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Some Firms Save Money By Offering Employees Free Surgery

Lowe's home improvement company, like a growing number of large companies nationwide, offers its employees an eye-catching benefit: certain major surgeries at prestigious hospitals at no cost to the employee.

How do these firms do it? With “bundled payments,” a way of paying that's gaining steam across the health care industry, and that Medicare is now adopting for hip and knee replacements in 67 metropolitan areas, including New York, Miami and Denver.

Here's how it works: Lowe's and other employers pay one flat rate for a particular procedure from any of a number of hospitals they've selected for quality, even if they are a plane ride away. And, under the agreement, the hospital handles all the treatment within a certain time frame - the surgery, the physical therapy and any complications that arise - all for that one price.

It was Bob Ihrie, senior vice president for compensation and benefits at Lowe's, who came up with the idea in 2010. When he told managers at other companies about it, he said, “The first question was always, 'Oh, this is just for executives, right?' And I said no, absolutely not, this is for any Lowe's employee in the Lowe's health care plans.”

The program is optional for employees. They can still use their local surgeon, if they prefer, and pay out-of-pocket whatever their insurance doesn't cover. But more than 700 Lowe's employees have taken the company up on its offer, Ihrie said.

It's a great deal for patients, he said, and for his company.

“We were able to get a bundled price, which actually enables us to save money on every single operation,” Ihrie says.

This story is part of a partnership that includes WFAE, NPR and Kaiser Health News. It can be republished for free. (details)

The Pacific Business Group on Health negotiates that price for Lowe's, Walmart and a number of other large employers. Associate Director Olivia Ross oversees these deals, and said her team is able to negotiate rates that are 20 to 30 percent below what the companies used to pay for the procedures.

“We're seeing savings at the front end,” she said, because Lowe's pays less for the surgery. And, because the hospital is responsible for all that care, the institution has a strong incentive to be careful and thorough, Ross added.

That means “huge savings on the back end,” she said, “from things like reduced re-admissions, reduced return to the O.R. and lower rates of blood clots. Those are hugely expensive, preventable complications.”

Lowe's comes out ahead, even after paying for the patient's travel, Ihrie confirmed.

Participating hospitals win, too, by attracting more patients, said Trisha Frick, who handles such negotiations on behalf of Johns Hopkins Medicine in Baltimore.

“It's new business for us,” Frick said. “And, for the most part, the reimbursement is acceptable; we believe that we can provide that, within that amount of money.”

Medicare, the health insurance program for people 65 and older, started using bundled rates for hip and knee replacements this month. Medicare had some early evidence from pilot programs that “the model works well,” according to Rob Lazerow, a health care consultant with The Advisory Board Company.

“Medicare is saving something like $4,000 on orthopedic cases,” he said.

Medicare's deal is somewhat different than Lowe's. Patients may pay something out of pocket, depending on the type of Medicare policy that insures them. And while the few hospitals selected in Lowe's program can bank on increasing their revenue and the number of surgeries they'll get, the rates established by Medicare's bundled payment system hold for every hospital in a participating area.

“Entire markets are selected for participating,” Lazerow explains. “If you're in the San Francisco market or you're in the New York market, all of the hospitals are actually participating in the program.”

But there are similarities, too, and Medicare may learn some lessons from Lowe's experience. Lowe's initially had trouble wrangling all a patient's medical records from local doctors. And the company found that patients who had questions weeks or months after an operation sometimes had trouble following up with the out-of-town doctor who had performed the surgery.

“You have some setbacks, and things happen, and you just have questions,” Ihrie said. “So what we give every patient now is a little card with the doctor's name and direct phone line and the nurse's name and direct phone line. And all of a sudden, things were a lot better.”

Another lesson was startling, Ross said. In addition to cutting the cost of procedures, another chunk of savings to the companies came from avoiding surgeries that probably shouldn't happen in the first place.

“We're seeing up to 30 percent - close to 30 percent of cases - who should not be moving forward with the joint replacement,” Ross said.

What typically happens in these cases, she said, is that employees get a recommendation from a local doctor that they should have surgery, only to have physicians at the selected hospitals deem the operation inappropriate.

In some cases that may be because the employee hadn't first tried less invasive treatments, such as physical therapy, Ross said. Or the employee may need to lose weight first, to make the surgery safer.

Ihrie said what heartens him most about his company's program is that Lowe's employees are now taking a more active role in decisions about their care.

“What treatment you receive is not always very black and white,” he said. “The mere fact that people now think about what they're doing helps us control costs across the board.”

This story is part of a reporting partnership with WFAE, NPR and Kaiser Health News.

Competition Suffers Most If UnitedHealth Exits Obamacare In 2017: Analysis

If UnitedHealthcare follows through on its threat to quit the health insurance marketplaces in 2017, more than 1 million consumers would be left with a single health plan option, forecasted an analysis released Monday.

A UnitedHealthcare pullout would be felt most in several states, generally in the South and Midwest, where consumers would be left with little choice of plans, the Kaiser Family Foundation reported. (KHN is an editorially independent program of the foundation.)

In most of the 34 states where United operates this year, though, the effect would be modest for premiums and the number of plan options, Kaiser said.

Kaiser's analysis was made public a day before UnitedHealth Group, the insurer's parent, is expected to announce 2017 plans for the Affordable Care Act's marketplaces that provide coverage to individuals who shop for their own health insurance.

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In the past week, state officials confirmed UnitedHealth was withdrawing from marketplaces in Arkansas and Michigan and partially leaving Georgia. In Atlanta and Chicago, a new UnitedHealthcare subsidiary, Harken Health, began operating this year and is expected to remain.

Last year, UnitedHealthcare said it was losing hundreds of millions of dollars on the Obamacare plans and would decide its future participation by mid-2016. Health plans need to begin notifying states by May whether they plan to sell in marketplaces next year.

