For a full transcript of this episode, click here.
I’ve been in a couple of meetings lately. In one case, a healthcare company came up 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 end like a Monday morning quarterback here; but the plan that failed, I have to say, I wasn’t surprised. Had they asked me ahead of time, I would have told them to save their money because the plan was never gonna work, even though the strategy looked like kind of a straight line from here to there.
Nor was I shocked by the success of the other plan, even though this one that triumphed had what looked like five extra steps and was slightly counterintuitive if you looked at it cold, without understanding the way the healthcare industry actually works.
Here’s my point: It might feel like the healthcare industry is chaos monkey central and impossible to predict actions and reactions—and, for sure, there’s always unknowns and intersecting variables—but it’s not a complete black box. The trick is, as you know and I know, you gotta understand what other stakeholders are up to. You gotta get a bead on what they’re doing and what their incentives are because then you can better predict actions and potentially reactions.
So, let me state the obvious (that’s why listeners tune in to this show as I just said, and it’s what we aim to shine a light on here at Relentless Health Value): the pushes and the pulls and the forces. What’s going on outside of the 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’s very vital to be keyed in on what they’re doing or what their customers are doing or what their customers’ vendors are doing. This show should feel like it gives you a measure of control (or at least that’s my hope) or a method to find the measure of control. And I hope you succeed. That’s why I continue to put out these shows. The RHV tribe members want the same thing I want—to fix the healthcare industry for patients and for members—so, thanks for being here and for making actionable the insights that you might find here.
I have been so looking forward to doing a show with Ben Schwartz, MD, MBA, orthopedic surgeon and prolific writer of deeply thoughtful and insightful posts on LinkedIn. In this healthcare podcast, we are talking about bundled payments. And today’s your lucky day if you think you know a lot about bundles, because most people who listen to this show at least know enough to be dangerous. So, that’s our starting point, which is why I asked Dr. Schwartz to talk to me about what most people find surprising about bundles and bundled payments. There are four surprises that we go through in the show today. Listen to the show or read the transcript to find out exactly what they are. So, no spoiler alert alert.
But relative to these surprises, we get into the four types of bundles that may or may not be available. And those four types of bundles are:
1. CMS bundles such as the BPCI (Bundled Payments for Care Improvement) and the CJR (Comprehensive Care for Joint Replacement) bundles, and we talk about the current state of said BPCI bundles, which are being sunsetted probably because so many efficient clinical teams are being penalized for getting too efficient. They become victims of their own success the way the program is currently designed, wherein the goalposts keep shifting.
2. Commercial bundles—ie, a bundle that is offered by a commercial carrier such as a BUCA (ie, Blue Cross Blue Shield/UnitedHealthcare/Cigna/Aetna/Anthem) carrier
3. Direct bundle—a bundle that is paid for directly by a plan sponsor such as a self-insured employer
4. Condition- or diagnosis-specific bundle. These types of bundles do not spiral around a surgical intervention at their core, which most of the current bundles do. This may describe CMS’s recently announced “Making Care Primary” initiative, but we’ll have to see about that.
Speaking about the #3 kind of bundle, the employer-direct bundles, especially for musculoskeletal (MSK), let me share a post by Moby Parsons, MD, that I thought captured the entrepreneurial spirit of some of these orthopedic surgeons who are seeking employers to direct contract with and cut out the middleman, etc (which, by the way, is the main topic of an entire show upcoming with Elizabeth Mitchell from the Purchaser Business Group on Health). But Dr. Parsons wrote:
“When our bundle business has sufficient growth to ensure the absolute sustainability of our practice against declining reimbursements … in a fee-for-service system, I am getting this tattoo. Don’t tell my wife. [And the tattoo is ‘Free Yourself.’]”
My guest today, aforementioned, is Dr. Ben Schwartz. He’s an orthopedic surgeon in the Boston area still in full-time clinical practice. He’s grown very interested in healthcare innovation, healthcare technology, and does some advising and investing. Dr. Schwartz also writes a great Substack called Dem Dry Bones.
After you listen to this show, please go back and listen to the one with Steve Schutzer, MD (EP294) talking about how to create a Center of Excellence and also the one with Rob Andrews (EP415) about how and why if you are a plan sponsor you might want to consider direct contracting with quantifiably amazing provider groups.
Also, if you are an ortho or involved in MSK care, I might suggest following Karen Simonton on LinkedIn, as well as Moby Parsons, MD, and, for sure, of course, my guest today, Dr. Ben Schwartz.
Also mentioned in this episode are Moby Parsons, MD; Elizabeth Mitchell; Steve Schutzer, MD; Robert Andrews; Karen Simonton; Peter Hayes; Al Lewis; and Cora Opsahl.
You can follow Dr. Schwartz on LinkedIn and read his blog on Substack.
Benjamin J. Schwartz, MD, MBA, is a fellowship-trained orthopedic surgeon with over 15 years of experience. He has served numerous healthcare leadership roles on both a local and national level with a focus on developing and implementing evidence-based, high-quality musculoskeletal care delivery pathways. Dr. Schwartz is vice chair of the Practice Management Committee for the American Association of Hip and Knee Surgeons and helps advance knowledge of musculoskeletal conditions as a member of the Hip and Knee Content Committee for the American Academy of Orthopaedic Surgeons and editorial board member/elite reviewer for The Journal of Arthroplasty.
Dr. Schwartz has extensive experience in value-based care, having personally achieved over $400,000 in savings during his first year in the CMS BPCI-A program. He has received awards for clinical care and professionalism and was named a Castle Connolly Top Doctor in 2022 and 2023.
In addition to his clinical work, Dr. Schwartz maintains a strong presence in healthcare technology and innovation as advisor and investor to early-stage digital health companies. He is frequently sought after by clinicians, founders, and venture capitalists for his ability to bridge the gap between real-world medicine and start-ups/entrepreneurship.
Dr. Schwartz’s passion is thoughtful implementation of technology and innovation to improve healthcare quality, accessibility, costs, and outcomes.
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?
27:03 How do Centers of Excellence connect back to bundled payments?
30:29 EP294 with Steve Schutzer, MD.
33:43 EP372 and EP373 with Cora Opsahl.
