When employers evaluate health benefit plans for their employees, factors such as coverage, cost and customer service are typically cited as most important. However, companies nationwide are looking for innovative ways to improve employee health and more effectively manage how much they spend on medical care, including adopting new value-based care approaches that shift how care is paid for and delivered.
Under value-based care arrangements, the healthcare providers that employees use are paid for achieving certain quality outcomes and demonstrating that they’re improving people’s health, rather than getting paid solely for the number of services they provide to patients. In other words, they’re paid for value over volume. Value-based care arrangements can come in many forms for care providers, including performance-based contracts that tie specific portions of their compensation to achieving certain quality measures, or accountable care organizations that fully integrate both payment models and clinical services with the health plan.
Focusing on value also has the potential to help reduce our nation’s overall healthcare costs. Nationwide we spend more than $2 trillion a year on healthcare; more than one-third of it considered wasteful. Companies and consumers deserve more for their healthcare dollars, and they should be receiving and paying for care that is based on proven quality measures and takes into consideration their specific healthcare needs.
One of the value-based care arrangements gaining interest among employers, especially companies that self-fund their health plans, is called a bundled payment. The bundled payment method reimburses a healthcare provider or hospital for a defined episode of care under a single fee or payment. For example, all services immediately prior to, during and after knee replacement or cancer treatments are sometimes being lumped into a bundled payment. This is a shift away from the common fee-for-service structure in which a care provider is paid separately for each treatment, appointment or test during a treatment plan, generating multiple claims within a single, broader episode of care.
Employers are increasingly using bundled payments for employees who undergo musculoskeletal procedures, which are becoming increasingly common due to an aging population and higher obesity rates. By 2030, the number of knee replacement surgeries performed nationally is expected to increase by 500%, according to a recent study from the Healthcare Cost and Utilization Project. Moreover, these surgical procedures are expensive (knee/hip replacements average $35,000 per operation), and costs vary widely among care providers.
A new UnitedHealthcare program with healthcare facilities nationwide, including The Christ Hospital in Cincinnati, is using a bundled payment for knee, hip and spine procedures, and participating employers have recorded an average savings of $10,000 or more per operation when compared with median costs in the same metropolitan area. Meanwhile, employees having the surgery may save $1,000 in lower out-of-pocket costs when accessing an in-network facility that accepts bundled payments.
Bundled payments are part of more than $52 billion of UnitedHealthcare’s payments to hospitals, physicians and other providers that are tied to value-based care arrangements. By the end of 2018, that number is expected to reach $65 billion.
The shift toward increased collaboration, outcome-based payment and new benefit designs is transforming how we pay for healthcare and how healthcare is delivered. Employers play an important role in bringing these new approaches to life by incorporating them into the benefits for the more than 155 million Americans with commercial insurance.
Value-based payment methods are helping make better, higher-quality and lower-cost care a reality.
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