate onthe more complicated patient
because the bundles don't do agreat job of risk stratification.
So that higher risk patient that maybe ismore likely to have a complication or more
likely to use post acute services, maybeyou're less likely to offer surgery too.
So it definitely sounds like the bundlesdo have disadvantages, but if we're
thinking about the promise of a bundle asmaybe a first step into value based care,
(11:13):
we talked about a bunch of negatives.
Let's talk about some positives now.
What are the, what's the good news?
Yeah, the good news is we have learneda lot of lessons from the bundles.
We learned patients tend to do betterif we treat them more holistically.
So, if we take an active role inoptimizing patients for surgery, making
sure their diabetes is well controlled,making sure any anxiety or depression
(11:35):
is taken care of, because we knowthat affects outcomes from surgery.
We've learned that one of the biggestcost drivers is post acute care, so if
the patient is discharged somewhere otherthan home after the surgery, that's very
expensive and guess what, they also havea higher readmission rate, they also tend
to have a higher complication rate if theyend up in a nursing facility or rehab.
(11:57):
So we've learned that it's safefor patients to go home, it's cost
effective for them to go home,it's better for them to go home.
So there are lessons we've learned abouthow to take better care of patients, how
as orthopedic surgeons to see and treatthe patients more holistically, how to
optimize their health for surgery, sothey have better outcomes, and that's
an enduring lesson from the bundles.
In an enduring way, we haveorthopedic surgeons who are
(12:21):
thinking about a whole person here.
As you just said, if theirdiabetes is uncontrolled.
So just the outcome isnot going to be as good.
And now everybody is on the sameteam, making sure that the patient
is prepared for the surgery andthen gets the right aftercare.
One of the most interesting thingswe've learned is that patients
who stop smoking specifically toget their hip or knee replaced.
(12:44):
A lot of them don't go back tosmoking after their procedures, and
so these are the ripple sustainableeffects that we've learned.
What I would like to do is to gothrough a few things that people
might find surprising about bundles,things that they may not realize or
may be a little bit counterintuitive.
So if we're thinking about whatis surprising about bundles, you
(13:07):
mention it and people are like, what?
One of the things that comes as a surpriseto a lot of people in that 90 day window,
and this is for the CMS BPCI bundles.
Anything that happens to that patientmedically that Medicare has to pay
for in that 90 day window aftersurgery comes out of the bundle.
Two of my examples of quote unquotelosers, meaning that we experienced
(13:29):
downside risk, one patient within 90days of their procedure was diagnosed
with a head and neck cancer thatobviously needed to be treated.
That came out of the bundle.
So I was on the hook for that even thoughit had nothing to do with their surgery
they did well from their knee replacement.
I had another patient that hadinflammatory arthritis, they were on
a biological infusion like Humira orEnbrel, and we typically skip a dose
(13:53):
before and after surgery for a month toreduce the risk of infection, then the
patient goes back on that medicationmonth two after their surgery, so
that's two doses in that 90 day window.
That infusion at $7000 a pop,and that comes out of my pocket.
$14,000 out of the bundlebecause it was paid for by
Medicare in that 90 day window.
Is this how to get the orthopedicsurgeon to pay for oncology
(14:16):
care or infusions for 400, Alex?
Yeah, unfortunately, it seems a bitunfair to put people on the hook for
things that are unrelated to the surgery.
So surprising thing number one isthese bundles are all in for all
downside risk in the next 90 days.
Somebody gets hit by a caror something like that.
But if there's medical care, theorthopedic surgeon is paying for it,
(14:39):
even if it's quite clear that it'snot, that had nothing to do with the
surgery is what I'm understanding.
Correct.
For the CMS bundles, that's correct.
All right.
So that is surprising.
What's the surprising thing too?
I think that maybe the second surprisingthing, maybe a cynical take, but as
much as we talk about value based care,commercial payers, you could argue that
maybe incentivized for pursuing bundlesor agreeing to do bundles with orthopedic
(15:05):
surgeons because of medical loss ratioand whether or not that's really in
line with their typical business model.
But commercial bundles, again, as muchas we talk about value based care,
can be difficult, not impossible.
A lot more difficult to get involvedwith if you're an orthopedic practice.
Surprising thing number two, despite alot of talk, commercial payers are really
(15:26):
not overly interested in doing bundles.
