Enhancing the value of healthcare services is a major goal of healthcare reform. Faced with a shifting landscape of healthcare regulation and payment, providers are increasingly interested in better understanding and navigating the various incentive schemes. In this review, we reviewed and discussed (1) physician- and (2) patient-oriented financial incentive models being implemented to improve value in orthopaedics; (2) key challenges to payment reform in orthopaedics; and (3) prerequisites to implementing value-based healthcare practices in orthopaedics.
The literature and our specific review are subject to a number of limitations. First, we searched the MEDLINE database for hospitals and healthcare systems implementing various payment models in orthopaedics. Healthcare economics and administration topics are less robustly reported in the primary literature; thus, we likely failed to fully capture literature on implementation efforts for various payment and incentive models within orthopaedics. Second, this was not a systematic review of the literature and we used limited search terms that likely constrained the number of articles we were able to review. Third, for additional sources of information, we used Google as a search engine based on the authors’ and contacted experts’ knowledge of financial models under implementation in orthopaedics. While this represents a broad base of expertise in the field, certain programs or payment schemes may have been omitted.
A major finding from our review of the available literature is that, even though a number of financial incentive models are being implemented in orthopaedics, there is a dearth of primary literature reporting on the implementation, suitability, or applicability of these programs. Greater emphasis should be placed on reporting the results of various payment programs within orthopaedics. P4P appears to be the most widely investigated payment model within orthopaedics. Despite the engagement of P4P within orthopaedics, P4P measures have been unable to generate value-driven practices in orthopaedics. Why has P4P had such little effect on quality generally and on orthopaedic services specifically? In most P4P programs to date, the proportion of total physician compensation tied to quality performance has been in the 1% to 3% range, and many argue 10% to 20% of payment must be linked to quality to trigger changes in clinical practice [7
]. Why have payers taken such a cautious approach to tying payment to quality? Physician leaders have argued measures are not reliable enough to discern superior performance and should not account for a high proportion of payment [27
], and payers have generally acquiesced. Orthopaedic patients typically represent a variety of payment programs (government payer/Medicare [32%], managed-care plans [30%], private pay [21%]), and a major proportion are enrolled in the Medicare program [2
], which does not provide for any P4P rewards in the traditional fee-for-service program, so the occasional private sector experiment has little effect on overall practice patterns, especially since a single private payer is unlikely to account for a substantial portion of a surgeon’s income. Similarly, why has bundled payment fallen short of wide-scale adoption and substantial cost savings? Several providers offering bundled payment for orthopaedic procedures report low interest by commercial health plans in entering into such contracts with provider systems. Payers express concern that bundled payments require one-off negotiations with selected providers and deviate from common contracting models already in place across their large networks. Payers are also concerned that, while bundles may increase the incentives for managing resources efficiently, they may also lead to reduced provider transparency and have little effect on the number of procedures performed.
Purchasers of healthcare services, such as large employers, have greater interest in the episode payment concept but have little ability to design or implement these models without administrative help from health plans.
While providers have traditionally been the focus of reform measures, new programs are demonstrating a marked interest in targeting the healthcare consumer. We reviewed several patient-focused financial incentive models. Patient-oriented incentive models represent permutations of behavioral economic principles geared at directing consumer behavior toward more value-driven practices. Value in this perspective refers to the right care to the right patient at the right time for the right price [42
]. As foreshadowed by the Oregon collaborative, orthopaedic surgeons will be increasingly called on to prove the value of certain interventions for each patient. To this end, there needs to be a greater emphasis on CER in orthopaedics. CER provides the platform to compare interventions and determine which groups of patients most benefit from particular interventions or procedures [31
Our review of various incentive models suggests no model has shown superiority in achieving large-scale value-based healthcare practices. Further, healthcare measures that have demonstrated favorable results on a small scale are not being transitioned to larger-scale implementation. We identified two major challenges to healthcare reform in orthopaedics: (1) no incentive program has yet shown an ability to bend the cost curve or drive substantial quality gains and (2) the current interrelation of healthcare systems and payments hampers implementation of large-scale or broad-sweeping reform measures. There is no easy solution to overcoming these challenges. Value assessments are inevitably complicated by a myriad of contending stakeholder interests. Reform in healthcare and orthopaedics will require a better alignment of stakeholder incentives [62
]. As the system undergoes reform, existing models become less profitable while profit opportunities are created through other avenues [23
]. Reform tactics must encourage active stakeholder participation in achieving cost and quality goals.
While looking to overcome these challenges, certain prerequisites need to be operationalized to facilitate effective reform in orthopaedics: (1) reliable and complete data infrastructure; (2) new business structures for cost sharing; and (3) a retooling of patient expectations. These prerequisites are tractable, and as already presented, attempts are currently underway to put them into practice. Leadership within orthopaedics will be needed as reformers navigate our healthcare system through these challenges and prerequisites.
There are a number of physician- and patient-oriented payment models in various stages of implementation in orthopaedics. There is insufficient literature reporting on the implementation of these models. A synthesis of the available data suggests no single approach will prove effective at achieving purchaser goals. There are major challenges to achieving value-driven healthcare practices, but a critical first step to overcoming these challenges is to engage and align the financial incentives of stakeholders. Success at limiting cost growth and improving quality will require new collaborations among healthcare stakeholders, leadership from orthopaedics professional societies, improved data collection and reporting, and messages to patients about appropriate expectations of orthopaedic care. Payment to providers should be aligned with patient information and incentives to increase the likelihood of consistent cost- and quality-conscious behaviors.