The United States spends more per capita on health care than any other country, yet fails to achieve a commensurate improvement in many population health outcomes.¹ Most payment systems continue to incentivize volume and procedural performance rather than value, defined as the health outcomes benefiting patients relative to cost. Centering care around a patient’s preferences, values, and needs related to their condition² is one of the key components of higher value care. Thus, there has been a gradual shift among stakeholders in the public and private sector toward redefining incentives and developing value-based alternatives to payment and practice. Alternative payment models (APMs) were created to improve health care value by transitioning from traditional fee-for-service (FFS) medicine and shifting financial risk and reward for both health care costs and quality onto medical providers. Pioneered by Medicare in 1982 with the adoption of the diagnosisrelated group system for hospital inpatient services, bundled payments served as a type of APM to tackle the inefficiencies brought about by FFS models. By encouraging providers to work collaboratively with payers and adopt innovative approaches to care delivery, these APMs aimed to focus care on improving value across the entirety of a condition.

In a bundled payment system, clinicians assume accountability for the quality and cost of care where those who keep costs below a risk-adjusted price share a portion of the resulting savings, and those who exceed the target price incur financial penalties.³ Bundled payments encourage physicians to collaborate and improve efficiency, coordinate care, and limit low-value services in a more costeffective matter. Bosco et al,⁴ in their review of bundled arrangements, described seven principles that are critical to the success of the bundled payment: (1) preoperative identification and modification of patient risk factors, (2) adoption
of evidence-based clinical pathways, (3) collection and dissemination of robust data, (4) identifying variations in outcomes and costs, (5) handling postdischarge costs, (6) maximizing quality, and (7) configuring gainsharing arrangements. Over the past 5 years, the Affordable Care Act allowed the Center for Medicare & Medicaid Innovation to create different payment reforms and an opportunity to expand bundled payments. APMs in musculoskeletal care have included the voluntary Bundled Payment for Care Improvement Initiative and the mandatory Comprehensive Care for Joint Replacement model (CJR).⁵ These procedure-based payment models involve a payment bundle for all services delivered by provider groups managing an entire surgical episode of care, for example, index hospitalization until 90 days after total joint replacement (TJR) for patients with degenerative joint disease (DJD) of the hip or knee.⁶ Implemented in 2013, the Bundled Payment for Care Improvement Initiative program has since shown cost reductions through reduced use of postacute care facilities such as inpatient rehabilitation facilities and skilled nursing facilities without negatively affecting clinical outcomes.⁷,⁸ The Comprehensive Care for Joint Replacement model, since its introduction in 2016, has shown reductions in total spending through a similar approach with lower utilization of postacute care while refining and increasing the efficiency of operational practices.⁹

Episodic bundled payments for procedures such as total joint replacement have demonstrated improved operational efficiency and reduced total costs among participating hospitals without having a detrimental effect on clinical outcomes. However, the overall magnitude of cost reductions is modest with limited improvement in clinical outcomes, especially considering the investment of time and resources within these programs.⁸,¹⁰,¹¹ Further, procedure-based bundled episode payments address a limited part of the care continuum and fall short in engaging patients further upstream, prior to the phase of preoperative optimization. Critical opportunities exist around utilizing a range of evidence-based nonsurgical strategies, enhancing appropriate surgical selection through shared decision making, and integrating both surgical and nonsurgical strategies into consensus-based standards and more comprehensive practice guidelines for managing persistently painful musculoskeletal conditions.

Current nonsurgical management of common musculoskeletal conditions, such as DJD, frequently involves the overutilization of low-value services such as MRI and hyaluronic acid injections. Further, substantial underutilization of evidence-based, clinical guideline supported, nonsurgical modalities exists, including arthritis education, structure exercise programs, and dietary and weight management.¹²,¹³ Populations with chronic musculoskeletal conditions also exhibit high levels of psychological distress.¹⁴,¹⁵ Such stressors have shown to negatively affect functional outcomes and patient experience.¹⁶,¹⁷,¹⁸

Procedure-based bundles also fundamentally do little to address the issue of surgical appropriateness.¹⁹ Current procedure-based APMs lack incentive structures that reward specialists around appropriate treatment selection, thereby
tackling the issue of overuse, or mitigate negative side effects such as preferential patient selection (“cherry picking”) to maximize gains.²⁰ Notably, the number of total knee replacement (TKR) cases performed in the United States and worldwide has continued to rise. Data suggest up to 30% of TKRs performed in the United States may not be appropriately indicated based on standardized criteria, leaving a proportion of patients dissatisfied with their surgery²¹,²² (Figure 1). This problem is further compounded by the lack of implementation of the aforementioned nonsurgical care strategies.

Payment and care models that center around the procedure not only limit exposure of the range of potentially beneficial services available to patients, but also the prospect of surgeons and patients to engage in shared decisionmaking—a concept where the latest knowledge (nature of the condition and details of all potential treatment options including their risks and benefits) are discussed using expert communication and surgeon-patient interaction before arriving at an informed decision aligned with the patient’s preferences, values, and needs. Shifting toward a model configured to provide a comprehensive and longitudinal condition-based approach, including optimal nonsurgical strategies and appropriate surgery, promises to enhance the experience and outcomes for patients (Figure 2).

Transitioning bundled episode payment models toward an outcomes-driven, patient-centered, and condition-focused approach, from one oriented around the procedure, signals opportunities to overcome perpetual cost containment strategies and limitations in access to evidence-based low-cost interventions, while also promising significant cost savings. Failure to do so, either through bundled episode payments in specialty care or via models involving primary care or accountable care organization arrangements with specialty care, is ultimately unlikely to result in the change that is needed. Condition-based bundled episode payments (CBEPs) are an emerging payment and practice framework that hope to address the shortcomings of procedure-based bundled payment systems. CBEPs expand the scope of care through incentivizing appropriate utilization of procedures, evidence-based treatment selection based on a patient’s holistic needs, care coordination involving a range of services, and reimbursement based on health-related outcomes achieved, thereby reducing inappropriate procedures, variation in care, and total costs of care (Figure 3).

The concept of CBEPs is gaining traction across US health care with a critical need for evidence to garner payer-provider engagement and commitment from stakeholders to invest in change. Few healthcare systems have successfully oriented themselves toward CBEPs. This section highlights both national and international exemplars at various stages of the transition toward a condition-based approach to the management of musculoskeletal conditions.