You can listen to the episode here.

EP434: 4 Surprises About Bundled Payments


[00:00:00] Stacey Richter: Episode 434, “4d Surprises About Bundled Payments". Today, I speak with Dr. Ben Schwartz.

American Healthcare Entrepreneurs and Executives You Want to Know Talking. Relentlessly Seeking Value. 

A Tale of Two Strategies: Success and Failure in Healthcare

[00:00:26] Stacey Richter: 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 ends 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 going to 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, the 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.

Decoding the Healthcare Industry: Insights and Strategies

[00:01:07] Stacey Richter: 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 because you're listening to this podcast, you got to understand what other stakeholders are up to.

You got to 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 tuned into the 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 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 looking so forward to doing a show with Dr. Ben Schwartz, orthopedic surgeon and prolific writer of deeply thoughtful and insightful posts on LinkedIn. 

Today, 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 the 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, and 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 number one, CMS bundles, such as the BPCI and the CJR 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 just keep shifting.

The second type of bundle that we talk about are commercial bundles, ie, a bundle that is offered by a commercial carrier, such as a BUCA, ie, Blue Cross Blue Shield, United Healthcare, Cigna, Aetna, Anthem carrier. Number three kind of bundle is a direct bundle. This is a bundle that is paid for directly by a plan sponsor, such as a self insured employer.

And then number four type of bundle we talk about is a 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. So, this last type, this fourth bundle type, may describe CMS's recently announced Making Care Primary initiative, but we'll have to see about that.

Speaking about the number three kind of 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 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 Purchasers 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'm going to get 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". All the links to everything I just said in the show notes. After you listen to the show, please go back and listen to the one with Dr. Steve Schutzer talking about how to create a center of excellence and also the one with Rob Andrews 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. 

My name is Stacey Richter. This podcast is sponsored by Aventria Health Group. 

Dr. Ben Schwartz, welcome to Relentless Health Value.

[00:06:05] Dr. Ben Schwartz: Thank you. Thanks for having me. This is quite an honor. 

[00:06:07] Stacey Richter: Let me ask you one question before we also get into the heart of our conversation today. Where are we in the bundle time space continuum? 

[00:06:15] Dr. Ben Schwartz: Sure. So the main bundles that people know about are through CMS, through the government, and that's the Bundled Payment for Care Improvement Program, or BPCI.

It's a mouthful. And that started several years ago. Now it's been through an iteration to the advanced model. But the general idea is you get paid a lump sum for that hip or knee replacement, and any care that happens in the 90 days after the procedure comes out of the bundle. And so there's been some good lessons learned, there's been some care improvement.

The problem is that the target price in the bundle tends to shift lower, you become a victim of your own success, and then it becomes difficult to see upside reward. You experience downside risk and then you have to drop out of the bundle, and that's where most surgeons in the BPCI program end up. And the thinking is that's going to be sunset by CMS probably after 2025 and replaced by something else.

We don't know what yet. Probably some form of specialist and primary care working together and being incentivized together. There are commercial bundles, and that's through obviously a commercial insurer where you approach them. Similar sort of concept of it's a lump sum payment attached usually to a surgical episode.

Those are harder to get, and we can talk about why that might be later on. There is this third arm that's arising, I think it's going to become more commonplace, and that is some form of bundled agreement with a self insured employer that's looking for high value, cost effective care, and so you can negotiate with them directly.

That's a center of excellence model, or there's care navigators. So there's more of this direct bundled program. The final thought is eventually we expect bundles to shift away from surgical episodes of care and maybe more towards condition specific, whether that's attached to back pain or knee arthritis or hip arthritis.

To really capture more of the care process outside of the surgical episode. 

[00:08:08] Stacey Richter: Okay, so you listed four types of bundles there. One is the BPCI bundle, which is a CMS thing. Paid a lump sum after a surgical episode. As you said, people become a victim of their own success because you get paid for efficiency.

So like how efficient you are becomes the benchmark and then you have to be more efficient than you're, Efficient self. You have to get down with your more efficient self at a certain point. You can't become more efficient. So then, yeah, you start losing money. And as you mentioned, Sunset 2025, then you also have your commercial bundles.

