In anticipation of payment reforms centering on coordinated care, health systems and a major Tennessee insurer are establishing a bundled payment system for joint replacements.

Under a contract announced this week, BlueCross BlueShield of Tennessee will give four orthopedic provider partners a set payment amount for the entire episode of care for total knee and hip replacements, including the surgery, post care and physical therapy, according to the insurer. The system will start Oct. 1.

People who undergo major joint replacements often require skilled nursing stays for rehabilitation. Implementation of the Tennessee agreement was driven largely by Affordable Care Act payment reforms that encourage partnerships between providers and payers to improve patient care quality and clinical outcomes, BCBS officials said. Payment experts say, regardless of the ACA’s future, payment reforms such as bundled payments and accountable care organizations are likely to stick around.

“This system is generally considered a new payment methodology, but make no mistake, this is a collaborative tool we can use to improve health outcomes and the patient experience,” Tom Lundquist, M.D., vice president of performance measurement and improvement of healthcare services for BlueCross, said in a statement.

The participating practices involved are Vanderbilt Medical Group and Tennessee Orthopedic Alliance in Nashville, Campbell Clinic in Memphis and the Knoxville Orthopedic Clinic.