Minnetonka-based UnitedHealthcare has expanded a program that is changing payment terms for certain hip, knee and spine surgeries in hopes of improving quality while lowering costs.
Launched as a pilot in 2015, the program is now saving employers about $18,000 per procedure, the insurer announced Wednesday, and has been expanded this year to nine new markets.
UnitedHealthcare, which is one of the nation’s largest health insurers, is part of a well-established trend across many private health insurers and government-run programs like Medicare to pay via “value-based care” contracts that include a degree of financial risk for doctors and hospitals when patient outcomes are poor.
“The program’s bundled payment method reimburses health care providers and facilities for a defined episode of care, such as knee or hip replacement, under a single fee or payment,” UnitedHealthcare said in a statement. “This is a shift away from the traditional fee-for-service structure in which a care provider is paid for each treatment, appointment or test, generating multiple claims within a single, broader episode of care.”
Paying as a package for all care connected to an orthopedic procedure is common among Minnesota’s nonprofit insurers, said Eileen Smith, spokeswoman for the Minnesota Council of Health Plans, a trade group for those carriers. Smith cited one example of a nonprofit health plan saving hip- and knee-replacement patients 20 to 25 percent compared to the old system.
At UnitedHealthcare, the Spine and Joint Solution program has saved money by giving health care providers incentives, the insurer said, to reduce return visits to the hospital as well as complications following surgery. It changes payment terms at certain facilities for hip- and knee-replacement surgeries, as well as fusion surgeries in the lumbar portion of the spine.
Complications following joint-replacement surgeries have been 17 percent lower at facilities in the program compared with other providers, the insurer said, and 3.4 percent lower for spine-surgery patients.
“This program is one example of the ways we are reshaping how health care is delivered, helping enhance care coordination, improve outcomes and deliver greater value,” said Dr. Sam Ho, the UnitedHealthcare chief medical officer, in a statement.
After its pilot phase, the program in 2016 enrolled 15 employers with more than 1 million employees. The numbers have grown this year to more than 115 employers with more than 3 million employees in 37 markets.
Several Minnesota-based companies have enrolled in the program, the insurer said, adding that two surgery centers operated by Twin Cities Orthopedics are participating facilities.
With the program’s expansion this year, UnitedHealthcare said there are more incentives for employees to opt for care that is provided by facilities paid through value-based care contracts.
Lumbar spinal fusion procedures cost an average of $80,330 in Minnesota and $80,000 across the country, the insurer said, but just $65,800 in the UnitedHealthcare program. For knee replacement, the national average for patients in the program is $26,500, UnitedHealthcare said, compared with an overall average of $40,058 in Minnesota and $40,300 across the country.