Americans in 2016 spent an estimated $380 billion on musculoskeletal conditions—the highest expenditure of any health condition. More than half of this spend was paid by private insurance, and a large fraction of the spending was associated with working-age adults.


Musculoskeletal conditions are often the largest cost driver for employers, surpassing even cancer and heart disease – accounting for upwards of 15-20% of annual medical spend. Unfortunately, this high spend does not correlate to better outcomes for their employees.

MSK Pain-related conditions affect 116 million adults in the United States. A significant percentage of people who start with acute MSK issues transition to chronic stage every year.

Chronic musculoskeletal pain is one of the greatest causes of work absenteeism. Employees go to work despite being in pain, leading to decreased productivity, representing an even greater economic cost than absenteeism. Since there is significant multiplicative interaction between depressive symptoms and chronic musculoskeletal pain – it is this combination of two conditions which most often leads to loss of days at work.

The other problem is fragmented and inefficient MSK delivery system – it is estimated that 50% of the spend on musculoskeletal issues is wasted.

“The Price of Excess,” an article by PWC, estimates that wasteful spending in the health system is 54.5 percent, with the biggest areas of excess being redundant, inappropriate or unnecessary tests and procedures, followed by inefficient health care administration.

Musculoskeletal health care is often highly medicalized and interventional using excessive diagnostics, treatments without clear evidence and with high cost and little outcome data. The health system has a rich history of “innovative” tests and treatments escaping into routine care before we completely understand the balance of benefits and harms. Over-diagnosis is widespread and leads to unnecessary tests and treatments that do not benefit patients, and may cause harms, and waste health resources that could be better used elsewhere.

Wasted Healthcare Spending: A $750 Billion Opportunity | hcldr

Contrary to a common belief, over-diagnosis is not confined just to the tests ordered by traditional medical providers, it also spans to physical therapy, podiatry and chiropractic – where the treatments are primarily driven by assessment of factors such as posture, range of motion, alignment, weakness, balance and coordination. A minor variation detected in one of these factors may be considered abnormal, and can trigger big interventions to correct the presumed abnormality (eg sacroiliac dysfunction, lumbar instability, poor hip control).

The same overuse problem exists in injections and surgeries. For example, despite solid evidence that over 50% of lumbar spine surgeries are found to not be medically necessary, healthcare systems and health plans have not made much progress in curbing unnecessary procedures.


80% of the waste is recoverable. Therein lies the biggest opportunity. If employers and health plans can reduce waste, they spend less, and hence bring the insurance premium and cost-sharing down for everyone.

This is easier said than done.

To reduce waste, employers and health plans need to execute a pragmatic strategy build on a robust technology foundation. There are five elements of this strategy.

ELEMENT 1: Manage Persistent High-Cost Utilizers

ELEMENT 2: Reduce Price Variation between Providers

ELEMENT 3: Improve Quality by Optimizing Process

ELEMENT 4: Go Digital MSK-First

ELEMENT 5: Value-based Plan Design

Manage Persistent High-Cost Utilizers

Member-focused strategy means focusing on members with persistent utilization. There is strong evidence of persistent high-cost utilization in MSK. These members also have higher overall health care costs.

When analyzed over a two year period, about 35% of direct costs for musculoskeletal pain is concentrated among the 4%

The following chart shows the weighted mean annual expenditures for MSK pain diagnoses and all health care by expenditure group. The groups are based on expenditure levels in Yr 1 and Yr 2. HIGH group (85th percentile), LOW group (15th percentile) and MEDIUM group (remaining 70%).

To adequately address the needs of high-cost members with persistent utilization, we need proactive identification and intensive care management.

Proactive Identification

This approach requires predicting which members will generate high spending in future. Data can be a guiding source for identifying persistent utilizers. Prediction model built on member conditions alone are fraught with errors because health care needs fluctuate randomly. These models need to include data about providers (who provide care to these members) and their prescription patterns, which tends to be more consistent across similar cohorts. Through evaluation and modeling, it becomes possible to identify a population segment that has the potential to become high cost before claims even begin to accrue.

