How much would you pay for a loaf of bread at a local bakery? What about from a large grocery store a few miles away?
What if, instead, you were buying a new hip? How much would you pay? Or how much should your insurance company pay?
If you were buying a loaf of bread, or most any other consumer product, you would probably expect a price to be within a pretty small range, regardless of where you made the purchase. Otherwise, you might walk away, or put off buying bread until your next shopping trip.
But when it comes to health care, you might be surprised to learn that not only is it difficult to find out how much a procedure will cost in advance, there is also a huge variance in price.
Few decisions in life are more important than those having to do with health care, and yet they are often the most complicated – especially when facing a significant treatment or procedure. So Colorado PERA set out to explore what can be done to provide reliable health care at a fair and predictable cost without sacrificing quality. In conjunction with the South Metro Denver Chamber, PERA recently hosted an Executive Roundtable discussion on Health Care: Lowering Costs, Improving Results with members of the business community, non-profit sector, and public employers.
Colorado PERA Executive Director Greg Smith reported that the rising cost of health care is one of the biggest issues facing individuals and employers today. According to annual averages compiled each year by the Milliman Medical Index, the total employee cost (premiums and copays) increased by 43 percent between 2010 and 2015, and employer costs increased 32 percent during this time frame, which translates to employees shouldering an increasing percentage of health care costs.
Annual Medical Cost for Family of Four
Source: Milliman Medical Index (MMI)
Smith discussed PERA’s support of the “Triple Aim:” improving the patient experience of care (including quality and satisfaction), improving the health of populations, and reducing the per capita cost of health care. He also reviewed PERA’s effort to address these challenges by creating a new bundled payment option for hip and knee replacements called PERACare Select.
With more than seven million Americans living with hip or knee replacements – and that number expected to grow – focusing on this procedure provides a good case study for lowering costs and improving results. In Colorado, the cost of a hip or knee replacement surgery can vary by up to $80,000, and there is often very little correlation between cost and quality – a higher cost doesn’t always mean a better outcome.
Key attributes of the PERACare Select program include:
- A predictable cost: PERACare enrollees provided with pricing information up-front to make informed decisions. For many members, there will be no out-of-pocket cost at all.
- Access to high quality health care: procedures from qualified and experienced physicians at high quality facilities that together have a proven track record of healthy patient outcomes.
(Read more about PERACare Select from PERA on the Issues.)
By creating this new benefit for PERACare enrollees, PERA hopes to help crack the code on cost confusion and help members live healthier, more mobile lives, according to Smith.
Executive Roundtable at Colorado PERA
Colorado PERA is also an active participant in several health care organizations focused on improving outcomes while controlling costs, including two that participated in the Roundtable discussion: the Colorado Business Group on Health (CBGH) and Center for Improving Value in Health Care (CIVHC).
CBGH is an innovative non-profit organization dedicated to changing the way that employers buy health care. CBGH provides practical tools, pioneering programs, and informative, insightful reports designed to support Colorado employers with market-based, employer-driven approaches to lowering costs and improving quality.
CIVHC is a non-profit, non-partisan organization that helps Colorado drive, deliver, and buy value in health care by leveraging health-care-cost data and analytics. Its mission is to cultivate and advance strategic initiatives that improve the health of Coloradans, contain costs, and ensure maximum value for health care received.
Read more about CBGH and CIVHC.
By using data and collaborating with providers and consumers, Colorado PERA will continue to lead and participate in the discussion around delivering maximum value to its members in the evolving health care arena.
