Employers drive value with centers of excellence

Several large employers, including Lowe’s and Walmart, are confident enough in their recently designated centers of excellence for joint replacement that they are waiving all plan-member cost sharing for procedures at the centers. What’s more, travel costs to any of the four locations will be covered as well.

The overall intent is to drive the highest quality care, which would ultimately save money for the employer plans, says David Lansky, president and CEO of the Pacific Business Group on Health (PBGH), the facilitator of the initiative.

“They felt the variability of quality of care they were getting in the community was so great that it was important to identify places that were reliable and had consistently good results,” Lansky says. “In experiences elsewhere, they found that if they do that, then cost will follow.”

Employees and covered dependents who are referred for knee or hip replacement will receive consultations and care covered at 100% without deductible or coinsurance, plus travel, lodging and living expenses for the patient and a caregiver. Patients must be healthy enough to travel and could be out of town for seven to 12 days, as determined by the centers of excellence.

According to PBGH, the program is voluntary and employees or their covered dependents can still choose to receive care from local providers and incur routine costs.

Lansky says the real opportunity is in bundled pricing, which shares risk and places responsibility on the providers for care coordination and good outcomes. Using facilities that have lower rates of complications and reoperations is better for patients and saves money for the employer sponsors, says Lansky.

“They have to be referred by their local primary provider, and the receiving center has to decide that they are appropriate for surgery,” he says. “So the question of appropriateness is still a critical factor.”

He says the level of frustration is high with employers that are trying to stretch their healthcare dollars. Most are concerned with outcomes more than unit costs.

“They’re thirsty for identifying those centers of excellence and helping employees find them,” he says.

PBGH members are especially interested in designing tiered networks that drive members to the higher quality sites through financial incentives. Any added travel benefit will help employees who live in areas underserved by quality providers.

“The variation in quality is very troubling to them,” he says. “Particularly troubling because there aren’t good metrics that make it easy to evaluate whether hospital A or hospital B, or surgeon A or surgeon B, is providing superior care.”

Lowe’s and Walmart have each tested similar benefit designs in recent years with other centers of excellence.

Joint Replacement Centers of Excellence

Pacific Business Group on Health

• Johns Hopkins Bayview Medical Center in Baltimore, Md.

• Kaiser Permanente Orange County Irvine Medical Center in Irvine, Calif.

• Mercy Hospital in Springfield, Mo.

• Virginia Mason Medical Center in Seattle