Hot-spotting is another method to understand the utilization intensity by members to identity specific patterns and root causes.

Intensive care management

A full-picture view of a member’s health is key. Persistent high-utilizers often have co-morbidities (multiple chronic conditions), and hence require intensive care management. In this model, an assigned care manager continually coordinates care across multiple providers and multiple care settings, and assists with adherence to a personalized treatment plan.

In summary, the idea behind member-focused strategy is to detect persistent utilizers through in-depth claims analysis and expert review. Once identified, assign a care team to monitor these individuals and develops personalized action plans strengthened by a unique mix of support programs, resources and outreach.

Reduce Price Variation between Providers

Over 82% of musculoskeletal (MSK) spend is on imaging, surgery and drugs. These are also the categories where we see a high degree of variation in pricing.

Many studies have shown that prices are dramatically different not only across geographies, but they vary substantially even within the same market for the same service. Further, there is less evidence suggesting that higher-cost tests are also higher-quality.

As mentioned above – Radiology, imaging and surgical services tend to have the greatest healthcare cost variation between providers. The highest-priced services are relatively more expensive compared to the average price than the lowest-priced services are comparatively inexpensive. In other words, the distributions of prices by service tended to skew to the right (more expensive).

This means that savings resulting from a minimal reduction in the prices of the most expensive claims would outweigh increased spending from potentially larger increases in the costs of the lowest priced claims. For example, by managing variation to the 90th percentile, organizations could save $1,500 per knee and hip replacement cases.

The care settings also make a big difference. Ambulatory surgery centers (ASCs) and hospital outpatient departments (HOPDs) may offer identical services, but they vary in prices. According to multiple articles and studies, ASCs offer surgical procedures, such as joint replacement, rotator cuff repair, and knee arthroscopy, as well as other services, such as MRIs and injections, at a significantly lower cost than HOPDs. In fact, outpatient joint replacements performed in an ASC cost 40% less than those performed in a hospital, and other procedures, such as rotator cuff repair and knee arthroscopy, cost over 50% less.

Approximately $21,000 could be saved if patients performed unicompartmental knee arthroplasty in an ASC setting rather than in a HOPD.

Employers and health plans can use various instruments like reference pricing, bundled payments and COE contracting to address excessive variability in pricing.

Reference Pricing

The reference price is a set price for a specified procedure or service
above which an employer will not pay. Many employers and health plans have been using reference pricing for a few years now.

Reference pricing is best applied to products/services where there is wide variation in price but only narrow variation in quality – for example imaging and routine therapy and high-volume surgery procedures.

Bundled payment

Bundled programs operate under the assumption that by setting a total cost target for an episode of care, providers will be compelled to communicate with each other, coordinate care more efficiently and implement practices that improve quality and reduce the risk of complications. To stimulate and encourage quality improvement efforts, health plan bundled payment models usually offer financial incentives for performance on quality.

COE Vendor Contracting

Centers of excellence (COE) vendors operate as a carve-out from a purchaser’s primary health plan. These vendors identify high-quality providers and hospitals and prospectively pay them a bundled payment for elective procedures. COE bundled payment programs use quality criteria to identify high-performing providers, often selecting individual physicians within a group practice; however, they generally do not offer providers incentives for quality outcomes or utilization as part of the payment
model. Instead, the COE model makes inclusion in the COE network conditional on sustained quality performance – providers whose quality declines are removed from the network.

COE vendors have built robust infrastructure to assist with patient navigation and smooth the transition back to the patient’s primary care team. Most offer care navigation and coordination through multiple modalities – online and telephonic – and services range from assistance in provider selection, to appointment scheduling, to support managing travel logistics.

Improve Quality by Optimizing Process

In our current health system, where you start in the episode of care affects your outcome. The care strategy each employee receive for any MSK condition is predicated upon which door they walk into. Orthopedic surgeons often believe they can fix the problem on an operating room table. Physical therapists believe they can fix it with their hands.

