It is estimated that by 2030, Colorado’s population over the age of 65 will increase by 150 percent. Colorado is known for being an active state, and as the demographics of the population shift, the demand for costly joint replacement procedures is likely to grow.
Across the nation and in Colorado, prices for knee and hip replacements vary widely. According to comedprice.org, out-of-pocket cost for knee replacements in Colorado can be anywhere from $20,000 - $58,000, while hip replacements can be as low as $21,000 and as high as $36,000. The Colorado Public Employees’ Retirement Association (PERA), a self-insured organization, is proactively addressing variation in joint replacement cost and quality through their PERACare Select Program for Hips and Knees.
“PERACare members receive about 100 joint replacements a year,” explains Jessica Linart, PERA’s Insurance Manager, “and PERA’s costs for in-network knee and hip replacements can vary by as much as $80,000 depending on the location and facility.” To minimize this variation and simultaneously improve care, the PERACare Select program is working with facilities that have agreed to provide joint replacements for a pre-determined price.
PERA has partnered with five metro-area HCA/HealthOne facilities to offer the procedures to eligible members with no out-of-pocket cost for most patients. “The providers who are participating in this new option are highly qualified and experienced surgeons. These providers boast lower site infection rates and shorter hospital stays than the national averages,” Linart notes. “This select group of doctors and facilities have set a fixed price for a full suite of services from intake to discharge, including surgery, hardware, anesthesia as well as pain block and management.”
Any costs outside the services related to the procedure are covered under the patient’s regular health plan, which may be subject to a deductible.
Approximately 10,000 Colorado PERA members are eligible for the program. “Joint replacements are some of the most successful and life-enhancing surgical procedures performed in today’s health care system,” shares Gregory W. Smith, PERA’s Executive Director. “Colorado public employees – school teachers, police officers and fire fighters—spend their lives taking care of Coloradans and we have an obligation to work for them to help them stay healthy.”
By eliminating ambiguity surrounding the cost of medical treatments, PERA is taking a huge step toward health care price transparency. Smith observes, “PERA is cracking the code on cost confusion. Right now there is no easy way to predict how much a critical health procedure will cost. This uncertainty creates stress and prevents a person’s ability to make informed decisions – which ultimately costs them money.”
The PERACare Select program puts them ahead of trends in health care payment reform. There are a handful of similar programs in Colorado and nationally, but many haven’t been implemented on a broad scale, as the projects are still in test mode.
However, the Centers for Medicare & Medicaid (CMS) recently issued a press release announcing the proposed Comprehensive Care for Joint Replacement payment model, signaling a potential national upsurge in alternative payment models. Also focused on hip and knee replacement, the program proposes to serve Medicare patients in 75 geographic areas and will require that hospitals assume much of the financial risk of the procedures and post-op care for the defined 90 day “episode.” Health and Human Services Secretary Sylvia M. Burwell stated in the release, “By focusing on episodes of care, rather than a piecemeal system, hospitals and physicians have an incentive to work together to deliver more effective and efficient care.”
The CMS announcement illustrates how innovative programs like PERACare Select will be able to help inform the health care community as pay-for-performance gains momentum nationwide.