37:13 What does Dr. Schwartz think the future is for bundled payments?
You can follow Dr. Schwartz on LinkedIn and read his blog on Substack.
@BenSchwartz_MD discusses #bundledpayments on our #healthcarepodcast. #healthcare #podcast #digitalhealth #healthcareleadership #healthcaretransformation #healthcareinnovation
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00:00:01
Episode 434, "Five Surprises About Bundled Payments".
00:00:07
Today, I speak with Dr.
00:00:09
Ben Schwartz.
00:00:18
American Healthcare Entrepreneurs and Executives You Want to Know., Talking.
00:00:24
Relentlessly Seeking Value.
00:00:26
I've been in a couple of meetings lately.
00:00:28
In one case, a healthcare company came up with a strategy and deployed it,
00:00:33
and the strategy didn't go as planned.
00:00:35
The other one, it did go as planned.
00:00:37
It worked great.
00:00:38
Of course, I'm coming in on the back ends like a Monday morning quarterback here.
00:00:42
But the plan that failed, I have to say I wasn't surprised.
00:00:45
Had they asked me ahead of time, I would have told them to save their money because
00:00:48
the plan was never going to work, even though the strategy looked like kind
00:00:51
of a straight line from here to there.
00:00:53
Nor was I shocked by the success of the other plan, even though this one,
00:00:57
the triumphed, had what looked like five extra steps and was slightly
00:01:01
counterintuitive if you looked at it cold without understanding the way the
00:01:05
healthcare industry actually works.
00:01:07
Here's my point.
00:01:08
It might feel like the healthcare industry is chaos monkey central and impossible
00:01:14
to predict actions and reactions.
00:01:16
And for sure, there's always unknowns and intersecting variables, but
00:01:20
it's not a complete black box.
00:01:22
The trick is, as you know, and I know because you're listening to
00:01:25
this podcast, you got to understand what other stakeholders are up to.
00:01:30
You got to get a bead on what they're doing and what their incentives are.
00:01:34
Because then you can better predict actions and potentially reactions.
00:01:38
So let me state the obvious.
00:01:40
That's why listeners tuned into the show, as I just said, and it's what
00:01:43
we aim to shine a light on here at Relentless Health Value, the
00:01:46
pushes and the pulls and the forces.
00:01:48
What's going on outside of the organizations or the silos
00:01:51
that we work within day to day?
00:01:53
Because if you're looking to sell to, partner with, not be obstructed by,
00:01:57
insert some stakeholder here, then it's very vital to be keyed in on what they're
00:02:02
doing or what their customers are doing or what their customers vendors are doing.
00:02:06
This show should feel like it gives you a measure of control or
00:02:09
at least that's my hope or method.
00:02:11
To find the measure of control.
00:02:13
And I hope you succeed.
00:02:15
That's why I continue to put out these shows.
00:02:17
The RHV tribe members want the same thing I want to fix the healthcare
00:02:22
industry for patients and for members.
00:02:24
So thanks for being here and for making actionable the insights
00:02:27
that you might find here.
00:02:29
I have been looking so forward to doing a show with Dr.
00:02:32
Ben Schwartz, orthopedic surgeon and prolific writer of deeply thoughtful
00:02:36
and insightful posts on LinkedIn.
00:02:38
Today, we are talking about bundled payments.
00:02:41
And today's your lucky day if you think you know a lot about bundles,
00:02:45
because most people who listen to the show at least know enough to be
00:02:48
dangerous, so that's our starting point.
00:02:50
Which is why I asked Dr.
00:02:52
Schwartz to talk to me about what most people find surprising about
00:02:56
bundles and bundled payments.
00:02:58
There are four surprises that we go through in the show today, and listen
00:03:02
to the show or read the transcript to find out exactly what they are.
00:03:05
So no spoiler alert, alert.
00:03:08
But relative to these surprises, we get into the four types of bundles
00:03:12
that may or may not be available.
00:03:14
And those four types of bundles are number one, CMS bundles, such
00:03:19
as the BPCI and the CJR bundles.
00:03:22
And we talk about the current state of said BPCI bundles, which are being
00:03:27
sunsetted, probably, because so many efficient clinical teams are being
00:03:31
penalized for getting too efficient.
00:03:33
They become victims of their own success, the way the program is currently designed
00:03:36
wherein the goalposts just keep shifting.
00:03:39
The second type of bundle that we talk about are commercial bundles, i.
00:03:42
e.
00:03:42
a bundle that is offered by a commercial carrier, such as a BUCA, i.
00:03:47
e.
00:03:47
Blue Cross Blue Shield, United Healthcare, Cigna, Aetna, Anthem carrier.
00:03:51
Number three kind of bundle is a direct bundle.
00:03:54
This is a bundle that is paid for directly by a plan sponsor,
00:03:58
such as a self insured employer.
00:04:00
And then number four type of bundle we talk about is a condition
00:04:03
or diagnosis specific bundle.
00:04:06
These types of bundles do not spiral around a surgical
00:04:09
intervention at their core, which most of the current bundles do.
00:04:14
So, this last type, this fourth bundle type, may describe CMS's recently
00:04:19
announced Making Care Primary initiative, but we'll have to see about that.
00:04:23
Speaking about the number three kind of bundle, the Employer Direct bundles,
00:04:28
especially for musculoskeletal, MSK.
00:04:31
Let me read a post by Moby Parsons, MD, that I thought captured the
00:04:34
entrepreneurial spirit of some of these orthopedic surgeons who are seeking
00:04:38
employers to direct contract with and cut out the middleman , et cetera, which, by
00:04:42
the way, is the main topic of an entire show upcoming with Elizabeth Mitchell from
00:04:47
the Purchasers Business Group on Health.
00:04:49
But Dr.
00:04:50
Parsons wrote, When our bundle business has sufficient growth to ensure the
00:04:54
absolute sustainability of our practice against declining in a fee for service
00:04:59
system, I'm going to get this tattoo.
00:05:01
"Don't tell my wife.
00:05:02
And the tattoo is free yourself."
00:05:04
My guest today, aforementioned, is Dr.
00:05:07
Ben Schwartz.
00:05:07
He's an orthopedic surgeon in the Boston area, still in
00:05:11
full time clinical practice.
