The Future of Reimbursement and Fee for Service in Orthopedics

Dear CSS Colleagues:

Enclosed is an interesting article to be published soon in the Journal of Arthroplasty. Dr. Louis McIntyre and colleagues article entitled “The Near-Term Ramifications of Long-Term Trends in Orthopedic Surgical Reimbursement” highlight a predictable trend. This is a progressive reduction in payment by Medicare for lower extremity joint replacement and a trend to where an hour in the office will ultimately be equal to an hour in the operating room. While this may seem an unlikely concern for many of you, remember that mostly all other insurers follow Medicare trends in payment for service.

My own interpretation is that this fits with the prevailing opinion that Fee-for-Service as a model for payment for surgical care, will be giving way to “value-based care” alternatives such as Bundles and Episodes of care. In fact, a search for these terms in google yields not surprising results of > 1 million results:

So, what does the future hold? I think if you search Google and other sources you will find many opinions. For my own part, I think there are two routes that business will follow when it comes to Orthopedic care. Both of these will be affected by downward pressure on payment for services and both will occur in the context of a broader trend for Mergers and Acquisitions which lead to larger business entities and consolidation of options for healthcare consumers. I call this the “Kaiserization” of American healthcare. This may not be a bad thing as Kaiser Healthcare delivers a great product. However, it will result in even more commoditization of you as a provider.

In one case, healthcare will move more to employment models as we see with Kaiser Healthcare, Mayo Clinic and Cleveland Clinic to name a few. In another case, healthcare will move to alignment and collaboration between physicians and their hospital systems. An example might include Rothman Institute. In such a case co-management can reduce costs of surgery and offer gainsharing as a behavioral incentive for physicians to align with the hospital. Legal experts can clarify how this can occur in the current context of acceptable practice where physician-owned hospitals are no longer permitted.

One thing is for sure, change is coming, and we all need to think in current context. Failure to do so risks living in an anachronistic perspective that will disappoint us when reality catches up to our expectations.

I welcome perspective from all of you.

Kind Regards,

“JP” Warner MD

Founder, The CSS

The Near-Term Ramifications of Long-Term

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