There are pockets where people have beensuccessful, but it takes a long time.
It's hard to get in frontof the right people.
It's hard to get engagement.
I think people might think, hey, they'd bewilling to do anything that's value based.
But it is a challenge to getinto these commercial bundles.
It takes a lot of work to getthem to come to the table.
(15:47):
Well, I will say that take has beencorroborated from the employer side.
I did have a conversation with theleader of a very well respected
employer coalition and the employercoalition got a bunch of employers
together in a particular region.
So the employers worked out a bundlearrangement that they all agreed to, then
(16:07):
they went to local providers in that sameregion and brought the providers along.
So now you have the employers andthe providers themselves who were
like, okay, we have agreed on abundle that we want to do together.
The two of them, those two stakeholders,then went to the TPAs that were
serving these self insured employers.
(16:28):
And they said, hey, we need youto administer this bundle that
we worked out with our providers.
And those TPAs said,nah, not going to do it.
Can't do it.
Won't do it.
The end.
That was the end of the story.
I think what we're going to see as aresult of that is the self insured
employer is then going to figureout a way to do it themselves.
(16:50):
If it's not the commercial payers,we are going to see other people
step into that void to helpadminister that, to help make those
connections, to help collect that data.
To help the self insured employermake sure they're pointing their
employees in the right direction ofhigh quality, high value providers.
I think we're going to see thatbecome more commonplace because
(17:10):
I think the desire is thereon the part of the surgeons.
I think the desire is there on thepart of the self insured employers.
I think it's beneficial for thosetwo parties, and if the commercial
insurer doesn't want to play ball,I think that you'll find those
other two parties figure out howto work together to make it happen.
Yeah, I mean, it does surprise mea little bit, honestly, that the
fully insured plans aren't scopingaround for bundles from you.
(17:35):
Just because from everything thatyou've said with the improved surgical
outcomes, as well as the, you'reon the hook for the next 90 days.
It feels like something a fullyinsured payer would be interested in.
A part of it, again, is the cynicaltake is that you don't want to get
too many different arrangementswith too many different providers.
(17:56):
So as it becomes sort of choppy andfragmented and how do you approach
practices in order to do that?
And does it look the samefrom one practice to the next?
What kind of data do you want or need?
To see, to make that worthwhile, isit a big enough provider that it makes
sense to go through that process?
The point that you're making isyou've got this big national player
(18:16):
who's offering fully insured plans.
Ah, maybe they spy some upsiderelative to this whole bundle thing,
but from a, you know, I'm going touse the efficiency in air quotes.
It's very inefficient.
You have to do all these contracts.
It's really hard to administer.
So the view ain't worth the climb.
It sounds like, or they just can'teven figure out how to do it from
an administration standpoint.
Yeah, I think that certainlyis a big part of it, right?
(18:38):
I mean, that's the one thing about feefor service as much as it has downsides.
It is clean, it's very transactional,it's a little bit easier to wrap your
head around than, you know, a bundlewhere there's different moving pieces.
On the other hand, as Rob Andrews, said inepisode 415, this is their day jobs, these
payers slash third party administrators.
(19:00):
This is what we're paying these entitiesto do to figure out how to get the
best health care for plan members.
And we all know full on FFSis bad scene from a actually
producing health standpoint.
So yeah, I'm going to chalk myself up assurprised that not being able to pull off
(19:21):
something as kind of basic as a bundle.
I mean, there's some valuebased care arrangements that are
really complicated, but a bundle?
So not being able to pull off abundle efficiently is a conversation
that we're actually having in 2024.
Alright, so we've got two surprises aboutbundles that we've already talked about.
One is the whole 90 daything, the orthopedic surgeon
has to pay for everything.
(19:42):
Secondly, commercial payers are a littlebit behind the curve, maybe not fans.
Some combination of both.
Is there a third surprise?
Yeah, I think looking into thefuture, part of what we're going
to see is the evolution of bundlesor specialty value based care.
Medicare kind of tipped itshand announcing the Making
Care Primary program last year.
(20:05):
There's going to be a move to number one,try to coordinate specialty and primary
care a bit better and incentivize that,but it's curious to me, I think some
of the expectation, maybe even some ofthe concern on the part of orthopedic
surgeons is that they're incentivizingprimary care doctors maybe to do more
of the specialty care delivery ortake on more of specialty type stuff
(20:28):
and will incentivize them to do that.