00:05:13
He's grown very interested in healthcare innovation, healthcare technology,
00:05:17
and does some advising and investing.
00:05:19
Dr.
00:05:19
Schwartz also writes a great Substack called "Dem Dry Bones".
00:05:24
All the links to everything I just said in the show notes.
00:05:27
After you listen to the show, please go back and listen to the one with Dr.
00:05:30
Steve Schutzer talking about how to create a center of excellence and also
00:05:34
the one with Rob Andrews about how and why, if you are a plan sponsor, you might
00:05:38
want to consider direct contracting with quantifiably amazing provider groups.
00:05:43
Also, if you are an ortho or involved in MSK care, I might suggest following
00:05:50
Karen Simonton on LinkedIn as well as Moby Parsons, MD, and for sure,
00:05:56
of course, my guest today, Dr.
00:05:57
Ben Schwartz.
00:05:58
My name is Stacey Richter.
00:05:59
This podcast is sponsored by Aventria Health Group.
00:06:02
Dr.
00:06:03
Ben Schwartz, welcome to Relentless Health Value.
00:06:05
Thank you.
00:06:05
Thanks for having me.
00:06:06
This is quite an honor.
00:06:07
Let me ask you one question before we also get into the
00:06:10
heart of our conversation today.
00:06:12
Where are we in the bundle time space continuum?
00:06:15
Sure.
00:06:15
So the main bundles that people know about are through CMS, through the
00:06:19
government, and that's the Bundled Payment for Care Improvement Program, or BPCI.
00:06:23
It's a mouthful.
00:06:24
And that started several years ago.
00:06:25
Now it's been through an iteration to the advanced model.
00:06:28
But the general idea is you get paid a lump sum for that hip or
00:06:32
knee replacement, and any care that happens in the 90 days after the
00:06:36
procedure comes out of the bundle.
00:06:38
And so there's been some good lessons learned, there's
00:06:40
been some care improvement.
00:06:42
The problem is that the target price in the bundle tends to shift
00:06:45
lower, you become a victim of your own success, and then it becomes
00:06:49
difficult to see upside reward.
00:06:52
You experience downside risk and then you have to drop out of the
00:06:55
bundle, and that's where most surgeons in the BPCI program end up.
00:06:59
And the thinking is that's going to be sunset by CMS probably after
00:07:04
2025 and replaced by something else.
00:07:06
We don't know what yet.
00:07:08
Probably some form of specialist and primary care working together
00:07:12
and being incentivized together.
00:07:14
There are commercial bundles, and that's through obviously a commercial
00:07:18
insurer where you approach them.
00:07:20
Similar sort of concept of it's a lump sum payment attached
00:07:23
usually to a surgical episode.
00:07:25
Those are harder to get, and we can talk about why that might be later on.
00:07:29
There is this third arm that's arising, I think it's going to become more
00:07:34
commonplace, and that is some form of bundled agreement with a self insured
00:07:38
employer that's looking for high value, cost effective care, and so
00:07:43
you can negotiate with them directly.
00:07:45
That's a center of excellence model, or there's care navigators.
00:07:48
So there's more of this direct bundled program.
00:07:51
The final thought is eventually we expect bundles to shift away from
00:07:56
surgical episodes of care and maybe more towards condition specific,
00:08:00
whether that's attached to back pain or knee arthritis or hip arthritis.
00:08:04
To really capture more of the care process outside of the surgical episode.
00:08:08
Okay, so you listed four types of bundles there.
00:08:12
One is the BPCI bundle, which is a CMS thing.
00:08:19
Paid a lump sum after a surgical episode.
00:08:21
As you said, people become a victim of their own success because
00:08:25
you get paid for efficiency.
00:08:27
So like how efficient you are becomes the benchmark and then you have to be more
00:08:30
efficient than you're, Efficient self.
00:08:32
You have to get down with your more efficient self at a certain point.
00:08:35
You can't become more efficient.
00:08:37
So then, yeah, you start losing money.
00:08:40
And as you mentioned, Sunset 2025, then you also have your commercial bundles.
00:08:44
You also mentioned number three, there's some self insured employers are
00:08:49
contracting for bundles and a lot of times this happens in the context of a
00:08:55
Center of Excellence or a COE program.
00:08:58
And then lastly, there's a lot of talk I've seen around can we
00:09:02
do condition specific bundles or diagnostic based bundles.
00:09:06
And you mentioned back pain and then the clinical group gets paid a certain amount,
00:09:11
some capitated number to take care of that patient for some duration of time.
00:09:16
I think the latter one, obviously, you know, a surgical episode, a
00:09:19
surgical bundle just says I did a good job of doing that surgery.
00:09:23
The patient didn't have a complication or readmission at 90 days.
00:09:26
It doesn't really say a whole lot about, well, did I manage that
00:09:29
appropriately up to that surgery, was that surgery indicated?
00:09:32
So, I think the hope for these condition specific bundles is it's going to
00:09:36
incentivize that whole episode of care attached to that diagnosis, and not
00:09:41
just the surgery, but non surgical management if that's appropriate.
00:09:44
That surgical episode might be so called nested into that bigger
00:09:48
bundle, but it's not going to be the only focus of the bundle itself.
00:09:52
Well, what you're bringing up, it's been discussed as a potential
00:09:56
perverse incentive with these bundles.
00:09:58
A surgeon also gets paid a bundle if the surgeon does an inappropriate surgery.
00:10:02
So one of the things that is a promise of value based care is care
00:10:06
is appropriate and we don't have an incentive to do too much care.
00:10:10
Bundles don't do anything to address that.
00:10:13
Correct.
00:10:13
The hope of these condition specific bundles is that they kind
00:10:16
of incentivize more appropriate care throughout the care journey.
00:10:20
Again, whether that's non surgical treatment, physical therapy,
00:10:23
an injection, medications, not just around a surgical episode.
00:10:27
Bundles do nothing really to disincentivize inappropriate care.
00:10:31
What else might be an issue?
00:10:33
They also can potentially lead to cherry picking and lemon dropping.
00:10:37
So, you operate on the healthier patients that you know are more likely to do well
00:10:41
or less likely to have a complication.