This provider-centric approach leads to enormous waste. Patients are often misdiagnosed and mistreated with surgical interventions that are either not needed, not indicated, not in the patient’s best interest when weighed against other available options, including conservative measures.

Only 1-5% of people with back pain have a problem that requires urgent treatment, yet 40-60% of people with back pain are sent for scanning – leading to massive waste.

Quality improvement is the science of process management. Implementation of quality improvement program leads to achieving better care, better outcomes at lower costs – in a sustainable manner. However, this requires a process-driven approach, that can be measured and analyzed, course-corrected and optimized in real time to get the best results possible.

The process-driven approach reduces waste through systemic process changes that don’t depend upon targeting specific providers or following specific members. On the other hand, focusing on such systematic changes such as reducing low-value care also helps persistent high-cost members since they are the biggest consumers of such services.

The framework for improving quality is based on a) identifying waste b) building evidence-based care pathways that removes the waste and c) analyze and course-correct.

Identify Quality Waste

Start with mapping out the current car process from the member’s perspective. This should include all steps that a member has to go through to get care for different MSK issues.

Quality waste means where a breakdown in the process leads to poor outcomes. Spotting quality waste requires going to the point of breakdown and fixing it to reduce extra services required.

Take for example the typical process for a patient with a MSK issue –

The traditional, physician-centered route of care starts with an initial visit to your primary care physician (PCP), then moves on to recommended diagnostic testing, follow-up visits, referrals to specialists, medication prescriptions, and then finally to a physical therapist.  These visits and tests, as well as the increased use of pain medications, are added costs to the consumer in both time, money, side effects, and more. It also delays the start of rehabilitation, ultimately hindering care.

Appropriately referring patients with back pain who are amenable to non-surgical treatment, e.g. physical therapy, chiropractic care (avoiding unnecessary surgery), would generate $14,000 in savings per case.

That’s what Virginia Mason in Seattle did. Pressure from companies like Starbucks and Costco pushed Virginia Mason to streamline how quickly a patient met with a doctor for MSK issues. Those with complicated back pain were placed in physical therapy, bypassing three steps that the physicians previously followed—no meeting with a specialist, no mandatory diagnostic test, no follow-up with doctors, all of which typically occurred before a patient was referred to physical therapy. 

It is important to state that when finding waste from low-value services – include both low-cost and high-cost items. while much of the time on low-value care focus on ‘high-cost’ items, such as procedures and high-cost imaging, nearly two-thirds of the money spent on low-value care are on fairly low-cost items — less than $550. This is important because these services do not generate a significant portion of an individual clinician’s income.

Evidence-based care pathways

After finding the quality waste, organizations should move to the next step of creating care pathways that remove that waste. Care pathways define predictable course targeting a specific group of members with a specific condition, in which the different tasks or interventions by providers involved in the member care are defined, optimized and sequenced.

The goal is to provide the ‘right care’, from ‘right providers’, at the ‘right time’ for the ‘right price’.

The evidence-based pathways in musculoskeletal for prevention and mitigation include processes built around ergonomics, employee education, exercise classes, second opinions, conservative therapies and access to lowest cost care.

Analyze and course-correct

To build a sustainable learning system, it is important that the processes are constantly analyzed for improvements. As members enroll and engage, it is critical to collect the engagement and usage data regularly and compare it against the outcomes (the KPIs) to see what services or interventions have had the best impact.

When a pattern emerges that showed a less-than-desirable result, the care pathways can be course-corrected, updated and optimized in real time to get the best cost and quality outcomes possible.

Go Digital-First

Digital MSK health is more important than it has ever been. Consumer expectations are changing as more people have been introduced to virtual care services during COVID-19. Employees love this option because digital care provides the same or higher quality of care in the most convenient setting for them.

