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Bundled Payments and Manufacturers

Posted by Frank Ripullo on Mon, Dec 19, 2016 @01:02 PM



In 2015, the Centers for Medicare and Medicaid Services (CMS) announced the Comprehensive Care for Joint Replacement Model. Eight months ago, this value-based care model -- bundled payments, for the total cost of hip and knee replacement, went into effect for 800 hospitals across 67 metropolitan areas. With this model, the CMS is not just looking at the surgical costs but a full 90 days post surgical.

The cost impact will take into account physician costs, hospital stay costs, home care costs for the full care experience and outcome, including re-admissions. The hospitals will be required to maintain quality of care while at the same time take a 2-3% reimbursement cut for these procedures.

If any of us in the medical device or pharma space have learned anything over the years, we know we will be in the cross hairs for a significant contribution for this short fall. Yes, we are the lowest hanging fruit here!

As a device company, what can you expect:

  1. Expect that your decision makers will be asking for more proof sources and outcome data;
  2. If you have relied heavily on surgeon or other clinical influencers to drive your sales, these folks may be losing their mojo. You should plan on more value analysis committees with Administrators and supply chain people involved;
  3. If you are a non-orthopedic device company, do not breathe a sigh of relief. This will be taking place across the board. Don’t be naïve enough to believe that once the hospital perfects this that they will not apply this to all areas of acquisition.

Tags: Bundled Payments