You also mentioned number three, there's some self insured employers are contracting for bundles and a lot of times this happens in the context of a Center of Excellence or a COE program. And then lastly, there's a lot of talk I've seen around can we do condition specific bundles or diagnostic based bundles.

And you mentioned back pain and then the clinical group gets paid a certain amount, some capitated number to take care of that patient for some duration of time. 

[00:09:16] Dr. Ben Schwartz: I think the latter one, obviously, you know, a surgical episode, a surgical bundle just says I did a good job of doing that surgery. The patient didn't have a complication or readmission at 90 days.

It doesn't really say a whole lot about, well, did I manage that appropriately up to that surgery, was that surgery indicated? So, I think the hope for these condition specific bundles is it's going to incentivize that whole episode of care attached to that diagnosis, and not just the surgery, but nonsurgical management if that's appropriate.

That surgical episode might be so called nested into that bigger bundle, but it's not going to be the only focus of the bundle itself. 

[00:09:52] Stacey Richter: 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 the surgeon does an inappropriate surgery.

So one of the things that is a promise of value based care is care is appropriate and we don't have an incentive to do too much care. Bundles don't do anything to address that. 

[00:10:13] Dr. Ben Schwartz: Correct. The hope of these condition specific bundles is that they kind of incentivize more appropriate care throughout the care journey.

Again, whether that's nonsurgical treatment, physical therapy, an injection, medications, not just around a surgical episode. 

[00:10:27] Stacey Richter: Bundles do nothing really to disincentivize inappropriate care. What else might be an issue? 

[00:10:33] Dr. Ben Schwartz: They also can potentially lead to cherry picking and lemon dropping. So, you operate on the healthier patients that you know are more likely to do well or less likely to have a complication.

So, they're less likely to be a downside risk in the bundle. And then you don't operate on the more complicated patient because the bundles don't do a great job of risk stratification. So that higher risk patient that maybe is more likely to have a complication or more likely to use post acute services, maybe you're less likely to offer surgery too.

[00:11:04] Stacey Richter: So it definitely sounds like the bundles do have disadvantages, but if we're thinking about the promise of a bundle as maybe a first step into value based care, we talked about a bunch of negatives. Let's talk about some positives now. What are the, what's the good news? 

[00:11:17] Dr. Ben Schwartz: Yeah, the good news is we have learned a lot of lessons from the bundles.

We learned patients tend to do better if we treat them more holistically. So, if we take an active role in optimizing patients for surgery, making sure their diabetes is well controlled, making sure any anxiety or depression is taken care of, because we know that affects outcomes from surgery. We've learned that one of the biggest cost drivers is post acute care, so if the patient is discharged somewhere other than home after the surgery, that's very expensive and guess what, they also have a higher readmission rate, they also tend to have a higher complication rate if they end up in a nursing facility or rehab.

So we've learned that it's safe for 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 about how to take better care of patients, how as orthopedic surgeons to see and treat the patients more holistically, how to optimize their health for surgery, so they have better outcomes, and that's an enduring lesson from the bundles.

[00:12:16] Stacey Richter: In an enduring way, we have orthopedic surgeons who are thinking about a whole person here. As you just said, if their diabetes is uncontrolled. So just the outcome is not going to be as good. And now everybody is on the same team, making sure that the patient is prepared for the surgery and then gets the right aftercare.

[00:12:37] Dr. Ben Schwartz: One of the most interesting things we've learned is that patients who stop smoking specifically to get their hip or knee replaced. A lot of them don't go back to smoking after their procedures, and so these are the ripple sustainable effects that we've learned. 

[00:12:50] Stacey Richter: What I would like to do is to go through 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 what is surprising about bundles, you mention it and people are like, what? 

[00:13:09] Dr. Ben Schwartz: One of the things that comes as a surprise to a lot of people in that 90 day window, and this is for the CMS BPCI bundles. Anything that happens to that patient medically that Medicare has to pay for in that 90 day window after surgery comes out of the bundle.

Two of my examples of quote unquote losers, meaning that we experienced downside risk, one patient within 90 days of their procedure was diagnosed with a head and neck cancer that obviously needed to be treated. That came out of the bundle. So I was on the hook for that even though it had nothing to do with their surgery they did well from their knee replacement.

