Bundled payments and the marginalization of complex patients. Featuring Charles. L. Nelson, MD.

Although fee-for-service payments may encourage volume without rewarding quality, bundled payments may incentivize providers to avoid patients more prone to complications. Is one a rock, and the other a hard place? Charles L. Nelson, MD, Professor and Chief of Adult Reconstruction at the University of Pennsylvania, discusses how surgical decisions are made, and how this process may favor those patients least likely to be re-hospitalized, marginalizing people with comorbidities such as obesity. Dr Nelson also argues that it is inequitable for patients not to receive the resources that they need, particularly when they may not be in a position to advocate for themselves. He makes the case that payments need to be adjusted to reflect clinical complexity and to mitigate the impact of social determinants. With Bill Finerfrock.

Episode Transcription

Bundled payments may cause the marginalization of complex patients.
Featuring Charles. L. Nelson, MD.
[Recorded March 2019]

Bill: You’re listening to the Health Disparities Podcast from Movement Is Life. Conversations about health disparities with people who are working to eliminate them. I’m Bill Finerfrock and today, I’m discussing health disparities and health policy with Dr. Charles Nelson. Dr. Nelson is involved with Movement Is Life and he’s also the Chief of Joint Replacement Service and Professor of Orthopedic Surgery at the Hospital at the University of Pennsylvania. Welcome Dr. Nelson. Can you tell us a little bit about yourself and how you got involved in Movement Is Life and this whole issue of trying to eliminate health disparities?

Charles: So, my name is Charles Nelson, again, as you mentioned, I’m the Chief of Adult Reconstruction at the University of Pennsylvania and a professor of orthopedics there, and I’ve had a long interest in what I would say is health equity. And, it’s health equity, not just with regard to disparities as they relate to race and ethnicity, but, also, patients who are obese, rural America. I think everybody should have access to the same quality healthcare, nationally and internationally, and that’s been a passion of mine.

Bill: So, by implications, then, obviously, then, people don’t have access. Do you think that that’s a conscious policy that folks who were looking at various aspects of healthcare said, “We want to create this disparate system?” How do you see that playing out or why is that happening in your community?

Charles: I don’t think, for the most part, it’s conscious. It may be in certain areas there may be different people who are involved in different parts of the political system. They have certain reasons for wanting to, let’s say, divert funds to another area that is more important to them or that they’re more passionate about. I don’t think it’s a conscious effort in that setting, but I think it’s a combination of some of the unconscious biases that people have that can sometimes lead to some of these issues, as well as, the reality of there’s a limited number of dollars and healthcare is very, very expensive to provide quality healthcare. And, the patients that don’t advocate for themselves, who are less informed and less powerful, within the political system, may not get the resources that are necessary, and those include underrepresented groups, but it, also, may include people with lifestyles that aren’t in the mainstream and it may include people who are overweight, have significant health problems, that many Americans don’t have and aren’t as sensitive to.

Bill: So, when you get paid, now, for what you do as a surgeon, the common method of payment is what we call “fee for service”. You provide a service and you get paid for it, but there’s a lot of talk about moving to something called bundled payments. I know there is some concern about whether or not bundled payments are going to make the kinds of things you just talked about, potentially, even worse. Can you talk a little bit about that bundled payment initiative and how you think that may impact patients and populations?

Charles: Certainly. So, in the current fee structure, people get paid for what they do, and the downside of that is whether people do a good job or they don’t do a good job, they, essentially, get paid the same amount. So, there’s an incentive for providers to try to increase volume and not, necessarily, value or quality. So, a lot of the current healthcare reform is looking at what they call value-based healthcare, where, which makes a great deal of sense.

Bill: Sure, who can object to value based?

