Impact of Device Cost in Bundled Payment Programs
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Impact of Device Cost in Bundled Payment Programs

The face of healthcare is changing with both inpatient and outpatient surgical services.  The Centers for Medicare & Medicaid Services’ (CMS) Bundled Payments for Care Improvement (BPCI) Advanced for inpatient procedures and outpatient bundled payments with private payers and self insured employers are all pathways to reduce the cost of many device-intensive surgeries and drive patient volume to participants.

Inpatient and outpatient bundled payment programs have created business opportunities intended to support providers in driving cost out of healthcare for both inpatient and outpatient procedures including:

BPCI-Advanced is a voluntary program designed to drive significant savings with physician groups and hospitals including 29 inpatient and 3 outpatient clinical episodes assessed on the quality and cost of care at the end of each performance period aligned with gainsharing payments. Value-based healthcare convener companies partner with voluntary providers to assist in implementing and managing value-based payment programs such as BPCI Advanced in their efforts to improve care outcomes, reduce costs, increase and share in the profitability.

Alternatively, Ambulatory Surgery Centers (ASC) partner with providers delivering cost-effective surgical services across several specialties at nearly half the cost of hospital outpatient departments in a convenient environment with typically fewer complications than the inpatient setting. Third Party Administrator (TPA) companies partner with Ambulatory Surgery Centers and providers to develop and administer medical bundled payment and delivery systems reducing self insured employer and private payers’ healthcare costs with fixed pricing for surgical care in a single invoice.

Bundled payments may prove to be an effective cure to reduce the cost of device-intensive surgical services in both the inpatient and outpatient setting largely driven by reductions in device costs since it is often the largest expense per procedure. When implanting surgeons benefit financially by aligning with facility cost-saving measures, their choice of device is often first to be scrutinized, which leads them to pressure device partners for better pricing. This represents a significant shift from the past when many surgeons insisted on their preferred devices without regard to cost and facilities with cost-plus payer contracts profiting from higher cost devices.  

ASCs and physician partners will need to consider expanding device company options and leveraging purchase volume across multiple ASCs to negotiate best prices prior to entering a bundled payment program. Traditionally, this has been a very long, manual and labor-intensive process requiring multiple meetings, exchanging non-standardized data while communicating objective comparisons to physicians in an effort to bridge clinical and economic decisions.  Facilities’ profitability continues to be negatively impacted during this long process that can take months to finalize for each service line.  

New technology platforms exist today to help streamline these manual time-consuming processes by standardizing medical device data, in order to objectively compare and communicate medical device options to physicians and efficiently analyze their financial impact on service line budgets. If you are interested in discovering how to streamline these manual and labor intensive processes, check out Relatable Healthcare.  

photo by natanael melchor