Are Ortho Companies Ready for Medicare Bundled Payments?

By Nancy Crotti

When Medicare proposed in July that hospitals in 75 metro areas would have to accept “bundled” payments for hip and knee replacement surgeries and follow-up treatment, some interested parties saw it coming.

“Hospitals have been knowing that this is coming for some time, and that’s why they’ve been absorbing so many physician practices,” says Edward Black, president of Reimbursement Strategies LLC, a reimbursement, pay relations, and health economics consultant based in St. Paul, MN. (Hear Black speak on a panel discussing “Strategies to Win in the Reimbursement Jungle” at the upcoming MEDevice San Diego conference and expo on September 2, 2015)

What they found surprising—but shouldn’t have—were the timing and scope of the proposal by CMS, says Geoff Walton, vice president of alignment, strategy, and reform at Stryker Performance Solutions, a unit of the Kalamazoo, MI-based device maker that partners with healthcare providers to help improve outcomes, patient satisfaction, and profitability.

CMS will accept comments until September 8, 2015, in hopes of starting the program January 1, 2016.
“Medicare has been broadcasting its move in this direction for a while now and has continued to set specific timelines and goals with moving payments towards value-based programs for the future,” Walton writes in an e-mail.

Hospitals already operate on slim margins. Those that have been slow to prepare for a bundled payment model are going to really scramble to stay competitive in the program and not lose too much money, Black says. They may look more carefully at the types of prosthetics they buy. Device manufacturers will have to think of how their device fits within that longer episode of care.



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