I had another patient that had inflammatory arthritis, they were on a biological infusion like Humira or Enbrel, and we typically skip a dose before and after surgery for a month to reduce the risk of infection, then the patient goes back on that medication month 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 bundle because it was paid for by Medicare in that 90 day window. 

[00:14:13] Stacey Richter: Is this how to get the orthopedic surgeon to pay for oncology care or infusions for 400, Alex?

[00:14:19] Dr. Ben Schwartz: Yeah, unfortunately, it seems a bit unfair to put people on the hook for things that are unrelated to the surgery. 

[00:14:25] Stacey Richter: So surprising thing number one is these bundles are all in for all downside risk in the next 90 days. Somebody gets hit by a car or something like that. If there's medical care, the orthopedic surgeon is paying for it, even if it's quite clear that it's not, that had nothing to do with the surgery is what I'm understanding. 

[00:14:45] Dr. Ben Schwartz: Correct. For the CMS bundles, that's correct. 

[00:14:47] Stacey Richter: All right. So that is surprising.  What's the surprising thing two?

[00:14:49] Dr. Ben Schwartz: I think that maybe the second surprising thing, maybe a cynical take, but as much as we talk about value based care, commercial payers, you could argue that maybe incentivized for pursuing bundles or agreeing to do bundles with orthopedic surgeons because of medical loss ratio and whether or not that's really in line with their typical business model.

But commercial bundles, again, as much as we talk about value based care, can be difficult, not impossible. A lot more difficult to get involved with if you're an orthopedic practice. 

[00:15:22] Stacey Richter: Surprising thing number two, despite a lot of talk, commercial payers are really not overly interested in doing bundles.

[00:15:30] Dr. Ben Schwartz: There are pockets where people have been successful, but it takes a long time. It's hard to get in front of the right people. It's hard to get engagement. I think people might think, hey, they'd be willing to do anything that's value based. But it is a challenge to get into these commercial bundles. It takes a lot of work to get them to come to the table.

[00:15:47] Stacey Richter: Well, I will say that take has been corroborated from the employer side. I did have a conversation with the leader of a very well respected employer coalition and the employer coalition got a bunch of employers together in a particular region. So the employers worked out a bundle arrangement that they all agreed to, then they went to local providers in that same region and brought the providers along.

So now you have the employers and the providers themselves who were like, okay, we have agreed on a bundle 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. And they said, hey, we need you to administer this bundle that we worked out with our providers.

And those TPAs said, no, nah, not going to do it. Can't do it. Won't do it. The end. That was the end of the story. 

[00:16:42] Dr. Ben Schwartz: I think what we're going to see as a result of that is the self insured employer is then going to figure out a way to do it themselves. If it's not the commercial payers, we are going to see other people step into that void to help administer that, to help make those connections, to help collect that data.

To help the self insured employer make sure they're pointing their employees in the right direction of high quality, high value providers. I think we're going to see that become more commonplace because I think the desire is there on the part of the surgeons. I think the desire is there on the part of the self insured employers.

I think it's beneficial for those two parties, and if the commercial insurer doesn't want to play ball, I think that you'll find those other two parties figure out how to work together to make it happen. 

[00:17:27] Stacey Richter: Yeah, I mean, it does surprise me a little bit, honestly, that the fully insured plans aren't scoping around for bundles from you.

Just because from everything that you've said with the improved surgical outcomes, as well as the, you're on the hook for the next 90 days. It feels like something a fully insured payer would be interested in. 

[00:17:49] Dr. Ben Schwartz: A part of it, again, is the cynical take is that you don't want to get too many different arrangements with too many different providers. So as it becomes sort of choppy and fragmented and how do you approach practices in order to do that? And does it look the same from one practice to the next? What kind of data do you want or need? To see, to make that worthwhile, is it a big enough provider that it makes sense to go through that process?

[00:18:13] Stacey Richter: The point that you're making is you've got this big national player who's offering fully insured plans. Ah, maybe they spy some upside relative to this whole bundle thing, but from a, you know, I'm going to use 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't even figure out how to do it from an administration standpoint. 

