BCBSNC bundles payments for better coordination, quality, costs

When I underwent knee surgery more than 10 years ago, I was faced with multiple bills from different providers, ranging from the surgeon, anesthesiologist and physical therapist. In some ways, the bills that piled up after the surgery were more daunting than my own recovery and rehabilitation. What I would have given to only had seen one bill with one payment required!

My story is far from unique and Blue Cross Blue Shield of North Carolina is hoping that the millions of patients like me will find the idea of paying one simple flat fee for all medical services surrounding a singular event to be quite attractive. I certainly would have jumped at the opportunity.

That's why BCBSNC has joined forces with two provider groups--Duke University Health System and Triangle Orthopaedic Associates--to offer bundled payments for knee replacement surgeries. Under the program, patients are billed one total amount for each service related to their knee replacement.

To learn more about the incentives driving BCBSNC toward bundled payments and how it has implemented the program, FierceHealthPayer spoke with Brian Holt, director of strategic reimbursement and contracting, at BCBSNC.

FierceHealthPayer: What motivated BCBSNC to launch its bundled payment initiative?

Brian Holt: Our objective was to create communication channels within the care pathways that created continuous improvement in the delivery of a given service. So this creates a continuous feedback loop that basically streamlines quality of care in that pathway. We see bundling being a true way to change the way care is delivered today through both optimization and engagement across the continuum of providers. Breaking that fragmented, silo approach that exists today.

So, for example, the service around knee replacement was very fragmented. We found that, in many cases, the surgeons weren't necessarily aware of the potentially avoidable complications or issues post the acute service of surgery, like a secondary infection that was treated by the primary care physician. That leads to additional costs incurred, so now the overall cost for that knee replacement and the patient's experience was significantly impacted by the post-acute care portion of the episode.

Basically what we're working with providers to do is deliver high-quality care at a lower cost without impacting their margin. This is a new way of thinking about care delivery and really optimizing all aspects of care delivery.

FHP: Why did BCBSNC decide to target knee replacement for its bundling program?

Holt: Since we're in the early evolution of bundling, we were looking for episodes that were pretty clean and had clear opportunities to optimize. Because if a group of providers are already doing all the communication pieces, it limits the amount of savings and benefits of a bundle. You're basically just paying differently. But our objective is really to change the way care is delivered, transform the way the discussion happens--not just pay differently.

So we chose the knee replacement for a couple of reasons. One, it's a good introduction because it expands a totally different clinical area, it expands the message around bundled payment as being a good way to incentivize the aggregate provider community to change the way they deliver service to patients and deliver value instead of just a service.

FHP: Does BCBSNC facilitate the provider communication? How frequently do the providers communicate with each other?

Holt: Initially, we tend to facilitate as far as getting on the calendar fixed meetings that occur, sometimes every couple of weeks. And as you optimize that care pathway, there's less need to meet on such a frequent basis because we're taking highly valued clinicians out of the clinical setting to talk about how we improve. But if there's nothing to improve, it's just a waste of their time. Usually at least for the first year we try to meet on a monthly basis.

FHP: How did you select Duke and Triangle Orthopaedic Associates as the provider groups to work with? What made them suitable for the bundling program?

Holt: We were looking for someone who already had a decent volume of cases because for this to work, as a payer, we have to have enough cases coming through the providers to actually have them change their pathway. We had discussions with the entire care team upfront to gain an understanding of whether they have the right mindset to truly coordinate and collaborate with us on improving care.

In many cases, it's about introducing them to the pathway and saying what you're doing isn't aligned with the appropriate clinical approach. Or because your system isn't optimized, your costs are way out of line and you could be losing money on every one of these cases based on the fragmented approach you're taking.

We also have quality measures that we set at the front of the program and then at each one of those clinical meetings we have discussions about progress against those targeted measures, which include range of motion on the knee, how quickly the patient returned to work, infection rates and readmission rates.

On average, professional providers are very interested in this approach, seeing it as a way to retain their market position. And as you roll these programs out, it has a sentinel effect, raising interest across the market.

FHP: What kind of savings have you generated by bundling payments?

Holt: We did a pilot program with CaroMont Health (which launched in April 2011 and lasted for one year) around the knee replacement where we saved about 8 percent to 10 percent on the average per episode. But when you talk about that destination model and you start moving care to these optimized settings under a bundled payment program, the savings get even greater.

FHP: What are the next steps for the BCBSNC bundled payment program?

Holt: Our greatest interest is using bundling payments for chronic patients, including those with heart failure, pulmonary disease or diabetes, who have episodes that can run a year in length. Those are the areas where we have the greatest interest, but it's also where it's most complex because there are lots of touch points between the specialists and primary care doctors. Other areas we will continue to focus on include outpatient procedures like ACL repair and maternity care, including decreasing the rate of C-sections.

- Dina (@HealthPayer)

Editor's Note: This interview has been edited for clarity and length.