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The Next Evolution in Bundled Pricing

The Next Evolution in Bundled Pricing

The Centers for Medicare & Medicaid Services (CMS) has begun its implementation of “bundling” policies designed to place greater responsibilities onto hospitals/providers. Entitled the Comprehensive Care for Joint Replacement (CJR), this is a bundled payment model that the CMS projects will save $153 million because of efficiencies of care and treatments. CJR focuses on two of the most common inpatient surgeries: hip and knee replacements. Not surprisingly, these procedures are also the most profitable for hospitals; conversely, it is one of the costliest for the CMS.

Let’s take a step back to review what “bundling” entails. The bundled payment model is per “episode of care,” defined as initial hospitalization through recovery (60 to 90 days on average). All services & fees are included in one episode-based or packaged price. Basically, CJR is designed to incentivize hospitals, physicians, and post-acute care providers to work in tandem to improve the quality and coordination of care—and to penalize the ones that don’t.

One of the reasons these procedures are so lucrative is because of lack of transparency. Whereas the CMS can bypass the time & expense of obtaining correct implant pricing by focusing on the big picture (i.e., averaging everything out to come up with the one bundled CMJ reimbursement amount), the private market does not have that luxury. Payers must reconcile that cost in some meaningful way. For instance, is 25K for a knee replacement reasonable? Has the cost of the medical/surgical implants been inflated? By how much? Are implants even listed on that bill? Beyond cost, there are other major questions to consider when trying to justify paying that $25K bundled bill. Do you have adequate, appropriate, and analyzable data? Is the provider focused on one set of manufactures implants vs. a more cost effective one?

While others are pondering those questions, wondering where the CJR program is headed, Advanced Medical Strategies (AMS) has already ushered in the next evolution: The Bundled Procedure Pricing (BPP) Module. It is a visionary component of AMS’ ImplantDx directory that lends clarity to RBP for bundled pricing procedures. BPP allows claims professionals (carriers, WC, TPAs, MGUs, health plans, reinsurers) access to exclusive provider reported implant data, pricing and analytics. Such as:

  • Complete clinical procedural review
  • Total all-in procedure costs
  • All surgically implanted components
  • Professional Services charges
  • Facility Fees
  • State, National & Network pricing (editable by mark-up and procedure percentiles)
  • CPT, ICD, and HCPCS codes

And that’s just the beginning. BPP isn’t just limited to orthopedics. Cardiac bundling, with hardware such as pacemakers and stents, is also included in BPP. As with the orthopedic implants, accurate pricing as well as indispensable clinical data and predictive analytics for other “episodes of care” will be provided for subscribers to keep their costs contained.

The business of healthcare is not static. Drug prices are soaring. Governmental policies & programs, medical protocols & procedures, and industry regulations & guidelines are all in constant flux. Advanced Medical Strategies has its finger on the pulse of these ever-changing conventions, moving relentlessly forward, staying ahead of industry trends by utilizing cutting edge technology, data, and information. The evolution continues…


Jason Marcewicz & Peter Borans

Advanced Medical Strategies

Originally posted on

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