00:10:43
So, they're less likely to be a downside risk in the bundle.
00:10:48
And then you don't operate on the more complicated patient
00:10:51
because the bundles don't do a great job of risk stratification.
00:10:54
So that higher risk patient that maybe is more likely to have a complication or more
00:10:59
likely to use post acute services, maybe you're less likely to offer surgery too.
00:11:04
So it definitely sounds like the bundles do have disadvantages, but if we're
00:11:07
thinking about the promise of a bundle as maybe a first step into value based care,
00:11:13
we talked about a bunch of negatives.
00:11:14
Let's talk about some positives now.
00:11:16
What are the, what's the good news?
00:11:17
Yeah, the good news is we have learned a lot of lessons from the bundles.
00:11:21
We learned patients tend to do better if we treat them more holistically.
00:11:25
So, if we take an active role in optimizing patients for surgery, making
00:11:30
sure their diabetes is well controlled, making sure any anxiety or depression
00:11:35
is taken care of, because we know that affects outcomes from surgery.
00:11:38
We've learned that one of the biggest cost drivers is post acute care, so if
00:11:42
the patient is discharged somewhere other than home after the surgery, that's very
00:11:47
expensive and guess what, they also have a higher readmission rate, they also tend
00:11:51
to have a higher complication rate if they end up in a nursing facility or rehab.
00:11:57
So we've learned that it's safe for patients to go home, it's cost
00:12:00
effective for them to go home, it's better for them to go home.
00:12:02
So there are lessons we've learned about how to take better care of patients, how
00:12:06
as orthopedic surgeons to see and treat the patients more holistically, how to
00:12:10
optimize their health for surgery, so they have better outcomes, and that's
00:12:14
an enduring lesson from the bundles.
00:12:16
In an enduring way, we have orthopedic surgeons who are
00:12:21
thinking about a whole person here.
00:12:23
As you just said, if their diabetes is uncontrolled.
00:12:26
So just the outcome is not going to be as good.
00:12:29
And now everybody is on the same team, making sure that the patient
00:12:33
is prepared for the surgery and then gets the right aftercare.
00:12:37
One of the most interesting things we've learned is that patients
00:12:40
who stop smoking specifically to get their hip or knee replaced.
00:12:44
A lot of them don't go back to smoking after their procedures, and
00:12:46
so these are the ripple sustainable effects that we've learned.
00:12:50
What I would like to do is to go through a few things that people
00:12:54
might find surprising about bundles, things that they may not realize or
00:12:59
may be a little bit counterintuitive.
00:13:02
So if we're thinking about what is surprising about bundles, you
00:13:07
mention it and people are like, what?
00:13:09
One of the things that comes as a surprise to a lot of people in that 90 day window,
00:13:14
and this is for the CMS BPCI bundles.
00:13:17
Anything that happens to that patient medically that Medicare has to pay
00:13:21
for in that 90 day window after surgery comes out of the bundle.
00:13:25
Two of my examples of quote unquote losers, meaning that we experienced
00:13:29
downside risk, one patient within 90 days of their procedure was diagnosed
00:13:33
with a head and neck cancer that obviously needed to be treated.
00:13:36
That came out of the bundle.
00:13:37
So I was on the hook for that even though it had nothing to do with their surgery
00:13:41
they did well from their knee replacement.
00:13:43
I had another patient that had inflammatory arthritis, they were on
00:13:48
a biological infusion like Humira or Enbrel, and we typically skip a dose
00:13:53
before and after surgery for a month to reduce the risk of infection, then the
00:13:58
patient goes back on that medication month two after their surgery, so
00:14:01
that's two doses in that 90 day window.
00:14:03
That infusion at $7000 a pop, and that comes out of my pocket.
00:14:08
$14 out of the bundle because it was paid for by
00:14:11
Medicare in that 90 day window.
00:14:13
Is this how to get the orthopedic surgeon to pay for oncology
00:14:16
care or infusions for 400, Alex?
00:14:19
Yeah, unfortunately, it seems a bit unfair to put people on the hook for
00:14:22
things that are unrelated to the surgery.
00:14:25
So surprising thing number one is these bundles are all in for all
00:14:30
downside risk in the next 90 days.
00:14:33
Somebody gets hit by a car or something like that.
00:14:35
But if there's medical care, the orthopedic surgeon is paying for it,
00:14:39
even if it's quite clear that it's not, that had nothing to do with the
00:14:43
surgery is what I'm understanding.
00:14:45
Correct.
00:14:45
For the CMS bundles, that's correct.
00:14:47
All right.
00:14:47
So that is surprising.
00:14:49
What's the surprising thing too?
00:14:50
I think that maybe the second surprising thing, maybe a cynical take, but as
00:14:54
much as we talk about value based care, commercial payers, you could argue that
00:14:59
maybe incentivized for pursuing bundles or agreeing to do bundles with orthopedic
00:15:05
surgeons because of medical loss ratio and whether or not that's really in
00:15:10
line with their typical business model.
00:15:12
But commercial bundles, again, as much as we talk about value based care,
00:15:15
can be difficult, not impossible.
00:15:18
A lot more difficult to get involved with if you're an orthopedic practice.
00:15:22
Surprising thing number two, despite a lot of talk, commercial payers are really
00:15:26
not overly interested in doing bundles.
00:15:30
There are pockets where people have been successful, but it takes a long time.
00:15:35
It's hard to get in front of the right people.
00:15:37
It's hard to get engagement.
00:15:38
I think people might think, hey, they'd be willing to do anything that's value based.
00:15:42
But it is a challenge to get into these commercial bundles.
00:15:44
It takes a lot of work to get them to come to the table.
00:15:47
Well, I will say that take has been corroborated from the employer side.
00:15:52
I did have a conversation with the leader of a very well respected
00:15:56
employer coalition and the employer coalition got a bunch of employers
00:16:01
together in a particular region.
00:16:03
So the employers worked out a bundle arrangement that they all agreed to, then
00:16:07
they went to local providers in that same region and brought the providers along.
00:16:12
So now you have the employers and the providers themselves who were
00:16:15
like, okay, we have agreed on a bundle that we want to do together.
00:16:19
The two of them, those two stakeholders, then went to the TPAs that were
00:16:26
serving these self insured employers.
