While many orthopedic procedures can safely be performed outside the hospital, barriers related to implantable devices often stand in the way of the transition.
For most patients needing orthopedic surgeries, the ambulatory setting is the best option, offering similar outcomes, fewer complications, shorter stays, and greater convenience than surgery in a hospital. Procedures performed in ambulatory surgery centers (ASCs) also cost about 40% less than those in hospitals, according to one study.
To support site-of-care transitions, CMS in recent years has moved hundreds of orthopedic procedures to the ASC-payable list, while more health plan policies steer patients to clinically appropriate lower-cost settings. Yet intractable barriers remain. These may include lower reimbursement rates for ASCs, patient (mis)perceptions about quality and safety of surgery centers, and hospital ownership of surgery centers that limit local access to physician-owned practices.
One often-overlooked barrier involves the challenge of managing costly implantable devices. Implants make up approximately 25% of health plans’ costs for device-intensive procedures, such as total knee replacement and lumbar fusion, but the challenges are felt more acutely by the ASCs themselves. Those with less success navigating pricing, quality and collection risk in the constantly changing market may struggle to perform certain procedures profitably.
Here are several of the key issues involved:
Opaque pricing
Some surgical facilities — particularly smaller ones — lack the purchasing power or market knowledge to negotiate fair implant prices. Pricing can vary wildly, not just within a category, but also for the same product. Confidentiality in purchasing agreements keeps facilities and providers in the dark about whether they are striking a good deal relative to others. Our Evolent Surgical Management solution discovered that one ASC in Georgia, for example, was paying 65-80% more for surgical implants used in lumbar fusions than the market rate before Evolent began working with them. Facilities that are overpaying may have trouble performing procedures profitably.
Pace of innovation
New implantable devices are coming on the market at such a rapid pace that surgeons and facilities struggle to keep up. Evolent Surgical Management has more than 61,000 FDA-approved implants in its tracking system, including 4,400 new products over the last 12 months. Amid so much market noise and change, it’s no small task to identify clinically superior products, as well as those that are clinically equivalent but less costly.
Entrenched products
Surgeons often have longstanding preferences for certain devices, based on experience, habit, relationships with manufacturers, and impressions of different brands and products. Those devices may not always offer the best outcomes or cost-effectiveness. Still, changing habits is achievable. One study found that 85% of clinicians conducting knee- replacement surgery would use or recommend a lower expense item if they were aware of the cost differences and if clinical outcomes were similar.
Cash flow and collection risk
For high-acuity, device-intensive procedures, many ASCs struggle to outlay the cash for expensive implants. In addition, they wait for reimbursement from payers and take on the risk associated with collecting the portion due from patients. Across all providers, collection rates have dipped to 48%. When such risks lead ASCs to decline such cases, patients may go to a more costly site of care.
Health plans seeking to shift site of care, when appropriate, for more orthopedic cases cannot ignore the challenge around implantable devices. Their strategy should address not just the plans’ own device-related spend, but also support ASCs in their efforts to improve device selection and pricing.
Does your implantable device strategy need a reset?
Evolent Surgical Management leverages our expertise in the implantable device market, our purchasing power, and innovative financial arrangements to overcome the barriers to optimal site of care.