[00:18:36] Dr. Ben Schwartz: Yeah, I think that certainly is a big part of it, right? I mean, that's the one thing about fee for 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 bundle where there's different moving pieces. 

[00:18:50] Stacey Richter: On the other hand, as Rob Andrews, said in episode 415, this is their day jobs, these payers slash third party administrators. This is what we're paying these entities to do to figure out how to get the best healthcare for plan members.

And we all know full on FFS is bad scene from an actually producing health standpoint. So yeah, I'm going to chalk myself up as surprised that not being able to pull off something as kind of basic as a bundle. I mean, there's some value based care arrangements that are really complicated, but a bundle? So not being able to pull off a bundle efficiently is a conversation that we're actually having in 2024.

Alright, so we've got two surprises about bundles that we've already talked about. One is the whole 90 day thing, the orthopedic surgeon has to pay for everything. Secondly, commercial payers are a little bit behind the curve, maybe not fans. Some combination of both. Is there a third surprise?

[00:19:52] Dr. Ben Schwartz: Yeah, I think looking into the future, part of what we're going to see is the evolution of bundles or specialty value based care. Medicare kind of tipped its hand announcing the Making Care Primary program last year. 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 of the concern on the part of orthopedic surgeons is that they're incentivizing primary care doctors maybe to do more of the specialty care delivery or take on more of specialty type stuff and will incentivize them to do that.

The question is, what does that look like? Are primary care doctors going to feel comfortable doing that? Is there going to be maybe a little bit of a battle between primary care doctors and specialists if the bundles become more general or more open to everybody? If you control a condition specific bundle and the surgical episode is nested within that, that's going to give more power to direct the bundle to the person that’s taking ownership of that.

[00:20:52] Stacey Richter: Okay, surprising thing here is that in this new condition specific or diagnosis specific bundle model, you could actually have primary care taking ownership for bundles and then bossing around the Orthos who might have a surgery nested in the middle of said bundle. So it's no longer the MSK specialists who are the leader of the bundle or the owner of the bundle, you're going to have somebody else, potentially primary care, who's the owner. And that's different. I can certainly see if we're trying to figure out areas where there are opportunities, to save money, considering most of the money is being spent in the specialty arena. I mean, one of the reasons is because primary care is just so woefully underfunded trying to figure out how to do more coordination could help reduce the spend having primary care do more, which isn't like a new idea.

[00:21:53] Dr. Ben Schwartz: You want to do what's right for the patient. If it's, hey, let's manage this in a primary care setting until it becomes time for the patient to see the specialist. I think that's a good thing, certainly more care coordination between primary care doctors and specialists is a good thing, and figuring out a way to incentivize both sides of that equation to work together is also a good thing.

I think the concern comes in of just making sure that the patient is getting the appropriate care. 

I think that will create potentially an opportunity for somebody, some entity, to bridge that gap to make sure the right decision is being made. The primary care doctor feels comfortable, they are making the right decision. And then the specialist feels comfortable that the patient is coming to them at the appropriate time and not too late.

So I think there's going to be an opportunity to bridge that gap between the specialists and the primary care doctors. I think we will see some companies start to fill that gap. 

[00:22:45] Stacey Richter: So you're talking about some kind of MSO type entity. 

[00:22:50] Dr. Ben Schwartz: Yeah, either an MSO or perhaps some type of a care navigator, a care coordinator who has some experience and can help make that decision to say, you know, yes, it's time for the specialist and we can point you to high value specialists or you know what, maybe you haven't tried this, maybe it's not time for imaging yet. And so you can continue to manage this in the primary care setting will help you to do that so that the patient is still getting good care, but it's not quite time to see the specialist. 

[00:23:19] Stacey Richter: I'm of a couple of minds as I'm listening to you, you talk there.

On the one hand, I'm like, there are entities right now that are kind of in that space. For example, you've got the virtual console gang. So a primary care doctor can get a hold of a specialist and ask that specialist questions as opposed to doing a full on referral. And as you were talking about navigators, obviously there's a plethora of them.

