Taking a cue from car manufacturers and cell phone companies, some providers are starting to see value in guaranteeing a standard for quality and costs.
In Baton Rouge, Louisiana, Our Lady of the Lake Regional Medical Center recently became the state's first hospital to offer a guarantee to patients receiving hip and knee replacements--as well as their insurers.
Our Lady Regional, the flagship facility in the Franciscan Missionaries of Our Lady Health System, is not charging for any additional care within 30 days of a hip or knee replacement. It covers everything--covering readmissions, infections, rehab and postoperative care--except deficiencies in the devices.
The goal is to "address the overall cost of care by eliminating the need for post-surgical follow-up care or not charging for this care in the rare instance it is necessary," said Scott Wester, CEO of the 800-bed teaching hospital. "We believe enough in our clinical care and our surgeons to offer something like this."
Hip and knee replacement patients are asked to "be an active participant" in care and recovery, and agree to attend pre-operative classes and evaluations. But neither they nor their health plans are asked to pay anything extra in the event of complications, even though certain incidents like surgical site infections could be billed, Wester said. "We're not asking for any more reimbursement from any payer; it's the default."
Competing against Louisiana's largest hospital network, Ochsner Health System, the Our Lady health system includes the regional hospital, a children's hospital, a 350-physician primary care network, an urgent care clinic network, outpatient imaging and surgery centers, plus a healthcare college. And the system is expanding more, with a new cancer center in the works and a new heart and vascular hospital.
The value guarantee is helping the hospital meet the patients' best interests and "reduce variations of care and variations of outliers," said Wester, who's spent his whole career at Our Lady. It also creates an incentive for the hospital to offer hip and knee replacements to the most appropriate patients, who will benefit in the long-term and who are healthy enough to make it through surgery without complications.
The total joint replacement guarantee started in January of this year and builds off a Medicare pilot Our Lady began last year, Wester said.
Our Lady Regional is participating in Medicare's Center for Medicare and Medicaid Innovation's Bundled Payment program, for both total joint replacement and coronary bypass surgery--as the only CMMI bundled payment pilot with both upside and downside potential.
"Our docs said, 'We want both an incentive on the upside and incentive on the downside,'" Wester recalled. "It's important for people to know that they could potentially lose money."
There is no data yet available on Our Lady's CMMI demonstration or the total joint replacement value guarantee, although Wester said that in 2013, the hospital met or exceeded quality benchmarks for TJR.
"It's been amazing when you see clinicians say, 'Let's standardize care. Maybe we don't need to do as much rehab. Lets standardize the devices we put in, instead of 10 vendors lets use four,'" Wester said. "They sit around and talk and come up with evidence-based practices or agree to their own convictions."
As the CMMI bundled payment project was getting underway last year, Wester thought about applying the approach to commercially insured patients. "I asked our team, 'What would happen if we would just guarantee all of those that are involved in our total joint for the hospital to assume risk post-discharge?'"
Wester and his colleagues reached out to major commercial insurers, including Blue Cross and Blue Shield of Louisiana, UnitedHealthcare and Aetna, and said "I don't want to renegotiate anything. We feel what we get paid is fair and accurate. We just feel so confident that we'll take care of hip and knee replacements.
At first, the insurers seemed a little skeptical, wondering if there was a catch, Wester said. But Blue Cross and Blue Shield of Louisiana, the state's largest insurer, "quickly realized that this is really a good thing," Wester recalled. "We said, 'If you want to change to a bundled payment, we'll be happy.'"
Sabrina Heltz, the senior vice president for quality at BCBSLA, said the hospital's move "is admirable" and indicative of the increasing scrutiny patients themselves are applying, although the insurer has not yet decided on adopting a bundled payment for it.
"As a consumer, you expect good outcomes from your provider, you expect no complication rates," Helz said. "The fact that they're not contractual or payers, is about a message to consumers, putting the money where their mouth is, so to speak."
BCBSLA also has its own portfolio of alternative reimbursement programs, the major one being the Quality Blue patient centered medical home along with the Quality Blue Value Partnerships. (Quality Blue Value Partnerships includes five major health systems in Louisiana, though not Our Lady.)
"Because we're local and can be very nimble, we're pretty much entertaining any kind of payment arrangement that is worth the effort and the return," Helz said.
Our Lady of the Lake is charging ahead with the value guarantee and considering expanding into other clinical areas. "I would like to start another one before the end of the year and another one in 2016 and 2017," Wester said.
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