Here are 10 of the most important stories in the orthopedics arena in 2016.
1. Bundled payments and CMS' CJR. Late in 2015, CMS finalized the Comprehensive Care for Joint Replacement model. The CJR model went into effect on April 1, 2016 for 794 hospitals located in 67 metropolitan statistical areas throughout the country. The total Medicare payment in CJR per episode will be $25,565 with 39 percent tied to post-discharge care, according to an Avalere analysis.
Orthopedic practices are also taking the plunge without Medicare's mandate. Chicago-based Midwest Orthopaedics at Rush began offering packaged pricing for orthopedic care in May. Charlotte, N.C.-based OrthoCarolina published an article in the New England Journal of Medicine Catalyst discussing its physician-owned bundled payment program, which was established in 2014. The practice lowered costs by 10 percent to 30 percent as well as improved outcomes for hip and knee replacement surgery.
2. Orthopedic device company mega-mergers. As with 2015, this year saw a number of major mergers in the orthopedic device industry, a market that is anticipated to reach $47.5 billion by 2020. One of the biggest mergers of the year was Medtronic's acquisition of Mazor Robotics. Medtronic purchased 4 percent of Mazor in May for $11.9 million, and invested in an additional $20 million just ahead of the Mazor X release.
Zimmer Biomet announced plans in July to acquire a majority stake in MedTech, a company focused on robotic technology for spine and brain surgery. In June, the company acquired LDR for $1 billion.
NuVasive acquired Ellipse Technologies for $380 million upfront cash payments and the potential for $30 million more payable in 2017 for reaching specific revenue targets early in the year.
3. Data breaches and HIPAA violations. At the end of July, a hacker obtained access to Athens (Ga.) Orthopedic Clinic's patient information. The data breach exposed the information of around 397,000 current and former patients, including patients' names, addresses, Social Security numbers, telephone numbers, dates of birth as well as medical data. In August, hacker group Dark Overlords offered 500 of the stolen patient health records on the black market.
The practice stated in a letter that it "retained cyber security experts to investigate and make recommendations for additional improvements to [their] system, and have begun implementing these recommendations." However, two law firms plan to file class-action lawsuits, the Athens Banner-Herald reports.
In April, Raleigh (N.C.) Orthopaedic Clinic agreed to pay $750,000 to settle an alleged HIPAA violation. The clinic handed over protected health information for around 17,300 patients to a potential business partner without entering into a business associate agreement. The clinic was also required to revise its policies and procedures related to this incident.
4. MACRA implementation. The HHS issued a new proposed rule, which is the first step in implementing certain provisions of the Medicare Access and CHIP Reauthorization Act of 2015. Through MACRA, Congress streamlined various programs into a single framework called the Quality Payment Program, which includes two pathways: The Merit-based Incentive Payment System and Advanced Alternative Payment Models.
MIPS will allow Medicare clinicians to be paid through success in four performance categories — quality, advancing care information, clinical practice improvement activities and cost. Alternatively, clinicians who participate to a sufficient extent in Advanced Alternative Payment Models, such as the Next Generation ACO model, will be exempt from MIPS reporting requirements and qualify for financial bonuses.
CMS has four "pick-your-pace" options under MACRA. The options are:
• Submit data reflective of your preparation for greater participation in 2018 and 2019.
• Submit full performance data for less than the full calendar year of 2017.
• Submit full performance data for the full calendar year of 2017.
• Participate in an Advanced Alternative Payment Model in 2017.
The implementation of MACRA is still scheduled for 2019.
5. PODs under scrutiny. Physician-owned distributorships, a controversial issue in 2015, were in the news once again this year. The Senate Finance Committee released a new report noting PODs "present an inherent conflict of interest that can put the physician's medical judgment at odds with the patient's best interests."
The report noted surgeons at hospitals involved in PODs performed fusion surgery on nearly twice as many patients as the non-POD surgeons. The report's recommendations include a federal law requiring physicians to disclose ownership or family member ownership in private device companies to hospitals and patients.
7. Clashes over on-call fees. Salina (Kan.) Regional Health Center made headlines this year when it refused to pay on-call fees demanded by the surgeons of Orthopaedic Sports Clinic of Salina, leading to the clinic resigning medical staff privileges. Salina Regional's policy states any physician with privileges at the hospital must provide on-call services. In February OSHC physicians asked for $1,800 per day fees for on-call days or $500,000 annually, which the hospital refused to pay. Thus, OSHC notified the hospital on April 22 its physicians would resign medical staff privileges on April 30.
8. Orthopedic surgeon compensation. For the last six years consecutively, orthopedics has been the highest-paid specialty in the country, and this year is no different, according to the Medscape Physician Compensation Report 2016. Orthopedic surgeon salary has increased from $350,000 in 2010 to $443,000 in 2016. Orthopedics came out on top as the highest paying specialty for young physicians — $329,000 on average — in Medscape Young Physicians Compensation Report 2016. In fact, James Andrews, MD, was ranked No. 5 on the Gazette-Review's list of top 10 richest doctors in the world, with a net worth of $100 million.
9. Practice mergers. To withstand the tide of healthcare regulatory changes as well as competition from hospitals and health systems, physician practices are banding together. These mergers are creating orthopedic mega-practices. For example, in July, Wilmington, N.C.-based OrthoWilmington; Asheville, N.C.-based Blue Ridge Bone and Joint; Alexander, N.C.-based Carolina Orthopaedic Specialists; and Durham, N.C.-based Triangle Orthopaedic Associates have joined together to form a new practice — EmergeOrtho. The new practice will include 49 office locations, 126 physicians and 237 physician assistants.
OrthoVirginia and Advanced Orthopaedics, both based in Richmond, merged on July 1. With the addition of Advanced Orthopaedics, OrthoVirginia includes more than 100 physicians. This was the second merger for OrthoVirginia in 2016. In January, the 18-physician Orthopaedic Center of Central Virginia in Lynchburg merged with OrthoVirginia.
10. Robotics. The use of robotics increased exponentially in the orthopedic arena in 2016. Nearly 33 percent of orthopedic surgeons are expected to utilize robotic systems by 2018, a RBC Capital Markets report found. Currently, nearly 18 percent of orthopedic surgeons use robotic systems. With Medtronic's acquisition of Mazor Robotics and Zimmer Biomet's acquisition of MedTech, medical device companies are taking note of the trend and investing accordingly.
Mazor's newest technology expands on its robotic guidance technology to include analytical tools, multiple-source data, precision guidance, optical tracking, intra-op verification and connectivity technologies. Medtronic ordered 15 Mazor X systems as part of its $20 million investment in Mazor.