There are entities that are already in the mix there. On the other hand, I would hate to see specialists in primary care disintermediated from working together when there's just such an opportunity just to work together. 

First of all, like we're just talking about knee pain. There's some shocking percentage of patients who go to their primary care doctor for musculoskeletal pain. I was reading a study just how little musculoskeletal training primary care doctors tend to get. In fact, if you read Dreamland or any of those 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 showed up, they were like, sure, and started prescribing them because they didn't know anything else to do amongst a whole bunch of other factors. 

[00:24:34] Dr. Ben Schwartz: I totally agree with you. I think the disintermediation point is very valid and the ideal situation is let's bring specialists and primary care doctors together, let's not pit them against one another, right?

Can we design some type of bundled payment program, capitation program, where we really get primary care doctors and specialists working together? You're right that at least in my medical school, unless you really sought out musculoskeletal education, we got like two lectures on musculoskeletal topics in medical school and the training isn't necessarily there later on as well in residency.

So you don't want to put primary care doctors in a situation where they're sort of incentivized not to refer to the specialist, but at the same time they want to feel like they're doing the right thing for the patient. And that can lead to, you know, over treatment, under treatment, over imaging, under imaging, wrong imaging.

So, I think the ideal is to develop a program that coordinates those two things and has them incentivized to do the right thing together. I think one of the concerns about these navigators 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 patient away from the specialist because that's where the cost really lies, and that's okay if it's appropriate, but making sure that the patient does see the specialist when it is necessary is number one.

And number two, making sure that the primary care side of the equation has resources that they feel comfortable at, hey, I'm doing the right thing for the patient, or I have a resource I can go 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 doing the wrong things for that patient.

[00:26:26] Stacey Richter: 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 care and specialists working together. Obviously, the whole lack of data could be a factor here. There was recently a Hospitalogy newsletter about this, just that primary care doesn't have the data a lot of times to know who the specialists are that are performing the best.

But the promise is very interesting and it seems like it could be a way forward for sure. All right. So that was our third surprising thing about bundles, Dr. Ben Schwartz. Is there a fourth? 

[00:27:03] Dr. Ben Schwartz: Yeah. Tangentially related to the bundles is the concept of centers of excellence. Those have become also very commonplace. A lot of promise. There was a pretty landmark HBR article written several years ago about Walmart's experience in the COE program. I think if you dig into that and you parse it a little bit, the Centers of Excellence. Don't necessarily save money sort of on the cost of the procedure. They can be as expensive if not more expensive in some cases for the procedure itself.

I think the value is driven there by surgical avoidance. So you get sent to the Center of Excellence and the physician at the Center of Excellence says no, I don't agree with the community surgeon. You don't need a $100,000 back fusion. And then that's your employer obviously saves money and in an avoided procedure.

And there is potentially some value to that, but unfortunately, there's a lot of gray areas and one person's opinion may be different than somebody else's opinion and how do you 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 their outcomes are any better, it's not necessarily the cost is any less. It's more that you're getting maybe a differing opinion that says, hey, I don't think this procedure has indicated that this person in the community is describing. And then that person in the community that maybe has had a relationship with that patient for years has to then deal with that patient who was sent to the Center of Excellence by their employer.

The employer says, look, the Center of Excellence said you don't need that procedure. I think people assume the COE is cost controlled for the procedure when oftentimes it's not any cheaper than having the procedure done in the community. Probably less care variation at the Center of Excellence, but I think most communities have good high quality, high value surgeons if you're willing to take the effort to find them.

[00:28:51] Stacey Richter: Okay, there's a couple of things I find really interesting about what you just said. And the first one is, and just never really thought about it before, honestly, but just pointing this out. We've had Peter Hayes on the show talking about just the high prices of hospital services, right? Hospital prices are very high.

I just never really thought about that. If we're talking about a Center of Excellence, which tends to be an academic medical center, which tends to be a hospital, you know, hospital system. So the prices are very high. The reason why those programs are cost effective or reduce costs isn't because the cost of the procedure is any less. It's because there are less surgeries. 