The question is, what does that look like?
For Are primary care doctors goingto feel comfortable doing that?
Is there going to be maybe a little bitof a battle between primary care doctors
and specialists if the bundles becomemore general or more open to everybody?
If you control a condition specificbundle and the surgical episode is
nested within that, that's going togive more power to direct the bundle.
(20:52):
Okay, surprising thing here is that inthis new condition specific or diagnosis
specific bundle model, you could actuallyhave primary care taking ownership
for bundles and then bossing aroundthe orthos who might have a surgery
nested in the middle of said bundle.
(21:13):
So it's no longer the MSK specialistswho are the leader of the bundle or
the owner of the bundle, you're goingto have somebody else, potentially
primary care, who's the owner.
And that's different . I can certainlysee if we're trying to figure out areas
where there are opportunities, To savemoney, considering most of the money
(21:35):
is being spent in the specialty arena.
I mean, one of the reasons is becauseprimary care is just so woefully
underfunded trying to figure out howto do more coordination could help
reduce the spend having primary caredo more, which isn't like a new idea.
You want to do what'sright for the patient.
If it's, hey, let's manage this in aprimary care setting until it becomes time
(21:58):
for the patient to see the specialist.
I think that's a good thing, certainlymore care coordination between primary
care doctors and specialists is agood thing, and figuring out a way to
incentivize both sides of that equationto work together is also a good thing.
I think the concern comes in ofjust making sure that the patient
is getting the appropriate care.
I think that will create potentiallyan opportunity for somebody, some
(22:23):
entity, to bridge that gap to makesure the right decision is being made.
The primary care doctor feels comfortable,they are making the right decision.
And then the specialist feels comfortablethat the patient is coming to them at
the appropriate time and not too late.
So I think there's going to be anopportunity to bridge that gap between the
specialists and the primary care doctors.
I think we will see somecompanies start to fill that gap.
(22:45):
So you're talking about somekind of MSO type entity.
Yeah, either an MSO or perhaps some typeof a care navigator, a care coordinator
who has some experience and can helpmake that decision to say, you know,
yes, it's time for the specialistand we can point you to high value
specialists or you know what, whatever.
(23:06):
You know, maybe you haven't tried this,maybe it's not time for imaging yet.
And so you can continue to manage thisin the primary care setting will help
you to do that so that the patientis still getting good care, but it's
not quite time to see the specialist.
I'm of a couple of minds as I'mlistening to you, you talk there.
On the one hand, I'm like,there are entities right now
(23:27):
that are kind of in that space.
For example, you've gotthe virtual console gang.
So a primary care doctor can get ahold of a specialist and ask that
specialist questions as opposedto doing a full on referral.
And as you were talking about navigators,obviously there's a plethora of them.
There are entities that arealready in the mix there.
On the other hand, I would hateto see specialists in primary
(23:49):
care disintermediated from workingtogether when there's just such an
opportunity just to work together.
First of all, like we'rejust talking about knee pain.
There's some shocking percentageof patients who go to their primary
care doctor for musculoskeletal pain.
I was reading a study just howlittle musculoskeletal training
primary care doctors tend to get.
(24:10):
In fact, if you read Dreamland or any ofthose books about the opioid crisis, one
of the reasons for the opioid crisis,according to some, is that primary care
doctors felt really pretty powerless.
in the face of patient pain.
So when, you know, opioids showedup, they were like, sure, and started
prescribing them because they didn'tknow anything else to do amongst
(24:33):
a whole bunch of other factors.
I totally agree with you.
I think the disintermediation pointis very valid and the ideal situation
is let's bring specialists and primarycare doctors together, let's not
pit them against one another, right?
Can we design some type of bundledpayment program, capitation program,
where we really get primary care doctorsand specialists working together?
(24:57):
You're right that at least in my medicalschool, unless you really sought out
musculoskeletal education, we gotlike two lectures on musculoskeletal
topics in medical school and thetraining isn't necessarily there
later on as well in residency.
So you don't want to put primary caredoctors in a situation where they're
(25:17):
sort of incentivized not to refer tothe specialist, but at the same time
they want to feel like they're doingthe right thing for the patient.
And that can lead to, you know, overtreatment, under treatment, over
imaging, under imaging, wrong imaging.