00:16:28
And they said, hey, we need you to administer this bundle that
00:16:32
we worked out with our providers.
00:16:34
And those TPAs said, nah, not going to do it.
00:16:38
Can't do it.
00:16:39
Won't do it.
00:16:40
The end.
00:16:41
That was the end of the story.
00:16:42
I think what we're going to see as a result of that is the self insured
00:16:46
employer is then going to figure out a way to do it themselves.
00:16:50
If it's not the commercial payers, we are going to see other people
00:16:53
step into that void to help administer that, to help make those
00:16:57
connections, to help collect that data.
00:16:59
To help the self insured employer make sure they're pointing their
00:17:02
employees in the right direction of high quality, high value providers.
00:17:06
I think we're going to see that become more commonplace because
00:17:10
I think the desire is there on the part of the surgeons.
00:17:12
I think the desire is there on the part of the self insured employers.
00:17:16
I think it's beneficial for those two parties, and if the commercial
00:17:20
insurer doesn't want to play ball, I think that you'll find those
00:17:23
other two parties figure out how to work together to make it happen.
00:17:27
Yeah, I mean, it does surprise me a little bit, honestly, that the
00:17:29
fully insured plans aren't scoping around for bundles from you.
00:17:35
Just because from everything that you've said with the improved surgical
00:17:39
outcomes, as well as the, you're on the hook for the next 90 days.
00:17:45
It feels like something a fully insured payer would be interested in.
00:17:49
A part of it, again, is the cynical take is that you don't want to get
00:17:53
too many different arrangements with too many different providers.
00:17:56
So as it becomes sort of choppy and fragmented and how do you approach
00:18:00
practices in order to do that?
00:18:01
And does it look the same from one practice to the next?
00:18:03
What kind of data do you want or need?
00:18:06
To see, to make that worthwhile, is it a big enough provider that it makes
00:18:11
sense to go through that process?
00:18:13
The point that you're making is you've got this big national player
00:18:16
who's offering fully insured plans.
00:18:19
Ah, maybe they spy some upside relative to this whole bundle thing,
00:18:22
but from a, you know, I'm going to use the efficiency in air quotes.
00:18:26
It's very inefficient.
00:18:27
You have to do all these contracts.
00:18:28
It's really hard to administer.
00:18:29
So the view ain't worth the climb.
00:18:31
It sounds like, or they just can't even figure out how to do it from
00:18:35
an administration standpoint.
00:18:36
Yeah, I think that certainly is a big part of it, right?
00:18:38
I mean, that's the one thing about fee for service as much as it has downsides.
00:18:43
It is clean, it's very transactional, it's a little bit easier to wrap your
00:18:46
head around than, you know, a bundle where there's different moving pieces.
00:18:50
On the other hand, as Rob Andrews, said in episode 415, this is their day jobs, these
00:18:57
payers slash third party administrators.
00:19:00
This is what we're paying these entities to do to figure out how to get the
00:19:05
best health care for plan members.
00:19:08
And we all know full on FFS is bad scene from a actually
00:19:14
producing health standpoint.
00:19:16
So yeah, I'm going to chalk myself up as surprised that not being able to pull off
00:19:21
something as kind of basic as a bundle.
00:19:24
I mean, there's some value based care arrangements that are
00:19:27
really complicated, but a bundle?
00:19:29
So not being able to pull off a bundle efficiently is a conversation
00:19:32
that we're actually having in 2024.
00:19:35
Alright, so we've got two surprises about bundles that we've already talked about.
00:19:38
One is the whole 90 day thing, the orthopedic surgeon
00:19:40
has to pay for everything.
00:19:42
Secondly, commercial payers are a little bit behind the curve, maybe not fans.
00:19:48
Some combination of both.
00:19:50
Is there a third surprise?
00:19:52
Yeah, I think looking into the future, part of what we're going
00:19:55
to see is the evolution of bundles or specialty value based care.
00:20:00
Medicare kind of tipped its hand announcing the Making
00:20:02
Care Primary program last year.
00:20:05
There's going to be a move to number one, try to coordinate specialty and primary
00:20:10
care a bit better and incentivize that, but it's curious to me, I think some
00:20:14
of the expectation, maybe even some of the concern on the part of orthopedic
00:20:17
surgeons is that they're incentivizing primary care doctors maybe to do more
00:20:22
of the specialty care delivery or take on more of specialty type stuff
00:20:28
and will incentivize them to do that.
00:20:30
The question is, what does that look like?
00:20:32
For Are primary care doctors going to feel comfortable doing that?
00:20:36
Is there going to be maybe a little bit of a battle between primary care doctors
00:20:40
and specialists if the bundles become more general or more open to everybody?
00:20:44
If you control a condition specific bundle and the surgical episode is
00:20:48
nested within that, that's going to give more power to direct the bundle.
00:20:52
Okay, surprising thing here is that in this new condition specific or diagnosis
00:21:01
specific bundle model, you could actually have primary care taking ownership
00:21:05
for bundles and then bossing around the orthos who might have a surgery
00:21:10
nested in the middle of said bundle.
00:21:13
So it's no longer the MSK specialists who are the leader of the bundle or
00:21:19
the owner of the bundle, you're going to have somebody else, potentially
00:21:22
primary care, who's the owner.
00:21:24
And that's different . I can certainly see if we're trying to figure out areas
00:21:30
where there are opportunities, To save money, considering most of the money
00:21:35
is being spent in the specialty arena.
00:21:38
I mean, one of the reasons is because primary care is just so woefully
00:21:41
underfunded trying to figure out how to do more coordination could help
00:21:47
reduce the spend having primary care do more, which isn't like a new idea.
00:21:53
You want to do what's right for the patient.
00:21:54
If it's, hey, let's manage this in a primary care setting until it becomes time
00:21:58
for the patient to see the specialist.
00:22:00
I think that's a good thing, certainly more care coordination between primary
00:22:04
care doctors and specialists is a good thing, and figuring out a way to
00:22:08
incentivize both sides of that equation to work together is also a good thing.
00:22:12
I think the concern comes in of just making sure that the patient
00:22:16
is getting the appropriate care.
