The Affordable Care Act and other healthcare reform initiatives have promoted bundled payments as an alternative payment model with significant potential for providing value-based care, particularly in orthopaedics. Because approximately 80 percent of medical care delivered through the workers' compensation (WC) system is musculoskeletal, orthopaedic surgeons are uniquely positioned to have a major influence on healthcare outcomes and costs in this area of medicine. Studies have shown that WC accounts for up to 20 percent of the general orthopaedist's practice, 65 percent of a hand surgeon's practice, and 90 percent of the independent medical examiner's practice.

The California experience
As an example, major reforms to the WC system in California have limited the ability of orthopaedic surgeons to provide medically appropriate care to their patients. In an attempt to slow escalating costs, rigid parameters and micromanagement by claims adjusters have supplanted the physician's medical decision making. For example, each industrial accident has a cap of 24 physical therapy visits, regardless of the type or nature of the condition. When cost concerns trump patient care, the patient loses.

One potential way to improve care for patients in the WC system is to uncouple each individual claim from the overall care of the orthopaedic industrial injury. This can achieve the goal of cost control while allowing the physician flexibility to make medical decisions in the best interest of the patient. Bundled payments offer such a mechanism, and preliminary work has been described although no published results are yet available.

The concept is still in its infancy, but by way of example, bundled payment arrangements under a WC agreement have already been initiated for an addiction medicine program at the University of California and the same institution is exploring the possibility of initiating a WC bundled payment agreement for spine and shoulder surgeries.

Reasoning
The WC system for orthopaedics includes two complementary and interrelated entities—orthopaedic medical care (medical management) and occupational medical care (disability management). In some states, WC system fee schedules recognize these differences in care and may reflect the additional work involved by providing higher reimbursements to physicians. In many states, reforms have lowered the reimbursement to levels equivalent to basic medical care (eg, Medicare), essentially no longer reimbursing for disability management. Bundled payments have the potential to allow adequate reimbursement for both medical care and disability management.

In a typical bundled payment arrangement, a variety of outcome measures can be used to establish the successful completion of an episode of care. In the WC system, return to work is a primary and overriding outcome measure. All parties (healthcare provider, insurer, employer, and patient) clearly understand this, so "return to work" may provide a fixed framework that is easily understood and around which the agreement may be crafted.

Although a bundled payment agreement in WC may not necessarily include return-to-work expectations, insurers will expect that patients do return to work on a timely basis and consider it a primary factor in their selection of practices. Other factors—such as timely and accurate reporting and permanent disability evaluations and ratings—will also be important.

The WC network
One of the challenges of typical bundled payment arrangements is attribution, with a need to distribute the payment to multiple providers involved in the care cycle. As a result, it is important to concentrate care within a controlled system. This ensures that patients do not receive care that is not tied to the bundle and is out of the physician's control.

The medical provider network (MPN) in the WC system is basically a narrow network. All parties, patients included, recognize that all care must be received within the MPN and that no reimbursement is provided for care received outside the MPN. Thus, in this area as well, the existing WC structure is well aligned for a bundled payment model.

"Bundling is going to be the future in the WC scenario," said Mark Melhorn, MD, who directs the AAOS course, "Occupational Orthopaedics and Workers' Compensation: A Multidisciplinary Perspective." "Clearly, insurers would like to manage costs and one way is to bundle and share the fiscal responsibility for the injured worker. One challenge will be how to implement bundles in a system that has been fairly rigid and structured. Another challenge will be addressing secondary issues and concerns—such as an employer's willingness to make adaptive changes to an employee's work—that make the outcome goal of return to work difficult to achieve."

The surgeon's role
More than 50 percent of the American workforce will have an occupational injury at some time. Although the concept is still in an early phase, orthopaedic surgeons or groups are uniquely positioned to develop and implement bundled payments in the WC system. Not only do they know the entire continuum of care, they also understand the concepts of high- versus low-value services for patient healing and return to work.

