Going under the knife can be costly for health plan sponsors and participants alike, especially in affluent areas such as Northern California’s picturesque Monterey Peninsula. A lack of competition makes specialty care costs notably higher in this region than the nearby San Francisco Bay Area, Los Angeles and much of the U.S.
But the Municipalities, Colleges, Schools Insurance Group (MCSIG) has had just the opposite experience with a planned surgery program. It leverages pre-negotiated, bundled rates — which include the cost of pre- and post-op care, offering completely transparent pricing — with high-quality surgical providers that offer affordable rates. MCSIG is a self-funded, joint-power governmental authority that covers 11,048 employees of public schools, colleges and municipalities, along with their dependents.
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As much as $15 million was saved on surgeries over the past decade (more than $10 million since 2015), while its members pay little to no out-of-pocket costs. They also receive ongoing support from a care coordinator who helps them navigate their way through what can be a complex and cumbersome system, and a shared-savings rebate, starting at $500, can be used to offset after-surgery costs.
“What we’ve been able to do is prove to employers that if you focus on quality, it will cost less,” says Glen Tullman, CEO of Transcarent, which manages MCSIG’s program. He predicts that surgery bundles will start to scale up with the help of 24/7 member-services advocacy through a single point of contact.
The secret formula involves a number of key ingredients. For starters, Tullman explains that as many as 30% of all surgeries don’t even need to be done. “If somebody is going to cut you open, get a second opinion,” he says. For those who require surgery, there are two critically important metrics: surgeon performance; and facility quality, with low infection and readmission rates among several indicators.
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With these elements in place, significant results can be expected. Ambulatory surgery centers, facilities dedicated to specialized surgeries and other independent physician-owned facilities can sometimes reduce the cost of a procedure typically performed in a hospital by 40% or more, according to Cameron Cummins, managing partner of Transparent by Design.
“That is why we ask employers to share those cost savings with their health plan members through incentivized steerage — like low or no out-of-pocket cost — to the lower-cost, higher-quality opportunities,” he says.
When MCSIG’s surgery bundle debuted in 2011, it was as a medical tourism benefit that took time to catch on, simply because members loved their local providers and hospitals. In 2015, care at surgery centers in Monterey County and surrounding areas were included, though some patients still travel to places like Kalispell, Mont., where there are enough savings generated for a companion ticket.
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Roxanne Buckner, MCSIG’s executive director, says the number of surgeries ramped down during the pandemic, though quite a few were still performed at outpatient facilities that weren’t hemmed in by COVID-19 restrictions.
Others are poised for the post-pandemic surge in medical procedures. “We have a seasonal trend in our world, especially with the schools — we already have surgeries scheduled into January and spring break,” she says.
And while the cost savings plays a role in raising awareness and interest in these kinds of programs, Buckner notes that the ultimate benefit is better healthcare.
“It’s easy to talk about finances,” she says. “But we really love to focus on the care and outcomes.”