Charles: Yes. So, rather than people getting reimbursed for quantity or volume, they’re getting reimbursed for quality. The problem is that that assumes that everybody is treating the same population. So, if you have a situation where providers have choices in whom they’re going to take care of, and they’re going to be penalized for higher readmission rates or higher complication rates, they may cherry pick or in converse lemon drop, the patients who are at higher risk. And, there’s many studies that demonstrate that patients with lower socioeconomic status have higher risk of readmissions and complications. Patients who don’t have a stable home to go to or if they have a home, they live in a third-floor walkup in a bad neighborhood. Let’s say that person is having a joint replacement surgery. The ability for that patient to be able to go home immediately after surgery and not need to go to a rehab facility, not need to go to a skilled nursing facility is significantly less than someone who lives in a suburban environment with a family member who is home with them, in a safe neighborhood, where, even if their bedroom is on the second floor, they have a guest bedroom on the first floor, where they can stay. So, you end up in a situation where, even if there’s no complication, the cost of treating the patient who is going to need a skilled nursing facility is greater and we know from multiple studies that the patients who go to skilled nursing facilities, have a higher, not only higher cost, but they also have higher complication rates, higher readmission rates. So, this creates incentives where providers may choose to, if they’re getting a set amount of dollars, they may try to use those dollars to take care of patients that are going to be less expensive in order to maximize their profit.

Bill: So, the things that you talked about, all those post-hospital, post-surgical costs, but you’re doing the surgery. So, how does that impact you as a surgeon? Why is that affecting, and you used the terms cherry picking and lemon dropping, for you to see one patient versus another?

Charles: Well, with bundled care initiatives, essentially, what’s happening is that a facility or a…

Bill: A hospital?

Charles: Either a hospital or a group of providers. It’s not defined specifically because it can vary depending on location, but they receive a certain bundle of money in order to take care of that patient through the continuum. The advantage of that is it creates an incentive in order to try to optimize the quality and minimize the cost of taking care of those individuals and not do unnecessary work. So, for example, if, normally, patients, after surgery, did three months of physical therapy and that was very, very expensive and they went to a rehab facility, afterwards, which was very expensive, and that same person could go home and do a online demonstration of exercises and not do formal therapy, then, the cost could be markedly decreased and if there’s no compromise in the end result, then that’s favorable. So, it does allow people to be creative and create better ways of providing healthcare more economically. The problem is that not every patient is going to be able to follow the same format and it creates incentives for either the provider or the hospital or the system that is in charge of that bundle to try to choose the patients that they’re going to have to spend less resources in if they’re going to get the same amount of money.

Bill: So, if I’m hearing you right, you don’t mind being held accountable for what you can control. Your work as a surgeon and the things that are directly related to what you do in the OR, or how you help to do patient follow-up. It sounds like part of the problem is that the way that this is structured is there are things that are outside your control that may affect the cost of the patient. One of the things I’ve read is some patients are more likely to have to be re-hospitalized after surgery. Can you talk a little bit about that?

Charles: Certainly, and I agree 100%. So, I think, not only do I not mind, I think we should be held accountable for the things that we can control. I think that’s everybody in any discipline should be held accountable for the things that they can control. One of the concerns is that in a setting where there are patients who are already marginalized based on the data, who already have decreased access to healthcare, that already have certain procedures done at a much lower rate than the normal population, this is the same group of patients that are often, at least, perceived to have a higher risk of complications, readmissions, to be more expensive to take care of. So, these patients could be marginalized even further with some of the healthcare reform. So, for example, patients who are morbidly obese, who are very overweight.

Bill: What is that?

Charles: Somebody who is very heavy. So, if somebody is extremely heavy or they weigh a lot for their height, those patients we know are more likely to be readmitted. They’re more likely to develop infections. They’re more likely to develop certain complications after surgery. Those patients are even more affected by advanced arthritis from a disability standpoint. Now, at some point, their complication rate may get so high that surgical management may not be appropriate or reasonable but, even at levels where most surgeons would agree that they benefit, tremendously, from surgical intervention, the complication rates are higher, but not inordinately high. When you start saying, there are some studies at the Mayo Clinic that demonstrate that somebody with a BMI of 50…

Bill: BMI is?