00:22:18
I think that will create potentially an opportunity for somebody, some
00:22:23
entity, to bridge that gap to make sure the right decision is being made.
00:22:27
The primary care doctor feels comfortable, they are making the right decision.
00:22:31
And then the specialist feels comfortable that the patient is coming to them at
00:22:35
the appropriate time and not too late.
00:22:36
So I think there's going to be an opportunity to bridge that gap between the
00:22:40
specialists and the primary care doctors.
00:22:42
I think we will see some companies start to fill that gap.
00:22:45
So you're talking about some kind of MSO type entity.
00:22:50
Yeah, either an MSO or perhaps some type of a care navigator, a care coordinator
00:22:56
who has some experience and can help make that decision to say, you know,
00:23:00
yes, it's time for the specialist and we can point you to high value
00:23:03
specialists or you know what, whatever.
00:23:06
You know, maybe you haven't tried this, maybe it's not time for imaging yet.
00:23:09
And so you can continue to manage this in the primary care setting will help
00:23:13
you to do that so that the patient is still getting good care, but it's
00:23:16
not quite time to see the specialist.
00:23:19
I'm of a couple of minds as I'm listening to you, you talk there.
00:23:23
On the one hand, I'm like, there are entities right now
00:23:27
that are kind of in that space.
00:23:29
For example, you've got the virtual console gang.
00:23:32
So a primary care doctor can get a hold of a specialist and ask that
00:23:35
specialist questions as opposed to doing a full on referral.
00:23:38
And as you were talking about navigators, obviously there's a plethora of them.
00:23:42
There are entities that are already in the mix there.
00:23:45
On the other hand, I would hate to see specialists in primary
00:23:49
care disintermediated from working together when there's just such an
00:23:53
opportunity just to work together.
00:23:55
First of all, like we're just talking about knee pain.
00:23:58
There's some shocking percentage of patients who go to their primary
00:24:01
care doctor for musculoskeletal pain.
00:24:04
I was reading a study just how little musculoskeletal training
00:24:08
primary care doctors tend to get.
00:24:10
In fact, if you read Dreamland or any of those books about the opioid crisis, one
00:24:14
of the reasons for the opioid crisis, according to some, is that primary care
00:24:20
doctors felt really pretty powerless.
00:24:23
in the face of patient pain.
00:24:24
So when, you know, opioids showed up, they were like, sure, and started
00:24:28
prescribing them because they didn't know anything else to do amongst
00:24:33
a whole bunch of other factors.
00:24:34
I totally agree with you.
00:24:36
I think the disintermediation point is very valid and the ideal situation
00:24:40
is let's bring specialists and primary care doctors together, let's not
00:24:45
pit them against one another, right?
00:24:47
Can we design some type of bundled payment program, capitation program,
00:24:53
where we really get primary care doctors and specialists working together?
00:24:57
You're right that at least in my medical school, unless you really sought out
00:25:01
musculoskeletal education, we got like two lectures on musculoskeletal
00:25:07
topics in medical school and the training isn't necessarily there
00:25:11
later on as well in residency.
00:25:13
So you don't want to put primary care doctors in a situation where they're
00:25:17
sort of incentivized not to refer to the specialist, but at the same time
00:25:21
they want to feel like they're doing the right thing for the patient.
00:25:24
And that can lead to, you know, over treatment, under treatment, over
00:25:28
imaging, under imaging, wrong imaging.
00:25:31
So, I think the ideal is to develop a program that coordinates those
00:25:36
two things and has them incentivized to do the right thing together.
00:25:41
I think one of the concerns about these navigators or these entities that exist
00:25:45
that you've mentioned is unfortunately, a lot of them, their value proposition
00:25:49
seems to be, hey, let's keep that patient away from the specialist because that's
00:25:53
where the cost really lies, and that's okay if it's appropriate, but making sure
00:25:58
that the patient does see the specialist when it is necessary is number one.
00:26:02
And number two, making sure that the primary care side of the equation has
00:26:06
resources that they feel comfortable at, hey, I'm doing the right thing for
00:26:10
the patient, or I have a resource I can go to if I'm not sure that maybe isn't
00:26:15
referring completely to the specialist, but is making sure that I'm on the right
00:26:20
track, that I'm not missing something, that I'm not delaying care, that I'm not
00:26:23
doing the wrong things for that patient.
00:26:26
And that's a lovely promise, right?
00:26:28
And I mean that full throatedly, that one of the things we've been
00:26:33
striving for is to get primary care and specialists working together.
00:26:38
Obviously, the whole lack of data could be a factor here.
00:26:41
There was recently a hospitology newsletter about this , just that
00:26:44
primary care doesn't have the data a lot of times to know who the specialists
00:26:49
are that are performing the best.
00:26:52
But the promise is very interesting and it seems like it
00:26:55
could be a way forward for sure.
00:26:58
All right.
00:26:58
So that was our third surprising thing about bundles, Dr.
00:27:01
Ben Schwartz.
00:27:01
Is there a fourth?
00:27:03
Yeah.
00:27:03
Tangentially related to the bundles is the concept of centers of excellence.
00:27:07
Those have become also very commonplace.
00:27:10
A lot of promise.
00:27:11
There was a pretty landmark HBR article written several years ago about
00:27:16
Walmart's experience in the COE program.
00:27:19
I think if you dig into that and you parse it a little bit,
00:27:22
the Centers of Excellence.
00:27:23
Don't necessarily save money sort of on the cost of the procedure.
00:27:28
They can be as expensive if not more expensive in some
00:27:31
cases for the procedure itself.
00:27:33
I think the value is driven there by surgical avoidance.
00:27:36
So you get sent to the Center of Excellence and the physician at the
00:27:39
center of excellence says no, I don't agree with the community surgeon.
00:27:42
You don't need a $100 back fusion.
00:27:45
And then that's your employer obviously saves money and in an avoided procedure.
00:27:49
And there is potentially some value to that, but unfortunately, there's
00:27:52
a lot of gray areas and one person's opinion may be different than
00:27:56
somebody else's opinion and how do you decide whose opinion is correct.
00:27:59
So I think the COE model is interesting, but it's really kind of more that
00:28:05
decision for or against surgery.
