How to be Successful with Bundled Payments with Dr. Kevin Bozic

July 06, 2017


How to be Successful with Bundled Payments with Dr. Kevin Bozic

Dr. Kevin BozicThis post is a recap of Dr. Bozic’s keynote presentation at the 2017 #LeadingVBHC Conference titled: “The Bundled Payment Health Care Environment: Recent, Current, and Future.”



It’s a very exciting time to be in medicine, there’s no doubt about that. When Dr. Kevin Bozic, Professor and Chair, Dept. of Surgery and Perioperative Care, Dell Medical School at the University of Texas at Austin, began practicing medicine in 1994, hepatitis couldn’t be diagnosed. Now it can be cured.

It’s also a challenging time to practice medicine.

Challenges in Healthcare Now

These challenges exist are for a variety of reasons, including the fact that we’re still engulfed in a healthcare system that emphasizes care and not health. In other words, the system is more focused on fixing things that are broken, rather than on preventive measures.

Dr. Bozic added we are working in a “fragmented payment and delivery system,” evidenced by the fact that Dr. Bozic (and providers like him) are often required to repeat imaging studies and lab tests recently completed at another clinic. This might not seem like that big of a deal, but the kicker is that the repetition exists solely because providers don’t have access to a particular EHR. Can you sense a little frustration?

If this seems like a huge waste of resources, that’s because it is. Bozic points out that we’re in the middle of a medical arms race. Practices and providers alike are constantly trying to outdo each other, striving to show off the industry’s latest and greatest. That’s even if the latest isn’t the greatest and doesn’t provide value.

Today our system is primarily fee-for-service, which incentivizes over-utilization based on the intensity and volume of services. Conversely, the full-risk, or global, capitation model, incentivizes under-treatment. “Where we need to be,” says Bozic, “is the epicenter of value. We need treatment for conditions that incentivizes a group or team of people to achieve outcomes with the patients they treat, per dollar spent.” Value = Outcomes/Cost

What’s the role of the payment system in improving value?

Enter bundled payments. Bundled payments mean that no matter how many services the patient receives over the course of a single episode of care (usually 90 days), the provider is reimbursed at a set target price. This payment model also aligns goals among providers and allows for increased communication of patient-care protocols between providers, to avoid scenarios like the above duplicate-testing example. Bundled payments motivate everyone in the care cycle to communicate.

If you’re planning on implementing a bundled payments strategy, Bozic outlined the following steps for getting started:

1. Identify your physician and administration champions. This is the first thing to do when you start. Identify who is going to run the show.

2. Define the episode you’re willing to take risks on. Remember, you’re managing the episode of care, as opposed to just the procedure. You’ll need to identify the variability between cost and outcomes.

3. Understand the care of your patients from their perspective. Map every single step of a patient’s care and define inefficiencies.

4. Understand the actual cost of care. Instead of allocating costs based on reimbursement, allocate costs based on measuring what it costs to deliver that care. That’s where you find where the inefficiencies are.

5. Use the data on the process of care and cost of outcomes to identify where opportunities are. You’ll need to define your performance goals, whether it’s to reduce readmissions or improve functional outcomes.

6. Redesign care. The only way we provide value is by redesigning the work, and getting clinicians and physicians to change their habits is hard. You have to change the way you deliver care to improve care and lower costs.

7. Six Sigma Approach. After all these steps, you’re ready to go to market, but you’ll need to remember the Six Sigma approach and keep repeating and redefining this process as you go.

What’s missing from today’s bundled payment experience?

In his presentation, Bozic gave an example of what he described as a “perfect” bundled TKA as a treatment for arthritis. Everything with the procedure went smoothly, however, the patient returned with problems a year later. It turns out the patient never had arthritis but instead was extremely depressed. In point of fact, the link between knee pain and depression is actually quite common. Unfortunately, mental health representatives weren’t involved in this ‘perfect’ TKA, and the prescribed treatment, therefore, wasn’t beneficial to the patient in either scenario. Talk about wasted resources.

“As we transition from volume to value, if we’re still delivering care in the volume way, it’s not going to work well for anyone.”

Bozic later went on to say, “Bundled payments are a payment delivery system disguised as an incentive program. This means we need to actually change the way that we deliver care for anything to be effective.”

The importance of patient-reported outcomes in bundled payment systems

Referred to as the holy grail of quality metrics, PROs are a key component of the value equation. Patients care most about their pain and function, so these outcomes MUST be measured. Bozic says a corollary scenario to orthopedic surgeons not collecting PROs as a step in their patient-care process is like a cardiologist treating hypertension without taking a patient’s blood pressure. Crazy, right?

The idea of PROs is simple. Ask the patient how they feel, both pre and post-op at specific intervals (usually three months and one year after the procedure). The data collected from PRO surveys can be quantified to reach an actual measurement using scientifically validated tools. These measurements will tell you if a patient actually improved, both functionally and mentally, as a result of the procedure.

Adding another layer, consumers WANT to access PRO data, and they’re getting it from sites like Yelp. Bozic argues this information should be A) transparent, and B) coming from the doctor themselves. “When a place like this is transparent, it’s where patients want to go.”

PROs can help with shared-decision making too. “When the patients know their role in a procedure (if they need to participate in a weight-loss program or stop smoking), as well as knowing what typical outcomes are for that procedure, the patient will have realistic expectations, which translates into better outcomes.”

Schedule A Call With a PRO Expert!

Need more help with your PRO related questions? CODE can help! Schedule a call with a CODE expert today to get you on your way to better harnessing your patient reported outcomes.