If you’ve been in business for a while now, you’ve probably gotten pretty used to the standard healthcare fee-for-service payment model: you provide a service, you bill for said service, and then you get paid for that service. Well, times are a changin’. While practitioners will still provide services and receive payment, that payment will soon be dependent on performance (i.e., outcomes data). In other words, you’ll get paid based on the value you offer your patients—not the volume of services you provide. And in some cases, payment will be based on the value an entire team of practitioners provides a patient—à la healthcare bundled payments.

The General Scoop on Bundled Payments

So, what are bundled payments? According to WebPT’s Brooke Andrus—citing this Association of Health Care Journalists (AHCJ) article—“a bundled payment model is one in which ‘an insurer sets a single price for all providers (physicians, hospital, and any post-acute providers) involved in doing a procedure or delivering an episode of care.’” From an efficiency standpoint, Andrus writes, “the idea is that because all of the providers involved in a particular episode of care must work under a single budget, they’re more inclined to work together to eliminate the provision of unnecessary services.”

The shift to a value-based payment paradigm means more bundled payment programs.

According to Tamara Rosin—in this Becker’s Healthcare article—“Bundled payments are emerging as an increasingly important element of the healthcare industry’s shift from volume- to value-based care, as CMS seeks to lower healthcare expenditures and providers aim to achieve the triple aim: providing the best possible care at the lowest price and improving the overall health of a population.” Luckily, there are already opportunities for rehab therapists to participate in—and potentially profit from—bundled payment programs.

CJR: A Therapist-Relevant Bundled Payment Program

The first bundled payment model that was clearly relevant to rehab therapists was the Comprehensive Care for Joint Replacement (CJR) model. According to CMS, “effective implementation of the CJR model will improve the quality and efficiency of care for Medicare beneficiaries, which is essential to creating a health care system that delivers better care, spends our dollars more wisely, and leads to healthier Americans.” Sounds good, right? Well, as I explained in this article, things can really only go up post-CJR implementation. That’s because in 2014 alone, surgeons performed more than 400,000 total hip and knee replacements on Medicare beneficiaries—yet there was no consistency in terms of quality of care or costs. In fact, CMS said that “the rate of complications like infections or implant failures after surgery can be more than three times higher at some facilities than others, increasing the chances that the patient may be readmitted to the hospital.” That left Medicare footing a bill for surgery, hospitalization, and recovery that averaged anywhere between $16,500 to $33,000.

Hospitals dedicated to exceptional care stand to benefit financially.

Enter CJR. Under this new model, CMS is holding participating hospitals financially responsible for the quality and cost of entire CJR episodes of care—from admission to 90 days post-discharge—including rehabilitation services. To put it simply, CMS will set a target price for a CJR episode of care at each participating hospital. If the hospital spends more than the target price, then that hospital must pay Medicare the difference. However, if the hospital spends less than the target price, then Medicare will pay the hospital the difference. CMS estimates that this five-year program will result in $153 million in savings.

So do qualified collaborative providers—including rehab therapists.

With so much money on the table, hospital administrators are even more motivated to partner with excellent rehabilitation therapists to ensure the best possible outcomes for their CJR patients—at the lowest possible costs. In his 2016 Ascend presentation, compliance expert Rick Gawenda explained that CJR enables participating hospitals to establish financial agreements with rehab therapists, through which the therapist can share in the financial risk and reward of CJR cases. To learn more about the details and exclusions of the CJR program, check out this post and this one.

The Great Bundle Debate

As WebPT’s Charlotte Bohnett discussed here, CJR has many therapists asking themselves the question: to bundle, or not to bundle? Unfortunately, there is no easy answer, and the right decision for one therapist may be totally wrong for another. As Andrus explained, while bundled payment models aren’t yet the norm, providers shouldn’t necessarily rule them out. After all, as the author of this Impact article said, “For physical therapists to be leaders in providing cost-effective, expert musculoskeletal care in an evolving health care system, we must dedicate ourselves to innovation and collaboration.” CJR has elements of both.

Therapists interested in participating in bundles should thoroughly evaluate their own practices—and potential hospital partners—before signing on.

Still on the fence? In her post, Bohnett included several questions that Gawenda recommends all therapists ask themselves before entering into a bundled payment agreement with a participating hospital:

  • “Do I receive referrals for Medicare beneficiaries who have had THAs or TKRs at a CJR hospital?
    • “If yes, how many referrals per month or per year do I receive?
    • “And how many visits does that translate into over the course of a calendar year?
  • “What is the CJR Hospital CMS Star Rating?
  • “Do I know my cost per episode for a THA and TKR patient?
  • “Do I collect outcomes data on my THA and TKR patients?
  • “Do I know—or am I at least aware of—the other collaborators involved in the care of my participating CJR beneficiaries?
  • “Do I know the star ratings of those other collaborators?
  • “Do I understand how the total cost of care per beneficiary is calculated?
  • “Do I understand how quality measures and quality scores impact target pricing?
  • “Do I know if the CJR hospital will perform the optional quality measures?
  • “Do I have a healthcare attorney who understands CJR bundling and has my best interests in mind?”

While all these questions are important, that last one’s a doozy. Before you enter into any financial agreement, be sure to discuss it with an experienced healthcare attorney who understands you, your practice, and your patients. To see if there’s a CJR-participating hospital near you—and to see a pro/con list for accepting bundled payments—check out this article.

Download your 2018 State of Rehab Therapy report now.

Enter your email address below, and we’ll send you a free comprehensive report on the trends shaping the future of the industry.

Please enable JavaScript to submit form.

The Importance of Good Data

Now, you may be wondering what role data collection plays in bundled payment models. According to Rosin in the above-cited Becker’s Healthcare article, “succeeding under bundles requires robust data analytics to help providers identify the main drivers of spending and opportunities to rein in costs and improve outcomes.” For hospitals, “optimizing patients, or preparing them for surgery by mitigating comorbidities and creating a comprehensive discharge plan, increases the likelihood that the patient can be discharged to the home instead of a skilled nursing home or inpatient-rehab, which are more expensive and increase the likelihood of a readmission,” Rosin said. And if you are a collaborative provider—such as a rehab therapist—then using a software platform with a robust outcomes tracking tool will enable you to not only better market yourself as a provider a hospital should want to partner with, but also objectively monitor—and communicate—your results.

Bundled payment models require providers to collect—and share—quality outcomes data.

According to the APTA, “the ability to measurably demonstrate objective results is critical in the pursuit and development of collaborative health care relationships. This will require you to be up-to-date on clinical practice guidelines and protocols as well as to be able to document your adherence to evidence-based practices sufficiently, and share your data with bundle partners.” (Interoperability, anyone?). As I explained in this post, “whether it’s to become a CJR collaborator or to participate in any one of the other alternative payment models that will be coming down the pipeline, quality data is crucial.”


So, where you do you fall in the bundled payment debate? To bundle, or not to bundle? Tell us your thoughts—and experiences—in the comment section below.