00:28:06
It's not necessarily that their outcomes are any better, it's not
00:28:09
necessarily the cost is any less.
00:28:11
It's more that you're getting maybe a differing opinion that says,
00:28:15
hey, I don't think this procedure has indicated that this person
00:28:18
in the community is describing.
00:28:20
And then that person in the community that maybe has had a relationship with
00:28:22
that patient for years has to then deal with that patient who was sent to the
00:28:27
Center of Excellence by their employer.
00:28:29
The employer says, look, the Center of Excellence said you
00:28:32
don't need that procedure.
00:28:32
I think people assume the COE is cost controlled for the
00:28:37
procedure when oftentimes it's not any cheaper than having the
00:28:40
procedure done in the community.
00:28:42
Probably less care variation at the center of excellence, but I think most
00:28:45
communities have good high quality, high value surgeons if you're willing
00:28:49
to take the effort to find them.
00:28:51
Okay, there's a couple of things I find really interesting
00:28:54
about what you just said.
00:28:55
And the first one is, and just never really thought about it before,
00:28:58
honestly, but just pointing this out.
00:29:00
We've had Peter Hayes on the show talking about just the high prices
00:29:04
of hospital services, right?
00:29:06
Hospital prices are very high.
00:29:08
I just never really thought about that.
00:29:10
If we're talking about a center of excellence, which tends to be an academic
00:29:13
medical center, which tends to be a hospital, you know, hospital system.
00:29:16
So the prices are very high.
00:29:18
The reason why those programs are cost effective or reduce costs isn't because
00:29:25
the cost of the procedure is any less.
00:29:28
It's because there are less surgeries.
00:29:31
In a lot of cases, I think the employer and the Center of Excellence do tend to
00:29:36
negotiate through their own bundle price.
00:29:38
But even then, It's not necessarily less expensive than if you went to,
00:29:42
you know, a community facility to have your surgery or let's say a surgery
00:29:46
center, which is going to be even less expensive than having it done at the COE.
00:29:51
You look at the SAGE Transparency Project or you look at any of these things, it's
00:29:54
very clear that commercial rates are quite high and the center of excellence model.
00:29:59
You're still going to those same exact entities that are charging a lot of money.
00:30:03
I mean, there's some upsides here.
00:30:04
One of them is a lot of the center of excellence programs do require
00:30:09
very meticulous data tracking.
00:30:12
Such a small percentage of provider organizations and or clinics measure
00:30:16
outcomes of any kind clinical or PROMS, Patient Reported Outcome Measures.
00:30:23
I think that's the main question here.
00:30:24
I mean, how do clinicians even know if what they're doing
00:30:27
is amazing or not amazing Dr.
00:30:29
Steve.
00:30:30
Schutzer talked a lot about this in Encore episode 294, if somebody really
00:30:34
wants to dig in, but if I'm an employer using a center of excellence model, the
00:30:38
requirements to track a lot of different data elements could really be helpful
00:30:43
and potentially I'm not sure the worth it and valuable in and of themselves.
00:30:47
So there's definitely some upsides here.
00:30:49
However, the cost of the procedures themselves are still, as you
00:30:52
just said, on the high side.
00:30:54
But then the other issue to kind of keep in mind is, it certainly
00:30:57
is a second opinion, right?
00:30:59
And as anyone would tell you, whenever, before anybody gets any surgery, you
00:31:04
should definitely go get a second opinion.
00:31:05
But because that second opinion and the surgery may be happening outside
00:31:09
of the patient's local community and outside of that patients local ability
00:31:14
to go get physical therapy or go get, right, like they're going to have to
00:31:18
get aftercare within the community.
00:31:20
There may be a disruption of care continuity, and if they need care then in
00:31:26
the community, that is certainly something that anybody with the Center of Excellence
00:31:29
network should be keeping in mind.
00:31:32
There's a lot of things there that you mentioned.
00:31:34
Number one is, for sure, I mean, it's not fair to throw shade at COEs if
00:31:38
you don't come with your own data.
00:31:39
So, if you want to keep those patients locally, and you say, we do just as good
00:31:43
a job, and we can do it maybe more cost effectively, you have to bring the data.
00:31:47
That's only fair, and you have to prove it.
00:31:49
So, I think that's point number one.
00:31:51
Number two is, yes.
00:31:52
In my mind, the best thing for the patient is to whenever possible keep them in
00:31:57
the community as opposed to something that's, that can be very transactional,
00:32:01
they're meeting that person for the first time at the COE, maybe they're
00:32:04
having their surgery, and they're going back to the community, and now it's
00:32:07
up to the community if that patient shows up in the ER with a complication.
00:32:10
The COE maybe tries to take care of the complications as much as they can,
00:32:14
but the patient's not going to travel hundreds or thousands of miles away
00:32:16
when they have a complication, right?
00:32:18
They're going to go to the local ER.
00:32:19
I think some of these programs come up with agreements with primary
00:32:23
care doctors to do some of the post operative care, which may
00:32:25
not be the best situation either.
00:32:28
The patient goes back in the community, if they've had a procedure
00:32:31
and they're having an issue, or if they go back to the community and
00:32:33
they've been told to the COE, look, I don't agree with this surgery.
00:32:37
Now, what do I, as a community provider who maybe has been treating
00:32:41
that patient for a long time, now where do we go from there?
00:32:43
How do I reconcile that?
00:32:45
Now I have this patient that's been turned away from a COE, their
00:32:48
employer's telling them that they're not going to cover the cost of care.
00:32:51
That makes for some difficult conversations and we don't have, as far
00:32:55
as I know, good data on the outcomes.
00:32:57
What happens to patients that go to a COE and are told that they
00:33:01
don't need a certain treatment and end up back in the community?
00:33:04
What's their ultimate outcome?
00:33:05
Do they end up with surgery in the community?
00:33:06
Do they do okay?
00:33:07
Do they not do okay?
00:33:08
They not end up with surgery, do they end up with another treatment,
00:33:10
do they eventually get better?
00:33:12
You know, that data we really don't have.
00:33:14
Like so many things, it's not like any given idea is good or bad.
00:33:18
It's a lot of it has to do with devils in details and the
00:33:23
execution really matters here.