[00:29:31] Dr. Ben Schwartz: In a lot of cases, I think the employer and the Center of Excellence do tend to negotiate through their own bundle price. But even then, It's not necessarily less expensive than if you went to, you know, a community facility to have your surgery or let's say a surgery center, which is going to be even less expensive than having it done at the COE.

[00:29:51] Stacey Richter: You look at the SAGE Transparency Project or you look at any of these things, it's very clear that commercial rates are quite high and the Center of Excellence model. You're still going to those same exact entities that are charging a lot of money.

I mean, there's some upsides here. One of them is a lot of the Center of Excellence programs do require very meticulous data tracking. Such a small percentage of provider organizations and or clinics measure outcomes of any kind clinical or PROMS, Patient Reported Outcome Measures. 

I think that's the main question here. I mean, how do clinicians even know if what they're doing is amazing or not amazing. Dr. Steve Schutzer talked a lot about this in Encore EP294, if somebody really wants to dig in, but if I'm an employer using a center of excellence model, the requirements to track a lot of different data elements could really be helpful and potentially worth it and valuable in and of themselves.

So there's definitely some upsides here. However, the cost of the procedures themselves are still, as you just said, on the high side. But then the other issue to kind of keep in mind is, it certainly is a second opinion, right? As anyone would tell you, whenever, before anybody gets any surgery, you should definitely go get a second opinion.

But because that second opinion and the surgery may be happening outside of the patient's local community and outside 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. There may be a disruption of care continuity, and if they need care then in the community, that is certainly something that anybody with the Center of Excellence network should be keeping in mind.

[00:31:32] Dr. Ben Schwartz: There's a lot of things there that you mentioned. Number one is, for sure, I mean, it's not fair to throw shade at COEs if you don't come with your own data. So, if you want to keep those patients locally, and you say, we do just as good a job, and we can do it maybe more cost effectively, you have to bring the data.

That's only fair, and you have to prove it. So, I think that's point number one. Number two is, in my mind, the best thing for the patient is to whenever possible keep them in the community as opposed to something that's, that can be very transactional, they're meeting that person for the first time at the COE, maybe they're having their surgery, and they're going back to the community, and now it's up to the community if that patient shows up in the ER with a complication.

The COE maybe tries to take care of the complications as much as they can, but the patient's not going to travel hundreds 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 come up with agreements with primary care doctors to do some of the post operative care, which may not be the best situation either.

The patient goes back in the community, if they've had a procedure and they're having an issue, or if they 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 community provider who maybe has been treating that patient for a long time, now where do we go from there?

How do I reconcile that? Now I have this patient that's been turned away from a COE, their employer's telling them that they're not going to cover the cost of care. That makes for some difficult conversations and we don't have, as far as I know, good data on the outcomes. What happens to patients that go to a COE and are told that they don't need a certain treatment and end up back in the community?

What's their ultimate outcome? Do they end up with surgery in the community? Do they do okay? Do they not do okay? They not end up with surgery, do they end up with another treatment, do they eventually get better? You know, that data we really don't have. 

[00:33:14] Stacey Richter: Like so many things, it's not like any given idea is good or bad.

It's a lot of it has to do with devils in details and the execution really matters here. It would be up to any employer or plan sponsor who's thinking about getting a COE model to really think through some of the executional elements here. As with so many things, and listen to the show with Al Lewis, 331, for a deep dive into this, also the show with Cora Opsahl, this comes up, it's up to the plan sponsor to take a broad view on the actual impact of the program.

Because as you just mentioned, if the COE, the Center of Excellence program vendor, is only measuring the impact in cost savings or ROI on the patients who got operated on, And then the patients who didn't get operated on are tallied up as zero dollars and no further costs are considered. That's not going to be accurate.

[00:34:09] Dr. Ben Schwartz: A lot of things about the concept of a Center of Excellence model makes sense and you're right, it's all about the execution. I don't think you necessarily have to send patients hundreds or thousands of miles away from their community. It may take some work and again, it's incumbent upon us in the community to, you know, come with our data and prove that we're doing good work, whether it's at our practices, a surgery center, or local hospital.

But I think the concept of the COE can be local. 

