Bundled payments, amongst a number of alternative payment models, are gaining traction in the new healthcare environment. Can ambulatory surgery center leaders successfully create and execute a system for bundled payments? Orthopedic Surgery Center of Orange County began to adopt bundled payments in late 2008. Gabrielle White, RN, CASC, is executive director of ambulatory services and network development at Hoag Orthopedic Institute and the founder of an independent consulting company. Ms. White explains the process and offers insight for any surgery center taking on bundled payments.
Defining the bundled payment
The first step in preparing to launch bundled payments is determining what falls beneath the umbrella of that bundle. At Orthopedic Surgery Center of Orange County, bundled payments are defined as a global payment. In this case, the bundle includes all facility and professional fees for a single episode, from admission to discharge, at the surgery center.
A step beyond global payment is a warranty episode. In this case, the bundle will include all fees from admission to a certain number of days past the procedure itself. "This is more work and detail, as you need to determine what is included and excluded in the warranty," says Ms. White.
Global payment is a good place for ASCs that have never offered bundled payments to start. Easing into the process allows ASC leaders to build reliable processes that can serve as a foundation for future growth of a bundled payment program.
Gauge payer interest
Before diving into the details, reach out to payer coordinators. "You have to test the market," says Ms. White. "Don't put in too much effort for a payer only to find out they aren't interested." Level of payer interest and cooperation varies from market to market.
Find the procedures that fit
Elective procedures without costly implants are some of the procedures that most naturally arise as bundled payment candidates. Select cases that offer a measure of predictably in outcomes, time spent in the operating room and supplies used. "Though all cases have a level of uncertainty, high volume procedures are fairly predictable for any surgery center leader," says Ms. White.
In orthopedics and spine predictable procedures may include:
• Meniscectomy
• Rotator cuff repair
• Carpal tunnel release
• Discectomy
• Laminectomy
A procedure, such as fracture repair, would be an unlikely fit due to the high variability between cases.
Gather data
Data is the lynch pin of any successful bundled payment program. Interested payers will want to see data and ASC leaders will require data to understand how bundled payments will work at their center. "You need to know the fee for the surgeon, assistant, anesthesia, pathologist and facility in one lump sum," says Ms. White.
To arrive at that single number, ASC leaders will know the answers to a number of questions.
• What is each procedure's primary CPT code?
• What are your average costs for each type of procedure?
• Are all of the ASC's physicians going to participate?
• What are the average costs of procedures by individual physicians?
• How does this average play into the center's overall price average?
• How will these numbers stack up when applied to the center's profit margin?
"If you have good data on your physicians and their trends, you can easily come up with pricing, even including implants," says Ms. White. Once all of the data is in hand, ASC leaders can determine price limits for each procedure's global fee.
Align providers
All providers will need to be on the same page if a bundled payment program is to be successful. "It is really a matter of putting the concept together and presenting it in a simple, understandable way," says Ms. White. At Orthopedic Surgery Center of Orange County, Ms. White organized the data and presented a plan to the center's board. The ASC's surgeons and anesthesia team worked together to create a global price, which was imbedded in the facility's price limit.
When working with providers it is important to find equilibrium. "If you are getting paid one check from the payer to cover all services and you have a surgeon with cases that cost a thousand dollars more than everyone else that is a problem," says Ms. White. Providers using more expensive implants or spending above average amounts of time in the OR will most likely not fit into a bundled payment model.
Prepare for changes in coding and billing
Coders will still need to code the operative report as with any other procedure. One issue to be aware of: if a surgeon does anything in addition to what is included in the bundle, it will not be covered. Ms. White has addressed this problem in a case such as complex arthroscopy by including all of the codes and average pricing that may be needed within that bundle.
The largest changes come during the billing process. "You go from four different providers sending claims to the payer, to one provider sending one claim," says Ms. White. "There is a lot of trust involved." A uniform process in place amongst all providers will allow for a smooth process of sending one claim and receiving one check. The Orthopedic Surgery Center of Orange County is physician-owned and the owners maintain a positive relationship with the center's anesthesia team. In cases such as this, the necessary pathways for strong communication are already open.
Ms. White's center has an in-house billing department, which was intimately involved in the bundled payment process since its inception. Though this is a definite benefit, there are outsourced billing services prepared to handle bundled payments. In the case of outsourced billing, it is helpful to know the staff members in charge of a center's account. Do these staff members rotate? Do they all know and understand what is required for billing in the case of a bundled payment? Regular communication is key to a successful bundled payment program.
Remain attentive to the process
Putting in place a successful bundled payment process does not entirely eliminate the possibility of mistakes. One provider may accidentally send a bill directly to the payer, resulting in double billing. Always identify a procedure as a part of the bundled payment system before it is performed and ensure all parties involved are aware.
Gabrielle White can be contacted at gwhite@oscoc.com or ccadvisors1@gmail.com.
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