Charles: BMI is the body mass index and a BMI of 50 would be somebody who weighs, let’s say about 350 pounds and is like five-foot-three. So, that would give you an idea. Somebody, at that level, their risk of complications, based on the Mayo Clinic data, about three times higher for infection and many other complications compared to somebody of normal weight, but the absolute number is still pretty low. So, if somebody of normal weights, in fact, infection rate is 4 in a thousand and they go up to 12 in a thousand, is that rate so high that they don’t benefit from the surgery? Probably not. But if you’re the person taking care of those patients, and you have an inordinate number of those patients to take care of, number one, if your hospital is going to be penalized for a high rate of readmission rates, are they going to let you take care of those patients? So, many hospitals, now, do not allow those patients to be taken care of, and when you think of those patients trying to lose weight when they have severe arthritis and very, very limited ability to move, limited mobility, it’s very hard to lose weight when you can’t exercise, at all and many of those patients, actually, end up gaining weight rather than losing weight. So, this is a big concern of how these patients are going to continue to get cared for in a system that doesn’t stratify risk based upon the risk of complications.

Bill: So, what do we do about it? I mean, it sounds like the bundled payments, and maybe some other things that they’re doing, are well-intentioned, but there’s some things missing from how they’re designed. Are there things that you think can be done from a policy perspective that might be able to address that, so that you can achieve a situation where you, you know, as you’ve acknowledged are held accountable, but, perhaps, not held accountable for things that are beyond your control.

Charles: Yes, so, I think there’s a few different strategies that could be employed. One is to essentially grade people on a curve based upon the complexity of the patients that they’re taking care of. Now that can become a little bit difficult for certain situations where we don’t have good enough data to create an appropriate curve. So, where we don’t have that what I would suggest is that we, basically, look at a group of patients that providers can all agree are of similar risk and look at those patients as the patients that we’re going to hold people accountable to meet the same standard. So, that we’re comparing apples to apples when we’re comparing providers and health systems. And for the patients that fall outside of that group, either not look at that group of patients, right now. Look at their data, so you can create that curve over time. So, if you have a hospital, for example, that has the exact same outcomes for the apple patients, see how much higher, if they have a higher percentage of orange patients, see how much higher the complication rate is at that hospital for the orange patients, and then, create that type of adjustment in the future.

Bill: So, it sounds like what you’re talking about and it’s a term that’s not, it’s been around a longtime. It’s some form of risk adjusting.

Charles: Yes.

Bill: I know that things in the policy area where it’s not unusual, for example, with an insurance company that if they have patients who have what are considered to be higher risk, that they might get paid a little bit more for those. Is that the kind of thing you’re talking about here?

Charles: Yes. So, I think either, if you’re talking about a bundled situation, paying more for those patients, once you can target those patients, so that, now, the system is not overly incented to take care of those patients, but they’re also not incentivized not to take care of those patients.

Bill: That’s that cherry picking.

Charles: Correct. So, you want to, basically, create a situation where if it’s 20% more expensive to take care of a group of patients, then, you’re reimbursed 20% more or in a zero sum gain, you’re reimbursed 10% more and 10% less for a standard group of patients. I think that is a situation where you don’t create the incentives for providers and institutions to lemon drop.

Bill: The risk adjusting I’ve seen, typically, though, is related to a disease state. For example, if a patient has diabetes or high blood pressure or other medical problems, the system makes those kinds of risk adjustments. It sounds like what you’re talking about is that’s one part of it, but there’s this other aspect, and I think the terms that’s often tied to that or what they call social determinants of health, and we haven’t typically adjusted for that. Is that kind of the distinction here? Is that’s what happening?

Charles: Well, I think there are both disease states. There’s also a difference, when we start talking about bundled care initiatives, as opposed to what they call accountable care organizations, which, often, may look at population health, but when you start talking about bundled care, a lot of those would be procedural based. So, let’s say somebody’s undergoing joint replacement surgery. That is a procedure that is perceived to be of similar cost regardless of who gets it. So, that’s one of the reasons why many systems or policymakers have said, well, this is a great example for bundled care initiatives because the cost of doing the procedure should be the same, the outcome should be the same, the amount of therapy, and this way we can have the providers and the systems all collaborate and align themselves to try and figure out how this can be done less expensively, which makes a lot of sense and is a great concept, but, again, if the cost isn’t necessarily the same or the complication rate isn’t necessarily the same, then, we need to have a way of risk adjusting for that. So, it could be a disease state, or it could be a procedure, for example. The other issue, as far as social determinants of health that we’ve had a tough time, really, appropriately, adjusting for socioeconomic status because we know that those factors significantly impact on outcomes. So, if you live in a place that’s more dangerous, let’s talk asthma for example. So, people who live in urban areas, where they’re more exposed to dust and smoke, they have much more frequent exacerbations of asthma. So, if you’re talking about an asthma specialist and they’re being held to, and I don’t know the specific standards that asthma specialists are held to but utilizing certain medications.

