Successful Outcomes in Anesthesiology and Pain Medicine or Your Money Back—Really?

Are we heading toward a health care system in which medical care comes with a money-back guarantee?  That would seem to be the ultimate stage of accountability.  We do not see anesthesia, pain medicine or any other practices offering to refund payments if patients are not satisfied on the horizon.  We are aware of only one instance of a money-back offer in health care:  Janssen Pharmaceuticals recently entered into an arrangement with the English National Health Service under which Janssen UK will refund the cost of its hepatitis C drug Olysio for patients who do not successfully clear the virus after 12 weeks.  Janssen will also offer free access to pre-treatment blood tests to determine which patients are likely to benefit from treatment.  (McKee S.  Janssen offers NHS to pay for Olysio failures.  PharmaTimes Digital, January 15, 2015.)

Warranties are starting to take hold, however.  In the commercial arena, warranties obligate the seller to repair or replace a defective product at no charge to the buyer.  In health care, the warranty concept appeared first in the self-pay arena.  Corrective eye surgery, general cosmetic surgery, and dental services are often based on a global fee that includes any necessary rework by the provider.  Recently warranties have become part of the national discussion on reducing unnecessary costs and improving quality, led in part by an advocacy campaign led by Consumers Union to compel manufacturers to provide warranties on their surgical implants.

The Geisinger Health System in Danville, PA was the first health system to offer warranties for elective cardiac bypass surgery, in 2006, without using the word “warranty.”  According to Francois deBrantes [Should Health Care Come with a Warranty? Health Affairs 28, no. 4 (2009): w678–w687 (published online 16 June 2009; 10.1377/hlthaff.28.4.w678)], “Warranties are also natural extensions of episode-based payment models, including PROMETHEUS Payment’s ECRs [Evidence-Based Case Rates] and Geisinger’s ProvenCare, which seek to compensate providers for a set of clinically appropriate services for a given condition. ECRs have a built-in allowance for PACs [potentially avoidable complications].  This acts as a warranty.”

Under the ProvenCare model, Geisinger charges a global episode price—a bundled payment (see our Alert Bundled-Payment Episode-of-Care Resources for Anesthesiologists dated January 19, 2014)—for bypass surgery, covering any preoperative, operative, and postoperative expenses for up to 90 days after the procedure.  Geisinger now offers similar de-facto warranties for hip fractures and total hip and knee replacement surgeries as well.

In 2011, CaroMont Health and Blue Cross and Blue Shield of North Carolina (BCBSNC) launched a bundled payment arrangement encompassing knee replacement episodes, including the pre-surgical period of 30 days prior to hospitalization, the surgery itself, and most follow-up care within 180 days after discharge from the hospital.  A local anesthesia and pain medicine group as well as an orthopedic practice participate in the package.  The arrangement was driven by CaroMont Health's efforts to become an Accountable Care Organization and involved partnering with GE Healthcare and Sg2 analytic experts to assess the cost of a full knee replacement episode of care, including the pre-surgical period, surgery and post-surgical period.  This extensive analysis included observations and interviews with key members of the CaroMont Health clinical staff to redesign the care pathway and quantify the financial impact of the redesign through unique simulation modeling.  (CaroMont Health and BCBSNC announce bundled payment program for knee replacement.  Healthcare Finance, March 22, 2011.)

Last year, Virginia Mason Medical Center in Seattle, WA introduced a warranty program for privately insured patients covering avoidable complications stemming from total joint replacement procedures, of which the hospital performs approximately 1,300 per year with a complication rate of three percent.  (Lee J.  Virginia Mason to offer warranties on hip, knee replacements.  Modern Healthcare, September 5, 2014.)  Virginia Mason will absorb the costs of avoidable complications related to the surgery, for patients covered by a bundled-service contract with a private insurer or employer who receive all of their care, including diagnosis and rehabilitation, at the hospital.  The timeframe for the warranty would be negotiated based on the fact that most complications occur within 90 days of the surgery, e.g., wound infection, a hip dislocation or a thrombosis.  The warranty does not cover complications or revisions resulting from the failure of an implant itself.

Most procedure-based bundled payment packages today involve cardiac or orthopedic surgery and, not surprisingly, are increasingly offered by specialty hospitals.  The Hoag Orthopedic Institute in Irvine, CA, the highest-volume provider of joint replacements in the state, collaborated with McKesson and Aetna to create the first automated implementation of the California Integrated Healthcare Association’s bundled payment model, first with knee replacements and now with hip replacement procedures.  Warranties for 30 to 90 days are available under a bundled payment arrangement with various health plans.  The specific terms of the agreements and the components of a bundle or a surgical warranty vary by contract.

There are numerous other bundled payment arrangements centered on surgical procedures.  The Cleveland Clinic, to name one well-known example, has partnered with Boeing, Lowe’s and WalMart to provide joint replacement and other types of surgeries.  Cardiac bundles are available at all three Mayo Clinic locations (Rochester, Phoenix and Jacksonville); Johns Hopkins Bayview Medical Center offers both types of surgical bundles.  Most bundled packages only extend through discharge from hospital, however, especially if the patients will be returning quickly to their homes in other states where they will receive any extended care at local providers.  A 90-day or 180-day warranty covering complications or re-dos is more feasible when the patients will remain entirely within the geographical area of the health system offering the package for their post-procedure care.

At the Deuk Spine Institute in Melbourne, FL and the Surgery Center of Viera, neurosurgeon Ara Deukmedjian, MD late last year began offering warranties for spine surgery independently of any bundled payment.  Under the stand-alone warranty, the practice assures patients that their back pain will be eliminated after surgery.  If not, any additional treatments will be provided at no cost.  All services and follow-up care must be provided at either the Deuk Spine Institute or at the Surgery Center.  Patients or their insurers pay extra for the warranty, a varying amount depending on the age of the patient and the complexity of the procedure.  The warranty, bought in one-year increments for up to the patient's lifetime, covers additional care only for the area where the initial surgery is performed (lumbar or cervical, but not both).  It is aimed primarily at workers compensation carriers, at self-insured employers and at self-paying patients.  Individual patients can opt to buy the warranty even if their insurance company does not reimburse the costs.  Traditional health plans have not proven very receptive to the warranty thus far because “providing long-term assurance that treatment will be administered at no cost down the road may not resonate with carriers that see significant turnover in enrollment numbers as employees leave for other jobs and other carriers.”  (Sonnenberg M.  Spine surgery in Brevard now comes with a guarantee.  Florida Today, January 8, 2015.)

Clearly, the provider that warranties surgical outcomes must have highly credible data on which to base estimates of both the cost of post-procedure care and the risk of potentially avoidable complications, re-dos and hospital admissions, as applicable.  Risk adjustment is also very important.  The data are as available to anesthesiologists and even to pain physicians as they are to other providers who might participate in global surgical packages.

Although money-back guarantees seem ill-suited to health care in general—and to anesthesiology and pain medicine in particular—bundled payment opportunities will be increasingly common, based on how frequently the term “bundled payment” was repeated in a number of lectures at this past weekend’s ASA Practice Management Conference.  We should all be preparing ourselves to answer questions about the minimum prices we will accept for participating in bundled care packages.   Expect to see further Alerts on this topic in the year ahead.