So, I think the ideal is to developa program that coordinates those
two things and has them incentivizedto do the right thing together.
(25:41):
I think one of the concerns about thesenavigators or these entities that exist
that you've mentioned is unfortunately,a lot of them, their value proposition
seems to be, hey, let's keep that patientaway from the specialist because that's
where the cost really lies, and that'sokay if it's appropriate, but making sure
that the patient does see the specialistwhen it is necessary is number one.
(26:02):
And number two, making sure that theprimary care side of the equation has
resources that they feel comfortableat, hey, I'm doing the right thing for
the patient, or I have a resource I cango to if I'm not sure that maybe isn't
referring completely to the specialist,but is making sure that I'm on the right
track, that I'm not missing something,that I'm not delaying care, that I'm not
(26:23):
doing the wrong things for that patient.
And that's a lovely promise, right?
And I mean that full throatedly,that one of the things we've been
striving for is to get primary careand specialists working together.
Obviously, the whole lack ofdata could be a factor here.
There was recently a hospitologynewsletter about this , just that
(26:44):
primary care doesn't have the data alot of times to know who the specialists
are that are performing the best.
But the promise is veryinteresting and it seems like it
could be a way forward for sure.
All right.
So that was our third surprisingthing about bundles, Dr.
Ben Schwartz.
Is there a fourth?
Yeah.
Tangentially related to the bundles isthe concept of centers of excellence.
(27:07):
Those have become also very commonplace.
A lot of promise.
There was a pretty landmark HBRarticle written several years ago about
Walmart's experience in the COE program.
I think if you dig into thatand you parse it a little bit,
the Centers of Excellence.
Don't necessarily save money sortof on the cost of the procedure.
(27:28):
They can be as expensive ifnot more expensive in some
cases for the procedure itself.
I think the value is driventhere by surgical avoidance.
So you get sent to the Center ofExcellence and the physician at the
center of excellence says no, I don'tagree with the community surgeon.
You don't need a $100,000 back fusion.
And then that's your employer obviouslysaves money and in an avoided procedure.
(27:49):
And there is potentially some valueto that, but unfortunately, there's
a lot of gray areas and one person'sopinion may be different than
somebody else's opinion and how doyou decide whose opinion is correct.
So I think the COE model is interesting,but it's really kind of more that
decision for or against surgery.
It's not necessarily that theiroutcomes are any better, it's not
(28:09):
necessarily the cost is any less.
It's more that you're getting maybea differing opinion that says,
hey, I don't think this procedurehas indicated that this person
in the community is describing.
And then that person in the communitythat maybe has had a relationship with
that patient for years has to then dealwith that patient who was sent to the
Center of Excellence by their employer.
(28:29):
The employer says, look, theCenter of Excellence said you
don't need that procedure.
I think people assume the COEis cost controlled for the
procedure when oftentimes it'snot any cheaper than having the
procedure done in the community.
Probably less care variation at thecenter of excellence, but I think most
communities have good high quality,high value surgeons if you're willing
(28:49):
to take the effort to find them.
Okay, there's a couple ofthings I find really interesting
about what you just said.
And the first one is, and just neverreally thought about it before,
honestly, but just pointing this out.
We've had Peter Hayes on the showtalking about just the high prices
of hospital services, right?
Hospital prices are very high.
I just never really thought about that.
(29:10):
If we're talking about a center ofexcellence, which tends to be an academic
medical center, which tends to be ahospital, you know, hospital system.
So the prices are very high.
The reason why those programs are costeffective or reduce costs isn't because
the cost of the procedure is any less.
It's because there are less surgeries.
(29:31):
In a lot of cases, I think the employerand the Center of Excellence do tend to
negotiate through their own bundle price.
But even then, It's not necessarilyless expensive than if you went to,
you know, a community facility to haveyour surgery or let's say a surgery
center, which is going to be even lessexpensive than having it done at the COE.
You look at the SAGE Transparency Projector you look at any of these things, it's
(29:54):
very clear that commercial rates are quitehigh and the center of excellence model.
You're still going to those same exactentities that are charging a lot of money.
I mean, there's some upsides here.
One of them is a lot of the centerof excellence programs do require
very meticulous data tracking.
Such a small percentage of providerorganizations and or clinics measure
(30:16):
outcomes of any kind clinical or PROMS,Patient Reported Outcome Measures.
I think that's the main question here.