00:33:25
It would be up to any employer or plan sponsor who's thinking COE
00:33:32
model to really think through some of the executional elements here.
00:33:36
As with so many things, and listen to the show with Al Lewis, 331, for a
00:33:42
deep dive into this, also the show with Cora Opsahl, this comes up, it's up to
00:33:46
the plan sponsor to take a broad view on the actual impact of the program.
00:33:51
Because as you just mentioned, if the COE, the Center of Excellence
00:33:54
program vendor, is only measuring the impact in cost savings or ROI on the
00:33:59
patients who got operated on, And then the patients who didn't get operated
00:34:03
on are tallied up as zero dollars and no further costs are considered.
00:34:07
That's not going to be accurate.
00:34:09
A lot of things about the concept of a Center of Excellence model
00:34:12
makes sense and you're right, it's all about the execution.
00:34:15
I don't think you necessarily have to send patients hundreds or thousands
00:34:18
of miles away from their community.
00:34:20
It may take some work and again, it's incumbent upon us in the community
00:34:23
to, you know, come with our data and prove that we're doing good work,
00:34:26
whether it's at our practices, a surgery center or local hospital.
00:34:29
But I think the concept of the COE can be local.
00:34:34
One thing that I have heard more than once also from employers is this whole idea of
00:34:39
efficiency and it's very inefficient to have lots of regional contracts, right?
00:34:45
So you've got a national workforce, you've got a couple of patients
00:34:48
in all these different markets.
00:34:50
It's a lot easier to set up a COE network where everybody flies to
00:34:56
a limited number of Centers of Excellence's, as opposed to having
00:35:00
lots and lots of local relationships.
00:35:03
So you can definitely kind of see why this winds up happening.
00:35:07
You know, you think about value based care, you kind of have to understand.
00:35:10
Who the quality provider organizations are within any local market.
00:35:15
You can't just keep flying people around for everything, right?
00:35:19
So as the data, maybe the quality data becomes more ubiquitous, it
00:35:23
becomes more possible to do some of the stuff that we're talking
00:35:27
about within the local community.
00:35:29
I think there is an opportunity sort of on a national level for high quality,
00:35:33
high value providers, centers that aren't necessarily traditional Centers
00:35:37
of Excellence, academic medical centers as we think of them, to band together
00:35:41
and say, you know, as a group, as this network, regional nationwide
00:35:46
network, we're going to follow similar protocols, we're going to report.
00:35:50
Our outcomes to you, we're going to have our own vetted providers and
00:35:55
vetted centers, almost like a franchise model or under some umbrella where
00:36:00
we've all kind of agreed to adhere to these standards and report our data.
00:36:05
You know, we're in our own local markets, but we're sort of under
00:36:07
the same national umbrella that we can approach self insured employers.
00:36:11
And you know that if you go to one of the providers that's in this self
00:36:15
curated network, that you're going to get good quality care because you
00:36:18
have the data as it's reported to you.
00:36:20
So, surprises that we have discussed here is this whole 90 day thing that everything
00:36:25
falls on the shoulders of the orthopedic surgeon to pay for regardless of whether
00:36:29
it's associated with the surgery or not.
00:36:32
Number two, commercial payers, not a huge fan of bundles, actually, it turns out.
00:36:36
Number three, this move to coordinate with PCPs and specialists.
00:36:41
And we talked through some of the interesting nuances there.
00:36:46
And then lastly here, we talked about COEs.
00:36:49
Centers of Excellence, the Center of Excellence models, not a magic bullet,
00:36:53
not that anyone thought there was, but there is some interesting implications
00:36:57
here, especially as it relates to taking the patient out of the community.
00:37:01
Dr.
00:37:02
Ben Schwartz, is there anything I neglected to ask you that
00:37:05
you think we should cover here?
00:37:07
I think, look, there's opportunity here.
00:37:09
We've learned some important lessons.
00:37:10
I think we'll continue to learn and evolve.
00:37:13
I think in the future, it's going to be mandatory and not voluntary
00:37:17
as we've seen before in the bundle.
00:37:18
So I think it's incumbent upon those of us, particularly at MSK,
00:37:21
particularly hyponatric arthritis and back pain, where a lot of the spend
00:37:25
is to understand this, to try to get a seat at the table, to try to be
00:37:30
proactive in having these conversations.
00:37:33
Hopefully, on the other side of the equation, the government, CMS, CMMI,
00:37:37
self-insured employers, commercial insurance plans are willing to come
00:37:41
to the table with us and work with us to collaborate on these programs,
00:37:46
cause I think that's really where we're going to see the most sustainability.
00:37:50
There's been some fits and starts.
00:37:51
We haven't yet hit on the right formula for sustained success.
00:37:55
I think really the only way we're going to do that is, is to have everybody coming
00:37:58
together and making sure that everybody's pulling in the right direction.
00:38:02
That's a great inspirational message.
00:38:04
There's a collaborative opportunity here so patients can get better care
00:38:09
at an affordable price and everybody's knowledge is required to make that happen.
00:38:13
Orthopedic surgeons, I think, are known for, for being entrepreneurial
00:38:17
and seeking out their own solutions.
00:38:19
And I think we are seeing pockets of that where, you know, if you can't
00:38:23
get traditional people to come to the table, then you'll figure out
00:38:26
ways yourself to try to make it work.
00:38:29
And so there's a lot of, I think, exciting work being done.
00:38:32
To that end, by people who really understand this and understand where
00:38:35
things are going and are really trying to help create that future.
00:38:38
For sure.
00:38:38
And it's going to take people who really understand the nuances here
00:38:41
and really understand what's going on in order to actually create
00:38:44
a future that's going to work.
00:38:45
Dr.
00:38:45
Ben Schwartz, where can people find your blog?
00:38:48
Yeah, so the blog is Dem Dry Bones on Substack.
00:38:51
There's a link to it on my LinkedIn page, Benjamin Schwartz, MD.
00:38:56
I'm happy to connect with anyone.
00:38:58
Dr.
00:38:58
Ben Schwartz, thank you so much for being on Relentless Health Value today.
00:39:02
Yeah, thank you, Stacey.
00:39:02
My pleasure.
00:39:03
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00:39:29
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