An Employer-Provider Direct Payment Program Is Associated With Lower Episode Costs

Area of Science:

• Health Economics
• Healthcare Management
• Clinical Operations

Background:

• Bundled payment models show potential for cost reduction in healthcare.
• Limited research exists on bundled payments within commercially insured populations.
• Orthopedic and surgical procedures are key areas for cost-saving interventions.

Purpose of the Study:

• To evaluate the impact of a bundled payment program on episode costs and patient cost sharing.
• To assess the effectiveness of bundled payments for orthopedic and surgical procedures in a commercial insurance setting.
• To determine the distribution of savings between employers and patients.

Main Methods:

• Analysis of a bundled payment program for orthopedic and surgical procedures.
• Inclusion of all care within a 30-day post-procedure period.
• Examination of preferred pricing agreements and waived patient cost sharing.

Main Results:

• Episode prices decreased by $4,229 (10.7%) for three surgical procedures.
• Employers realized savings of $3,582 per episode (9.5% reduction).
• Patient cost-sharing payments reduced by $498 per episode (27.7% decrease).

Conclusions:

• Bundled payments are effective in reducing healthcare costs for commercially insured populations.
• The studied program successfully lowered both overall episode costs and patient financial burden.
• This model offers significant savings opportunities for employers and improved affordability for patients.