More than one in four counties where UnitedHealthcare participates nationally would see a drop from two insurers to one if the company exits and isn't replaced by a new entrant, and a similar number would go from having three insurers to two, the Kaiser analysis found.

In total, 1.8 million enrollees would go from having a choice of three insurers to two, and another 1.1 million would go from having a choice of two insurers to one, the report said.

A UnitedHealth withdrawal would leave marketplace enrollees in Kansas and Oklahoma with only one insurer if another company does not move in, Kaiser said.

Its analysis cited the potential impact in other states if UnitedHealthcare drops out:

• In Alabama, about two-thirds of enrollees - those living in 60 counties - would go from having a choice of two insurers to a single insurer, and the remaining 33 percent of enrollees in seven counties would have two insurers to pick from.


• In Mississippi, 43 percent of enrollees in 50 counties would drop to just a single insurer and the remaining 57 percent in 32 counties would still have two.


• In Arkansas, there would be a drop from four insurers to three insurers in every county if a new insurer did not replace the company.


• In Georgia, nearly 50,000 marketplace enrollees, or 8 percent of the total, would be left with a choice of two insurers. Another 20,000 enrollees, or 3 percent, would have only one insurer if no new entrants replaced UnitedHealthcare.

Nationally, UnitedHealthcare's participation on the exchanges had a relatively small effect on average premiums, based on Kaiser's analysis of 2016 insurer premiums.

The company was less likely to offer one of the lowest-cost silver plans, where most enrollees sign up. When it did offer a low-cost option, its pricing was often close to its competitors. As a result, the weighted average premium for a benchmark silver-level plan would have been about 1 percent higher had United not participated in 2016. Federal subsidies in the marketplaces are based on the second-lowest silver premium.

Benjamin Wakana, a spokesman for the Centers for Medicare & Medicaid Services, said the government expects insurers to make adjustments in entering and exiting states.

“The marketplace should be judged by the choices it offers consumers, not the decisions of any one issuer. That data shows that the future of the marketplace remains strong.”

UnitedHealth Group will release its first-quarter earnings Tuesday morning and CEO Stephen Hemsley is scheduled to discuss the results with analysts and investors at 8:45 a.m. ET.

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By Not Discussing Cost Issues, Doctors, Patients May Miss Chances To Lower Out-Of-Pocket Expenses

Talking about money is never easy. But when doctors are reluctant to talk about medical costs, a patient's health can be undermined. A study published in Monday's Health Affairs explores the dynamics that can trigger that scenario.

Patients are increasingly responsible for shouldering more of their own health costs. In theory, that's supposed to make them sharper consumers and empower them to trim unnecessary health spending. But previous work has shown it often leads them to skimp on both valuable preventive care and superfluous services alike.

Doctors could play a key role in instead helping patients find appropriate and affordable care by talking to them about their out-of-pocket costs. But, a range of physician behaviors currently stands in the way, according to the study.

This KHN story also ran on NPR. It can be republished for free (details).

“We need to prepare physicians to hold more productive conversations about health care expenses with their patients,” said Peter Ubel, the study's main author and a physician and behavioral scientist at Duke University.

The researchers analyzed transcripts of almost 2,000 physician-patient conversations regarding breast cancer, rheumatoid arthritis and depression treatment. They identified instances in which patients suggested that the cost of care might be difficult to afford and assessed how doctors responded.

Overall, researchers noted two ways in which doctors dismissed patients' financial woes. They either did not acknowledge the concerns patients expressed or only half-addressed them. For instance, if a patient commented on how expensive a drug was, the doctor might ignore the comment entirely or might suggest a temporary solution - like a free trial - without exploring long-term strategies to address the issue.

And, without such a long-term plan, patients may eventually stop taking the medication, or take it irregularly. That can harm their health, and even send them to the hospital.

The study doesn't measure how often doctors dismissed patient concerns - because, the researchers wrote, they didn't know how often those dismissals led to people actually foregoing needed treatments.

Still, Ubel said, it is clear doctors are not talking to patients about these expenses. He pointed to a separate analysis of those same conversations, which found that doctors discussed medical costs with patients about 30 percent of the time; and, in only about 40 percent of those discussions did doctors and patients brainstorm about ways to make medication more affordable.

“A majority of [physicians] - they don't talk about costs,” he said. “When they do talk about it, they don't talk about it productively.”

Why do physicians hesitate? For one thing, they aren't used to discussing cost barriers, and many think it's inappropriate to bring up money at all, Ubel said. When he lectures on the subject, he always encounters people who worry discussing finances will “contaminate the doctor-patient relationship.”

Plus, doctors haven't been taught to listen for patients' pocketbook concerns. If a patient comes in with heartburn and indigestion, a good internist will immediately start probing for signs of coronary disease, Ubel said. By contrast, physicians aren't primed to pick up on cues that patients may face financial strains.

“If we had that on our list to be aware of, we'd pick up the cues. If we don't, it'll be right in front of our eyes, and we'll miss it,” he added.

The idea of patients acting as consumers - weighing cost and shopping for the best health care deal - is still relatively new, the study notes. As it becomes more commonplace, patients may push doctors for more help in making cost-based decisions, Ubel said.

That said, navigating a patient's financial circumstances and medical needs in the course of a 15-minute visit is tricky, said Jonathan Kolstad, an assistant professor of economic analysis and policy at the University of California, Berkeley. Kolstad wasn't involved in the Health Affairs study but has researched how medical costs affect people's decision-making.

“It's not as though, 'Oh, it's just consumers can't figure it out.' Doctors don't know,” he said. When it comes to figuring out what a drug will cost, “doctors are in the same boat.”

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