In 2006, AAOS released a position statement in support of efforts of stakeholders to develop payment methodologies to incentivize coordination of care among healthcare professionals and help reduce healthcare inflation. Among these methods to align facility and provider incentives are episode-of-care bundles and gain-sharing arrangements. In gain-sharing arrangements, hospitals and physicians share in the development, implementation, and proceeds from the provision of healthcare. However, according to Steven Schutzer, MD, FAAOS, of Advanced Orthopedics New England, the genie was really out of the bottle in 2011 when the Center for Medicare and Medicaid Innovation introduced the Bundled Payments for Care Improvement initiative to encourage healthcare organizations and clinicians to improve care delivery when patients are in the hospital and after discharge.

At the AAOS 2024 Annual Meeting, Dr. Schutzer, together with several other experts, discussed and scrutinized some of the gain-sharing arrangements that have emerged since that time, during a symposium titled “The Pros and Cons of Gainsharing Between Hospitals and Orthopaedic Surgeons—Is the Juice Worth the Squeeze?”

Rationale
Dr. Schutzer was joined by fellow panelist Porter Jones, MD, MBA, of Avant-garde Health, who oversees a large gain-sharing arrangement. Dr. Porter discussed how to implement a compliant gain-sharing program.

“First of all, you want to secure physician buy-in, and that needs to be voluntary participation,” Dr. Jones said. “If it is a top-down physician mandate, it doesn’t seem to work, and you don’t get the results you want.”

Next, anyone considering gain sharing must align incentives with the goal(s), whether that is improved outcomes, cost containment, or both. Providing relevant information is key.

“The process has to be data driven and have a constant feedback loop,” Dr. Jones said. “There can’t be any ambiguity in what is being measured and how it is being measured.” Any successful program will allow the use of necessary resources for complicated patients, allow for severity adjustments to ensure fair compensation, and engage a broad group of physicians across all service lines.

Gain sharing is not distributed based on revenue generation but on cost savings. Up to 50 percent of cost savings can be shared with participating physicians. In many cases, Dr. Jones said, calculations of cost are made at “year 0.” However, once the program is implemented, a comparison is made with “year 1,” and the comparator year may change over time. The program should have specific measures for savings, such as reducing waste of medical supplies, substituting less costly items without compromising care, and standardizing medical devices and supplies.

Dr. Jones used an example of the setup of a center of excellence for spinal surgery, where using those methods drastically decreased costs and increased outcomes and quality. “We had a large insurance payer come to us in disbelief at how much we were spending on spinal patients,” Dr. Jones said. “The payer suggested that before they send anybody in network to surgery that they require them to get a second opinion at our institution.”

Dr. Jones’ practice agreed. When patients who came in for a second opinion did indeed need surgery, many decided to have the surgery at his practice. “Because of the quality and cost effectiveness, we were able to create a side funnel of patients, creating additional volume,” Dr. Jones said.

Anyone interested in establishing gain sharing should put in place safeguards, such as the establishment of baseline thresholds to prevent inappropriate service reductions and monitor for altering practice patterns solely for financial gain. There are also ethical considerations. Gain-sharing programs have to be in compliance with anti-kickback statutes and must adhere to Stark and Civil Monetary Penalties laws, all while maintaining or enhancing patient care quality and protecting physician autonomy.

Different perspectives
Implementation of gain sharing is going to vary from practice to practice, especially within an academic medical center, said panelist Charles Davis, MD, PhD, FAAOS, of Penn State College of Medicine. However, gain sharing is still reasonable for academic physicians in specific circumstances. Within an academic setting, the goal of gain sharing is to improve value and generate cost savings, but some academic center physicians who are paid based on relative value units may lack incentive to work toward these improvements. “In an academic setting, I am already supposed to be reducing costs and trying to be efficient and responsible about spending money,” Dr. Davis said. In addition, physicians are used to improving margins through volume, gaining more resources. They may question why improving margins by reducing costs should not also yield more resources.

Dr. Davis’ institution participated in the Centers for Medicare & Medicaid Services’ Comprehensive Care for Joint Replacement (CJR) Model, where incentive payments are based on actual spending that is less than the target price and minimum composite quality score; if spending exceeds the target, repayment penalties are incurred.

Opportunities for improvement existed by reducing discharges to a skilled nursing facility or rehabilitation center, decreasing readmissions, and reducing complications. With a team effort and by using a variety of methods to improve outcomes, Dr. Davis’ institution was able to do just that. Over 5 years, the CJR incentive payment was more than $1.7 million to the hospital, but not the department. There were also cost savings to the hospital of $2.1 million, plus the addition of 488 bed-days per year because of shortened lengths of stay.

“There were benefits to the care team, benefits to us, and big benefits to the patients, with fewer patients in hospital, fewer complications to deal with, and improved patient satisfaction,” Dr. Davis said.

However, Dr. Davis noted that incentivizing physicians may require alternative thinking for gain distribution. Benefits to the department in terms of money for research, teaching, travel, or simulators; money for equipment procurement; or money to hire extra personnel may be more motivating to physicians than payments that just flow to the hospital.

The other panelists in Symposium B, “The Pros and Cons of Gainsharing Between Hospitals and Orthopaedic Surgeons—Is the Juice Worth the Squeeze?” were Jon J.P. Warner, MD, FAAOS, of the Massachusetts General Hospital Shoulder Service, and Eric L. Smith, MD, FAAOS, of Tufts University School of Medicine.

Leah Lawrence is a freelance medical writer for AAOS Now.