I mean, how do clinicians evenknow if what they're doing
is amazing or not amazing Dr.
Steve.
Schutzer talked a lot about this inEncore episode 294, if somebody really
wants to dig in, but if I'm an employerusing a center of excellence model, the
(30:38):
requirements to track a lot of differentdata elements could really be helpful
and potentially I'm not sure the worthit and valuable in and of themselves.
So there's definitely some upsides here.
However, the cost of the proceduresthemselves are still, as you
just said, on the high side.
But then the other issue to kindof keep in mind is, it certainly
is a second opinion, right?
(30:59):
And as anyone would tell you, whenever,before anybody gets any surgery, you
should definitely go get a second opinion.
But because that second opinion andthe surgery may be happening outside
of the patient's local community andoutside of that patients local ability
to go get physical therapy or go get,right, like they're going to have to
get aftercare within the community.
(31:20):
There may be a disruption of carecontinuity, and if they need care then in
the community, that is certainly somethingthat anybody with the Center of Excellence
network should be keeping in mind.
There's a lot of thingsthere that you mentioned.
Number one is, for sure, I mean, it'snot fair to throw shade at COEs if
you don't come with your own data.
So, if you want to keep those patientslocally, and you say, we do just as good
(31:43):
a job, and we can do it maybe more costeffectively, you have to bring the data.
That's only fair, andyou have to prove it.
So, I think that's point number one.
Number two is, yes.
In my mind, the best thing for the patientis to whenever possible keep them in
the community as opposed to somethingthat's, that can be very transactional,
they're meeting that person for thefirst time at the COE, maybe they're
(32:04):
having their surgery, and they're goingback to the community, and now it's
up to the community if that patientshows up in the ER with a complication.
The COE maybe tries to take care ofthe complications as much as they can,
but the patient's not going to travelhundreds or thousands of miles away
when they have a complication, right?
They're going to go to the local ER.
I think some of these programs comeup with agreements with primary
care doctors to do some of thepost operative care, which may
(32:25):
not be the best situation either.
The patient goes back in thecommunity, if they've had a procedure
and they're having an issue, or ifthey go back to the community and
they've been told to the COE, look,I don't agree with this surgery.
Now, what do I, as a communityprovider who maybe has been treating
that patient for a long time,now where do we go from there?
How do I reconcile that?
(32:45):
Now I have this patient that'sbeen turned away from a COE, their
employer's telling them that they'renot going to cover the cost of care.
That makes for some difficultconversations and we don't have, as far
as I know, good data on the outcomes.
What happens to patients that goto a COE and are told that they
don't need a certain treatmentand end up back in the community?
What's their ultimate outcome?
Do they end up withsurgery in the community?
(33:06):
Do they do okay?
Do they not do okay?
They not end up with surgery, dothey end up with another treatment,
do they eventually get better?
You know, that data we really don't have.
Like so many things, it's not likeany given idea is good or bad.
It's a lot of it has to dowith devils in details and the
execution really matters here.
It would be up to any employer orplan sponsor who's thinking COE
(33:32):
model to really think through someof the executional elements here.
As with so many things, and listento the show with Al Lewis, 331, for a
deep dive into this, also the show withCora Opsahl, this comes up, it's up to
the plan sponsor to take a broad viewon the actual impact of the program.
Because as you just mentioned, ifthe COE, the Center of Excellence
(33:54):
program vendor, is only measuring theimpact in cost savings or ROI on the
patients who got operated on, And thenthe patients who didn't get operated
on are tallied up as zero dollarsand no further costs are considered.
That's not going to be accurate.
A lot of things about the conceptof a Center of Excellence model
makes sense and you're right,it's all about the execution.
(34:15):
I don't think you necessarily have tosend patients hundreds or thousands
of miles away from their community.
It may take some work and again, it'sincumbent upon us in the community
to, you know, come with our data andprove that we're doing good work,
whether it's at our practices, asurgery center or local hospital.
But I think the conceptof the COE can be local.
One thing that I have heard more than oncealso from employers is this whole idea of
(34:39):
efficiency and it's very inefficient tohave lots of regional contracts, right?
So you've got a national workforce,you've got a couple of patients
in all these different markets.
It's a lot easier to set up a COEnetwork where everybody flies to
a limited number of Centers ofExcellence's, as opposed to having
(35:00):
lots and lots of local relationships.