[00:34:34] Stacey Richter: One thing that I have heard more than once also from employers is this whole idea of efficiency and it's very inefficient to have 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 COE network where everybody flies to a limited number of Centers of Excellence, as opposed to having lots and lots of local relationships. So you can definitely kind of see why this winds up happening. You know, you think about value based care, you kind of have to understand.

Who the quality provider organizations are within any local market. You can't just keep flying people around for everything, right? So as the data, maybe the quality data becomes more ubiquitous, it becomes more possible to do some of the stuff that we're talking about within the local community. 

[00:35:29] Dr. Ben Schwartz: I think there is an opportunity sort of on a national level for high quality, high value providers, centers that aren't necessarily traditional Centers of Excellence, academic medical centers as we think of them. To band together and say, you know, as a group, as this network, regional nationwide network, we're going to follow similar protocols, we're going to report our outcomes to you, we're going to have our own vetted providers and vetted centers, almost like a franchise model or under some umbrella where we've all kind of agreed to adhere to these standards and report our data. You know, we're in our own local markets, but we're sort of under the same national umbrella that we can approach self insured employers.

And you know that if you go to one of the providers that's in this self curated network, that you're going to get good quality care because you have the data as it's reported to you. 

[00:36:20] Stacey Richter: So, surprises that we have discussed here is this whole 90 day thing that everything falls on the shoulders of the orthopedic surgeon to pay for regardless of whether it's associated with the surgery or not.

Number two, commercial payers, not a huge fan of bundles, actually, it turns out. Number three, this move to coordinate with PCPs and specialists. And we talked through some of the interesting nuances there.

And then lastly here, we talked about COEs. Centers of Excellence, the Center of Excellence models, not a magic bullet, not that anyone thought there was, but there is some interesting implications here, especially as it relates to taking the patient out of the community. Dr. Ben Schwartz, is there anything I neglected to ask you that you think we should cover here?

[00:37:07] Dr. Ben Schwartz: I think, look, there's opportunity here. We've learned some important lessons. I think we'll continue to learn and evolve. I think in the future, it's going to be mandatory and not voluntary as we've seen before in the bundle. So I think it's incumbent upon those of us, particularly at MSK, particularly hyponatremia arthritis and back pain, where a lot of the spend is to understand this, to try to get a seat at the table, to try to be proactive in having these conversations.

Hopefully, on the other side of the equation, the government, CMS, CMMI, self-insured employers, commercial insurance plans are willing to come to the table with us and work with us to collaborate on these programs, cause I think that's really where we're going to see the most sustainability.

There's been some fits and starts. We haven't yet hit on the right formula for sustained success. I think really the only way we're going to do that is, is to have everybody coming together and making sure that everybody's pulling in the right direction. 

[00:38:02] Stacey Richter: That's a great inspirational message. There's a collaborative opportunity here so patients can get better care at an affordable price and everybody's knowledge is required to make that happen.

[00:38:13] Dr. Ben Schwartz: Orthopedic surgeons, I think, are known for, for being entrepreneurial and seeking out their own solutions. And I think we are seeing pockets of that where, you know, if you can't get traditional people to come to the table, then you'll figure out ways yourself to try to make it work. And so there's a lot of, I think, exciting work being done.

To that end, by people who really understand this and understand where things are going and are really trying to help create that future. 

[00:38:38] Stacey Richter: For sure. And it's going to take people who really understand the nuances here and really understand what's going on in order to actually create a future that's going to work.

Dr. Ben Schwartz, where can people find your blog? 

[00:38:48] Dr. Ben Schwartz: Yeah, so the blog is “Dem Dry Bones” on Substack. There's a link to it on my LinkedIn page, Benjamin Schwartz, MD. I'm happy to connect with anyone. 

[00:38:58] Stacey Richter: Dr. Ben Schwartz, thank you so much for being on Relentless Health Value today. 

[00:39:02] Dr. Ben Schwartz: Yeah, thank you, Stacey. My pleasure.

[00:39:03] Stacey Richter: So let's talk about going over to our website and typing your email address in the box to get the weekly email about the show that has come out. Sometimes people don't do that because they have subscribed on iTunes or Spotify and or we're friends on LinkedIn. What you get in that email is the introduction of the show transcribed.

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