Episode of care continues to spread
More specialties adopting bulk pricing
Bulk pricing by procedure is continuing to catch on among practices in managed care-intensive markets. A firm that specializes in putting together so-called "episode of care" deals between physician practices and payers says practices that can charge a fixed rate to manage the entire continuum of care from pre-surgical laboratory testing, to surgery, to follow-up rehab or home care can have a competitive advantage.
"As payers become more sophisticated, this [episode of care] is not going to be optional," says Vi Karr, chief operating officer of Los Angeles-based MEDSMART International.
When Physician’s Managed Care Report first reported on this trend in March 1997 (see PMCR March, pp. 25-28), episode-of-care concepts were primarily being explored for total joint replacement surgeries. MEDSMART says the concept has expanded on the West Coast to other types of high-volume or catastrophic cases, including spine injuries, sports injuries, wound management, maternity management (particularly high-risk pregnancies), head injuries, acute pain management, and foot and hand surgeries.
MEDSMART’s episode of care program includes four steps:
• patient evaluation before surgery to determine if surgery is appropriate and what comorbidity risks exist;
• using clinical pathways to direct a continuum of care for specific procedures;
• case management for high-volume cases;
• reporting outcomes data to payers and practices.
Lakewood (CA) Health Plan has used an episode-of-care system to reduce its total joint replacement procedure costs by 15% to 20%, says Noel Hecht, administrator of the 150-physician IPA, which deals primarily with capitated contracts. The IPA and MEDSMART negotiated the price structure with Lakewood’s existing hospital vendors, and MEDSMART supplies the durable medical equipment needed for the total joint replacement procedure. Hecht says he has found payers to be receptive to the concept.
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