So you can definitely kind ofsee why this winds up happening.
You know, you think about value basedcare, you kind of have to understand.
Who the quality provider organizationsare within any local market.
You can't just keep flying peoplearound for everything, right?
So as the data, maybe the qualitydata becomes more ubiquitous, it
(35:23):
becomes more possible to do someof the stuff that we're talking
about within the local community.
I think there is an opportunity sort ofon a national level for high quality,
high value providers, centers thataren't necessarily traditional Centers
of Excellence, academic medical centersas we think of them, to band together
and say, you know, as a group, asthis network, regional nationwide
(35:46):
network, we're going to follow similarprotocols, we're going to report.
Our outcomes to you, we're going tohave our own vetted providers and
vetted centers, almost like a franchisemodel or under some umbrella where
we've all kind of agreed to adhere tothese standards and report our data.
You know, we're in our own localmarkets, but we're sort of under
(36:07):
the same national umbrella that wecan approach self insured employers.
And you know that if you go to oneof the providers that's in this self
curated network, that you're goingto get good quality care because you
have the data as it's reported to you.
So, surprises that we have discussed hereis this whole 90 day thing that everything
falls on the shoulders of the orthopedicsurgeon to pay for regardless of whether
(36:29):
it's associated with the surgery or not.
Number two, commercial payers, not a hugefan of bundles, actually, it turns out.
Number three, this move tocoordinate with PCPs and specialists.
And we talked through some ofthe interesting nuances there.
And then lastly here,we talked about COEs.
Centers of Excellence, the Center ofExcellence models, not a magic bullet,
(36:53):
not that anyone thought there was, butthere is some interesting implications
here, especially as it relates totaking the patient out of the community.
Dr.
Ben Schwartz, is there anythingI neglected to ask you that
you think we should cover here?
I think, look, there's opportunity here.
We've learned some important lessons.
I think we'll continueto learn and evolve.
(37:13):
I think in the future, it's goingto be mandatory and not voluntary
as we've seen before in the bundle.
So I think it's incumbent uponthose of us, particularly at MSK,
particularly hyponatric arthritis andback pain, where a lot of the spend
is to understand this, to try to geta seat at the table, to try to be
proactive in having these conversations.
Hopefully, on the other side of theequation, the government, CMS, CMMI,
(37:37):
self-insured employers, commercialinsurance plans are willing to come
to the table with us and work withus to collaborate on these programs,
cause I think that's really where we'regoing to see the most sustainability.
There's been some fits and starts.
We haven't yet hit on the rightformula for sustained success.
I think really the only way we're goingto do that is, is to have everybody coming
(37:58):
together and making sure that everybody'spulling in the right direction.
That's a great inspirational message.
There's a collaborative opportunityhere so patients can get better care
at an affordable price and everybody'sknowledge is required to make that happen.
Orthopedic surgeons, I think, areknown for, for being entrepreneurial
and seeking out their own solutions.
(38:19):
And I think we are seeing pockets ofthat where, you know, if you can't
get traditional people to come tothe table, then you'll figure out
ways yourself to try to make it work.
And so there's a lot of, Ithink, exciting work being done.
To that end, by people who reallyunderstand this and understand where
things are going and are reallytrying to help create that future.
For sure.
And it's going to take people whoreally understand the nuances here
(38:41):
and really understand what's goingon in order to actually create
a future that's going to work.
Dr.
Ben Schwartz, where canpeople find your blog?
Yeah, so the blog is DemDry Bones on Substack.
There's a link to it on my LinkedInpage, Benjamin Schwartz, MD.
I'm happy to connect with anyone.
Dr.
Ben Schwartz, thank you so much forbeing on Relentless Health Value today.
(39:02):
Yeah, thank you, Stacey.
My pleasure.
So let's talk about going over to ourwebsite and typing your email address
in the box to get the weekly emailabout the show that has come out.
Sometimes people don't do that becausethey have subscribed on iTunes or
Spotify and or we're friends on LinkedIn.
What you get in that email is theintroduction of the show transcribed.
(39:24):
There's also show notes withtimestamps, just apprising you of
the options that are available.
Thanks so much for listening.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Nikki Glaser Podcast
Every week comedian and infamous roaster Nikki Glaser provides a fun, fast-paced, and brutally honest look into current pop-culture and her own personal life.