Digital-First strategy focuses on optimizing care utilization process by using virtual care/Telehealth/digital services as an anchor that improves quality and cost outcomes in the entire musculoskeletal continuum of care.

There are several care pathways that can be better served with digital-first strategy. For example, most of acute care can be easily addressed via Tele-PT. Chronic pain management, which has not be adequately provided in physician offices, has an enormous potential in a digital setting – where it is much easier to combine the physical and behavioral components together in a structured model of care. The same goes for rehabilitation therapy after surgery.

Digital-first DOES NOT mean digital-only. It means providing using a digital-first option provided and marketed to members for all MSK care pathways. Even when therapy starts with one or more in-person sessions, members may choose to follow up with online PT so their therapists can ensure they’re continuing to do their prescribed stretches and exercises—and doing them correctly. Digital-first also means that if and when members are better served in an office or outpatient setting, the referral and care continuation process is made easy and seamless for them.

Virtual Physical Therapy for acute MSK pain

Acute musculoskeletal pain is pain perceived within a region of the body, and believed to arise from the muscles, ligaments, bones, or joints in that region.

Best addressed in a virtual setting, this service can help in many ways. For daily aches and pains, this service provides quick access to care via messaging, phone or video get the right information and advice that helps with the problem.

For short-term injury episodes, the virtual therapy service can diagnose injury, manage symptoms and help members get better quickly. 

Members can video chat or message with their PT anytime, and can get the care they need from the safety of home.

Digital Chronic Pain Management

The chronic joint and back pain management programs are designed to reduce pain, improve function, and boost overall health and wellbeing. These programs include treatment for co-occurring disorders, such as depression, anxiety, or addiction when necessary.

The programs require the patient to take an active role in his or her own treatment. While some of these programs may be carried out in an outpatient basis, digitally-delivered programs are most conducive for access and adherence.

Rehabilitation Therapy

It does not make any sense for someone who has recently gone through surgery to get in the car and find their way to the therapist’s clinic.

Virtual Rehab Therapy turns this model on its head. In this model, the physical therapist comes to the patient before (prehab) and after (rehab) surgery—via video chat, messaging, and phone calls. The knowledge, guidance, measurement and monitoring typically addressed in therapist’s clinic is brought to the patient’s home. This approach has proven to increase compliance with treatment plans, speed up recovery and lower costs.

Remote monitoring

All digital MSK services should provide data-based insights to providers, who can review the progress of their patients on predicted trajectories of recovery. The monitoring and insights help providers understand when tasks have not been completed which could call attention to problems on the patient side. This model also help quantify which interventions are helping people get better faster and which regimens are associated with more rapid recovery.

By guiding people through therapy from home or at work, employers and health plans reduce the need for face to face visits with clinicians which reduces medical costs.

Value-Based Plan Design

Value-based insurance design (V-BID) is an approach that drives members and providers to high-value services while discouraging low-value services. The overall goal is to reduce the net cost of care by promoting better health outcomes that save money over the long term.

In another article on cost-sharing for physical therapy, we covered how PT is the right clinical entry point for over 90% of MSK conditions. However, since member’s choice of first-line treatment is influenced by health insurance cost-sharing features – this service is underutilized because of copays required in repeated visits. We also discussed in the same article that a co-payment of greater than $30 will make members 29% less likely to see a physical therapist first than members whose co-payment is zero.

Incorporating V-BID in MSK

By combining claims and other sources of data, employers and health plans can uncover high-quality, low- cost providers with the best outcomes. This information can be used to steer employees and their family members away from low-value treatments and overpriced healthcare providers through benefit design incentives – providing significant savings.

Provider partnership

For value-based design to achieve its full potential, providers need to evolve to becoming partners in these efforts. If providers are not invested in the program and the philosophy – and in turn won’t change their practice methods – then the intended changes are not as effective.

Sprite health helps employers and health plans get the most out of their musculoskeletal benefits. Our digital musculoskeletal (MSK) platform provides a single point of access for all MSK conditions, across the entire MSK continuum.


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