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UnitedHealthcare Adopts Bundled Payment Model for Surgeries

UnitedHealthcare has implemented a bundled payment model called The Spine and Joint Solution.

Value-Based Care Reimbursement

Source: Thinkstock

- The national health insurance company UnitedHealthcare has followed the lead of the Centers for Medicare & Medicaid Services (CMS) and implemented a bundled payment model specifically for hip, spine and knee surgeries much like the CMS Comprehensive Care for Joint Replacement Model. UnitedHealthcare invested in the value-based bundled payment model in January 2017 to improve the quality of care and improve patient outcomes.

UnitedHealthcare’s bundled payment model for hip, knee and back surgery is called The Spine and Joint Solution. The health plan under this bundled payment model is now available to employers around the country. UnitedHealthcare has partnered with hospitals and post-acute care facilities that have experience with spine and joint replacement surgeries and show few complications.

“The main reason for developing a [bundled payment] program is that, in most large companies, high spend is really associated with orthopedic procedures,” Michelle Lobe, Vice President of Network Strategy and Innovation at UnitedHealthcare, told HealthPayerIntelligence.com. “For the most part, about 17 percent of company spend is in the orthopedic arena. Hip, knee, and spine procedures constitute about 33 percent of that.”

The health payer has partnered with Dallas, Texas-based Baylor University Medical Center to utilize the bundled payment program along with 40 other medical facilities in 25 markets nationwide. Through 2017, UnitedHealthcare sets its sights on expanding the bundled payment program across 40 markets.

The surgeons and facilities participating in the bundle have qualified as UnitedHealthcare’s Centers of Excellence. Members will receive improved quality of care with low risk of complications when undergoing spinal fusion, spinal disc repair, or knee and hip replacement surgeries at the approved medical facilities.

“The first step is to go through some very specific analytics in the markets that we’re targeting to determine which the right center of excellence might be,” Lobe said.  “Before we get into any conversation about payment methodology, we’re looking first to find the highest quality centers to target for those discussions.”

“Using our own data as well as CMS data, we analyze centers for their outcomes and pick those partners,” she continued. “Once we identify in a market which Center of Excellence might be a good partner, then we start to entertain the conversation about negotiating a prospective bundle.”

The bundled payment program works by reimbursing providers for a specific episode of care instead of every clinical service completed like in the fee-for-service payment structure.

The pilot program for this bundled payment model began in 2015 and has shown an average savings of $10,000 or more among employers for each episode of care when compared against overall median costs for the same procedures in the same region. Employees also saw reduced out-of-pocket costs for these procedures under UnitedHealthcare’s bundled payment program.

With the baby boomer population aging, the number of hip and knee replacement surgeries are expected to increase over the coming years. The Health Care Cost and Utilization Project found in a new report that the number of knee replacement operations will rise by 500 percent by 2030.

Since the costs of these surgeries vary greatly among healthcare providers, health insurance companies like UnitedHealthcare are looking for new ways to control the costs while the number of surgical procedures is expected to rise. Bundled payment models are expected to reduce the cost of an episode of care while also reducing the risk of complications and improving quality.

Health insurance companies would benefit from following the lead of UnitedHealthcare and implementing bundled payment programs to better manage the costs of joint replacement surgery and spinal operations.

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