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UnitedHealth Group Adopts Bundled Payment Models for Surgeries

Another national health payer - UnitedHealth - has contracted through a bundled payment model to lower costs of hip, knee, and spine surgeries.

By Vera Gruessner

The commercial payer UnitedHealth Group has begun expanding its involvement in bundled payment models. Forbes reported that UnitedHealth will be implementing bundled payment models for spinal surgeries as well as hip and knee replacement operations in more than 40 markets by the end of 2017.

Value-Based Care Reimbursement

Bundled payment models put more financial risk onto the provider by making them responsible for keeping the costs of an episode of care close to the agreed upon bundle. Payers benefit from bundled payment models by both reducing their overall spending and bringing better quality of care for patients. Bundled payments incentivize providers to coordinate care more closely in an effort to boost health outcomes.

“It’s putting more risk with the provider to manage the risk and the outcome and it gives the employer that predictability of what it’s all going to cost,” Michelle Lobe, UnitedHealthcare’s Vice President of Network Strategy and Innovation, told Forbes. “It also gives the provider the opportunity to share in the gain.”

When it comes to hip and knee replacement surgeries, the prices have skyrocketed for some payers who are seeing fees of $30,000 or more. However, prices for these surgeries vary drastically across the nation. Therefore, UnitedHealth and other payers along with the Centers for Medicare & Medicaid Services (CMS) have implemented bundled payment models for hip and knee replacements to lower overall healthcare spending.

UnitedHealth has a bundled payment program in which hospitals and other medical facilities must meet healthcare quality and outcome metrics to be considered a “center of excellence” and received bundled payments. The bundled payment program initiated by CMS, however, does not indicate these specific measures and is mandatory for hospitals across 70 counties.

READ MORE: Humana Expands Medicare Orthopedic Bundled Payment Programs

The transition to bundled payment models among payers like UnitedHealth show how the healthcare industry is embracing value-based care reimbursement. The switch from fee-for-service is necessary to reduce wasteful spending on unnecessary medical testing and services.

UnitedHealth’s bundled payment model in spine and joint surgeries started in 2015 as a pilot program and has now grown to 28 markets and more than 40 hospitals. The plan is to have more than 40 markets operating in this bundled payment model by the end of next year.

“Knee, hip and spine surgeries are among of the fastest increasing categories of medical procedures, so this program provides a new way to help improve the quality of care, produce better outcomes for patients and better manage costs for employers,” Sam Ho, M.D., Chief Medical Officer of UnitedHealthcare, said in a public statement. “Our partnership with participating health care providers and facilities is an important step toward achieving better health outcomes while reducing the overall cost of care.”

Whether or not CMS will continue on the road to value-based care with the incoming administration, private payers are showing that the health insurance industry understands the importance of moving away from fee-for-service.

Along with UnitedHealth, major national payers like Aetna, Blue Cross and Blue Shield, Anthem, and Cigna have goals of moving the majority of their payment contracts to value-based care reimbursement platforms. Some are operating bundled payments while others have adopted accountable care organizations.

READ MORE: Humana Expands Orthopedic Bundled Payment Program to NC, VA

Humana is another payer that has incorporated bundled payment models for hip and knee replacement surgeries. Chip Howard, Vice President of Payment Innovation at Humana, spoke with about Humana’s involvement with bundled payments.

When asked how the payer would track outcomes for hip and knee replacement surgeries across the continuum of care, Howard answered, “We will have data and reporting that shows, at a member level, what occurred during the bundle. Specific to hip and knee replacements, we will actually have information for providers that says, for member A, this member received pre-surgery testing and consults at this provider and received an MRI at this provider.”

“We will be able to show all the detail around the actual procedure itself and the inpatient stay that accompanied the procedure,” Howard continued. “We will also be able to show the 90-day window post surgery where the member is rehabiliationizing in a post-acute setting.”

Humana will also be focused on tracking patient readmission and complication rates, which should help providers better prepare ways to improve patient safety and decrease these rates.

“We will show what post-acute setting was utilized whether it be home health, a skilled nursing facility, or inpatient rehab. Being able to also show readmissions and complication rates at a member level is part of our work. The short version is that, at a member level, we will be able to track all that and share that information with our providers. Clearly, having that ability drives the opportunity to track outcomes and look at potential opportunities for where to improve,” Howard concluded.

READ MORE: APMs, Health Data Exchange among Top Payer Reform Goals


Dig Deeper:

How to Overcome the Challenges of Bundled Payment Models

Time, Commitment Required for ACO, Value-Based Care Success


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