Why pay for Sally’s $85,000 operation when she can get it for $20,000? Seems unfair to pay Johnny $85,000 for his operation and only pay Sally $20,000 for the same procedure. Under a reference based pricing model, the plan sponsor would allow $20,000 leaving it up to the patient to decide where to seek treatment.
Jaimy Lee, Modern Healthcare
October 9, 2013 – 12:57 pm ET
A group of large employers including retail giants Wal-Mart Stores Inc. and Lowe’s Cos. Inc. announced they will offer their employees coverage for hip and knee implant procedures with no cost-sharing if they receive the procedures at one of four previously selected hospital systems.The participating hospitals are Johns Hopkins Bayview Medical Center in Baltimore; Kaiser Permanente’s Orange County-Irvine (Calif.) Medical Center; Mercy Hospital Springfield (Mo.); and Virginia Mason Medical Center in Seattle. The preferred network is similar in many ways to initiatives developed by Wal-Mart and Lowe’s that encourage employees to visit preferred academic centers like the Cleveland Clinic and Mayo Clinic for heart and spine surgeries.As part of this network, employees will have the option to receive care at a local healthcare provider although they will incur regular cost-sharing under their employer benefit plan. For the employees who choose to undergo procedures at one of the four systems, the cost of consultations and care, as well as travel, lodging, and living expenses for themselves and a caregiver, will be fully covered.“This is especially important for our employees who live in areas underserved by high quality healthcare providers,” Randy Moon, Lowe’s vice president of international human resources, benefits and human resources information systems (PDF), said in a news release.The Pacific Business Group on Health’s Negotiating Alliance, an organization that will oversee the so-called Employers Centers of Excellence Network, developed quality criteria to determine which providers would participate in the network, said David Lansky, the business group’s president and CEO. “There’s a sense of great variation” in the costs and quality associated with hip and knee implants, Mr. Lansky said. “The cost of care has been very unpredictable.”
The criteria did not include information about the costs of orthopedic procedures at the various facilities, but did take into account location. The Pacific Business Group on Health screened potential providers and later conducted on-site visits. Between 20 and 30 hospitals received requests for proposal.
“Each of these providers has a proven record of practicing evidence-based medicine with above-average positive patient outcomes in knee and hip replacement procedures,” Sally Welborn, Wal-Mart’s senior vice president of global benefits, said in the same release.
The participating companies—there are others that are expected to announce their participation in the network over the next few months—hope to lower complication rates and re-operation rates in the long-term, according to Mr. Lansky.
Jaimy Lee writes for Modern Healthcare, a sister publication of Business Insurance.