Payment options could include either a discrete bundled payment for provision of surgical care or, in a more advanced model, a single payment for management of the entire scope of the industrial injury. Surgeons willing to take on risk in this model must have considerable expertise in managing both the medical and the disability aspects of injuries.

Readiness to accept a bundled payment for a surgical episode requires understanding and quantifying the costs involved in an episode of care and alignment of all providers participating. The most common examples of bundled payments for inpatient total joint arthroplasty (TJA) include hospital costs (operating room, anesthesia, and implant) as well as post-acute care such as discharge to a short-term nursing facility or outpatient physical therapy. Experience with inpatient TJA bundles could position a practice to consider WC bundles.

However, many orthopaedic industrial injuries are amenable to outpatient surgical management, which may be an easier starting point for a bundle. Frequently, orthopaedic surgeons have established relationships with surgery centers, and this can facilitate assessment and management of the entire surgical cost, including aligning staff and anesthesiologists.

Increasing the episode from the surgery to the management of the entire orthopaedic injury requires more advanced WC experience and risk management skills. Although most orthopaedic surgeons are well-trained to manage risk based on the medical needs of patients, managing the larger scope of disability will typically require additional training, expertise, and experience. For example, although many surgeons may be comfortable taking on risk with regard to the typical outcomes of a standard ACL reconstruction, they might not be willing to be potentially financially responsible for when that patient would return to work. But these data are being collected, often without the physician's knowledge.

"WC carriers are already tracking that kind of information," said Dr. Melhorn. "They can pull up each physician and tell how long he or she keeps a patient off work for a certain diagnosis."

A complete bundle for treatment of a WC injury could begin when the decision is made to refer the patient to an orthopaedic surgeon. The surgeon could negotiate a fee for conservative management of an industrial injury (eg, an acute shoulder injury). This would include office visits, therapy, imaging, medications, and injections. Although a very advanced model could include accepting risk for potential surgery in the bundle, most surgeons might prefer to obtain authorization and a second bundled arrangement for surgical treatment, if conservative treatment failed. This bundle would also include the surgeon's fee, as well as anesthesia, surgical, and rehabilitation costs.

Every surgical bundled payment requires that all providers be aligned. For example, rather than a rigid 24 sessions of physical therapy, the goal becomes helping the patient initiate an effective home treatment program with support from the therapist as needed, which may significantly reduce the number of physical therapy sessions needed. In situations where additional therapy sessions could avoid higher intensity treatment or facilitate the return to work, these would be prescribed without delay and micromanagement from the adjustor.

In more traditional value-based models, patient outcomes are the critical component that prevents undertreatment. However, as noted above, all parties recognize that the primary outcome goals in an industrial injury are return to work and reduction of permanent disability or impairment.

Risks and benefits
A full understanding of the costs associated with providing an episode of care for a WC injury is required to minimize the downside risk of setting a bundled payment level too low. Further, as with all alternative payment methods, outcome reporting will be necessary. However, these patients are already scrutinized for outcomes in the context of advancing return to work.

The benefits of a WC bundle include the ability to treat patients without a claims adjuster as intermediary. This offers another way for the orthopaedic surgeon to own the bundle and be able to have the greatest impact on delivering care. This model is particularly attractive to practices with hospital alignment or surgery centers and ancillaries, given their greater ability to control quality and value across the episode.

"The AAOS is aware of these changes," said Dr. Melhorn, "and recognizes the importance of staying on the forefront. That's why we're working with members on topics such as bundling and WC."

At a time when creative alternatives to care delivery and reimbursement provide opportunities for surgeons to provide high-value care to patients, the WC system has remained mired in a model which relies on rigid rules and oversight to control costs. In the process, quality care is sometimes sacrificed. Taking charge of the process through a bundled payment approach enables the orthopaedic surgeon to reverse that equation.

Alexandra E. Page, MD, chairs the AAOS Health Care Systems Committee (HCSC); Nicholas Colyvas, MD, is a member of the AAOS Practice Management Committee.