Bill: Or ER visits.

Charles: ER visits or those types of complications and you’re dealing with a population that is exposed to a lot more things that are likely to insult their asthma. That’s probably not a fair comparison compared to somebody who lives in open air where there are less environmental triggers for the asthma. So, those are the types of things we’re talking about, really, adjusting for those types of issues.

Bill: Some people have talked about trying to do a better job of looking at these things as part of the development of these bundled payments. Not saying don’t do it but look at more. So, if you look at the Medicare level, the bundled payments, right now, it says, as long as you can reduce costs or improve quality and it’s not clear what that means, then, that’s a valid payment methodology. It sounds to me like what you’re suggesting is that there may be some other things that in development of these models’ folks should look at, such as, either risk adjustment for disease state, risk adjusting for social determinants of health. Is that kind of the message that you’d like folks to hear?

Charles: Yes. So, what we don’t want is we don’t want people improving outcomes just by changing the patient population that they’re taking care of. Right? So, we don’t want somebody to have a lower readmission rate because before they used to operate on patients at all weight levels, at all different levels of disease. They would take care of complicated infections that came from other institutions. And now, they said, you know what, we’re getting penalized if we have higher complication rates. We’re going to improve our outcomes. We’re not going to do anything differently. All we’re going to do is we’re going to just stop taking care of the patients that are high risk.

Bill: So, it sounds like the hospitals or the institution or the provider is going to get good quality scores, but because of this kind of self-selection there’s a whole community of people that just aren’t getting access to care.

Charles: So, there’s a whole group of patients who either don’t get access to care or who get shunted to another provider that’s willing to take care of them and may have worse quality scores, and we’ve seen that in some facilities that really, take care of the really, high risk groups, some of which may be going out of business.

Bill: Those are the safety net hospitals or what are generically referred to as safety net hospitals?

Charles: Yes.

Bill: Yes, I just saw a study recently that when they looked at hospital readmission policies, and they found that a disproportionately high percentage of safety net hospitals were hit with those readmission policies and the analysts went back and said, alright, well, let’s adjust for the social determinants of health and look at the community of those hospitals and adjust for that, and when they adjusted for that, I think it was half of the hospitals that had been hit with penalties, wouldn’t have been hit with penalties. So, the idea was that it wasn’t that the hospital was providing poor care or doing something that resulted in folks being readmitted. It was this idea that factors outside. The community that that hospital was caring for had certain aspects or things going on there that caused that outcome.

Charles: There’s no doubt. The other concern, and I’ve seen that same study, the other concern is this is a strategy to decrease costs and, in some cases, it may, surprisingly, actually, increase costs and the question is how does that happen? Well, let’s say no hospital is willing to take care of this complicated, infected patient and, as a result, there is a delay in treatment, and now, the infection is so far advanced that it’s no longer curable or, at least, not curable, as easily. So, it will cause multiple procedures, much more expensive to treat. A resistant organism develops that requires antibiotics that are much more expensive. You know, you can see in the setting of a cancer. A cancer spreads to the point where it’s no longer curable. Something that could have been managed cardiac wise with medication, now, needs coronary bypass surgery. So, in some cases, when there’s delays, this can make the entire treatment much more expensive because people aren’t willing to step in earlier, when the cost could have been less.

Bill: Dr. Nelson, we can probably talk for another hour. Unfortunately, we don’t have enough time to go into everything we’d love to talk to you about, but I want to thank you for talking with us today and for this podcast and health disparities, and wish you the best of luck moving forward. Thank you.

Charles: Thank you, very much.

(End of Podcast)

download pdf transcription of this episode