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BlueCross BlueShield of Tennessee (BCBST) recently announced an agreement with four orthopedic practices for a new bundled payment system that focuses on patient care, quality, and outcomes for total knee and hip replacements.

Under the agreement, BCBST will apply data analytics software to data provided by the Vanderbilt Medical Group and Tennessee Orthopaedic Alliance in Nashville, Campbell Clinic in Memphis and the Knoxville Orthopaedic Clinic. By examining the data, BCBST will identify variations in patterns of patient care across these organizations and then pinpoint best practices that produce optimal care and outcomes.

To do this, BCBST will rely on software from The Trizetto Group, Inc. to automate the processing of episode-of-care payments by BCBST for knee and hip replacements. The application connects with TriZetto's QNXT, an enterprise core administration system that maintains information on claims reimbursement, benefits and contracts management, predictive modeling, and payment bundling. The health plan also uses TriZetto's network management software for data analytics.

Loren Finkelstein, a spokesperson for The TriZetto Group, said in an interview that the initiative is part of a plan by BCBST to reimburse the participating practices in a new and very different way. He explained that beginning October 1, BCBST, one of the largest health plans in Tennessee, with some 3 million members, will provide bundled payments for multiple services patients receive during an episode of care.

For example, instead of charging separately for a surgical procedure, post care, and physical therapy-- which generates multiple claims from multiple providers--the entire team is compensated with a set price under one "bundled" payment.

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"A single group payment encourages caregivers to function as one team, share information, coordinate care, and work without walls to optimize the patient's health outcomes," Finkelstein told InformationWeek Healthcare.

"We provide information, analysis, and documentation that frame constructive dialogue to arrive at bundle definitions and quality metrics," Finkelstein said. "As a third party, we help move the medical practices and BlueCross toward consensus on best practices that can help ensure optimal patient care and outcomes, as well as cost efficiencies."

According to Dr. Tom Lundquist, vice president of performance measurement and improvement of healthcare services for BlueCross, healthcare providers will focus on collaboratively defining bundles of care, examining the tremendous variations in the care processes for certain diseases and procedures, and then perform the hard work of identifying best practices of care as well as best efficiency of care processes.

"The biggest challenge to creating bundled payment options in orthopedics is building a collaborative environment. We are fortunate to have many willing leaders in orthopedics [who want to] build trust and collaborate in system redesign work," Lundquist told InformationWeek Healthcare. "Successful bundling efforts do not stop there, though. They require collaboration between other major stakeholders such as hospitals and other providers, who must be willing to challenge the way we've been doing things in search for better processes which can lead to better quality and efficiency."

According to Lundquist, as providers, businesses and insurance companies prepare for a more robust exchange environment under the Affordable Care Act, interest in new payment models that lower costs and increase transparency will grow. He also said BCBST will prepare for this shift as well as continue to invest in its patient-centered medical homes and bundled payment partnerships to lay the foundation for developing accountable care organizations.

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