Value-Based Care: A Look Back & Forward With Karl Koenig, MD

Karl Koenig, MD, is the medical director of the Musculoskeletal Institute at UT Health Austin. Following his talk on patient-reported outcomes at TOA’s 2022 Annual Conference, TOA sat down with Dr. Koenig to get his thoughts on the future of value-based care in orthopaedics.

TOA:  You have now been at UT Health Austin’s Musculoskeletal Institute for five years, and one of your major initiatives has been to focus on value-based care. What have been the highlights or surprises in terms of value-based care in orthopaedics at both your center and across the nation?

Karl Koenig: Sure! We’ve learned a lot over the past five years and definitely have met some surprises. Locally, we have pioneered our Integrated Practice Units based on conditions with multidisciplinary care teams. The most forward-thinking partners have been entities who have the most direct accountability for the costs of patient care. That’s not a surprise necessarily, but I’m not sure I expected them to be first movers. The county’s safety net funding organization and self-insured employers have been the most interested in novel payment mechanisms thus far.  

From the national perspective, I have been surprised how slowly things have moved in the past five years. While the conversation progresses toward alternative payment models and value-based care, it has been both slowed by the pandemic and accelerated in a few niche areas (like telemedicine adoption). CMS has been moving the ball forward nationally through CMMI (Center for Medicare and Medicaid Innovation) and will very likely be pushing things from a policy standpoint as they work toward managing the ever-growing number of patients on Medicare and funding issues.  

I have been surprised that commercial health insurers have moved so slowly in this area, but they do tend to follow CMS, and maybe that’s the trend here, too.

TOA: Have there been any disappointments that you did not expect in terms of value-based care in orthopaedics over the past five years?

Karl Koenig: I personally was a bit surprised that procedure-based bundled payments for joint replacements had only moderate financial savings. While they did seem to improve quality and decrease costs from a payer perspective (depending on which study you reference), the effects were fairly modest. This is likely due to the complexity of administering the bundles and actually sharing the savings with conveners in a way that created more than modest upside for them, but I did expect the effect size to be larger. It will be interesting to see how the future of APMs (alternative payment models) is re-directed in light of this data. 

More frankly, the commercial insurers as a whole have been a disappointment in their inability to seriously consider APMs and take action on them. Despite a whirlwind of consortiums, conferences and talk, the status quo seems to be sufficient for them right now. Given the costs associated with musculoskeletal care and the demonstrated possibilities for savings and mutual benefit for them, their patients and the care providers, there has been a real lack of initiative (and maybe even some foot-dragging). I’m hoping that this trend will change as CMS leads them along in the next five years.

TOA: The pandemic was both a disruptive and an accelerating event for every aspect of orthopaedic practices, not just value-based care.

Karl Koenig: Agreed. I think the pandemic demonstrated significant vulnerability in a lot of orthopedic practices due to a drop in case volumes. Not that it was very surprising, but it did cause a lot of major changes in structure and certainly increased the number of practices being bought out or considering private equity funding.  

For the most part on the policy and payment front, the pandemic froze everything. However, on the care delivery side (in particular, the telemedicine and digital health fronts), things accelerated tremendously. It’s hard to imagine a world where successful practices in the future won’t provide access to telehealth appointments and digital platforms for certain treatments like weight loss and physical therapy.  

Some parts of health care have definitely changed in ways that won’t go back.

TOA: What aspects of the pandemic and its effect on orthopaedic practices jumps out in your mind?

Karl Koenig: I think it likely accelerated the conversation about APMs and value-based care as a future alternative revenue stream for orthopedic practices.

Given our level of musculoskeletal expertise, leading and managing teams and providing population-level musculoskeletal care is certainly a direction for the future that could diversify our skill set and reduce our reliance on the technical expertise of delivering surgery as our primary revenue source.

TOA: Where do you see value-based care going over the next year? And what about in the next five years?

Karl Koenig: Over the next year or two, I think we will see Medicare pushing further alternative payment models through the testing phase to try and see some real changes in the delivery system and the cost of care for certain conditions.

As we get closer to five years, commercial insurers will follow in some form or fashion, either to benefit from the greater cost-efficacy of these care models or due to pressure from employers who are being crippled by healthcare costs.

There will be increasing pressure from all sides to change the conversation from purely one of “access” to “access to high value care.” The financial pressure, along with patient demand, is going to push us to think more about improving health, rather than just delivering more health care.

I also see increasing pressure from employers, payers, and the medical community for patients to take more stock in their own health and participate in keeping themselves healthy through behavior modification and lifestyle choices. Further development through benefits plans and possibly some resource allocation denials in the future will likely start to occur as the financial pressure becomes more and more untenable.

TOA: What should an orthopaedic surgeon think about in terms of value-based care?

Karl Koenig: I would like to see orthopedic surgeons in a more collaborative role in building multidisciplinary teams that are capable of taking sub capitated risk on insured populations for musculoskeletal care, rather than continuing to “only” deliver orthopedic surgery procedures.

The current popular model of managing the majority of musculoskeletal disease in a primary care setting where there is a distinct lack of preparation in current medical training is not likely to be the most efficient and cost-effective model for the future. I think this is an area where we can excel.