Understanding Employer Case Rate Program Design & Use

A guide for Surgeons and Facilities

Employers have demonstrated increased interest from previous years on exploring and testing surgical case rate programs for employees’ access to various provider facilities without additional out-of-pocket costs.

For example, Walmart pays for the entire cost of employees to travel and receive spine care at select narrow network facilities; employees can seek care outside of the narrow network, but they are responsible for 100% of the billed charges.  Health Design Plus was the company that worked with Walmart to broker the arrangement.  It seems to have a low satisfaction score as a program manager judging from current reviews posted (Google: 1.4/5);  (Glassdoor 1.9); (Yelp 1/5);  They offer employer-provider contracting, customer service, care navigation, travel coordination, bundled claims adjudication and data reporting on savings.  Their website advertises an average $12,000 savings per joint replacement case and a 15% surgery avoidance rate. For Spine surgery, they average savings of $21,000 per spine visit and spine surgery case with a 54% surgery avoidance rate. They don’t seem to offer much more in terms of what’s posted as available surgical procedures on their website.  We couldn’t find more info from them. 

Our desk research discovered that between 2015-2018, Walmart paid for roughly 2300 employees, representing about half of those who underwent spine surgery or evaluation without surgery from 2015 to 2018 through its medical travel program. During that time, 46 percent of patients underwent surgery and 54 percent received other forms of conservative non-surgical treatment. In 2019, employees that seek care outside of the mandatory narrow network spine, hip and knee programs are responsible for the whole bill.

  • Walmart believes in a Center of Excellence model because they believe the quality is better.  According to published reports throughout the internet about the Walmart Health Design Plus program:
    The employees who underwent care at COE sites remained as inpatients for 2.5 days, compared to 2.9 days for the non-COE employees.
  • An impressive 0.6 percent of the COE patients were discharged to skilled nursing facilities, far lower than 4.9 percent of the non-COE patients.
  • The readmission rate per 1,000 patients in the program was three for COE patients, compared to 65 for non-COE patients.

However, if everyone in the nation were to select only COE facilities, access to care would suffer because the rate limiting factors will be 1) surgeons available, and 2) operating theaters with capacity to accommodate the demand.

Do non-COE have a chance to compete?

image of maria todd, medical tourism destination development expert
Maria Todd of AskMariaTodd™

According to direct contracting expert, Maria Todd of AskMariaTodd ™, non-COE facilities and ASCs with an established brand, favorable PR, and visibility so they can be identified can promote and defend their brand quality and safety, infection, complication and readmission rates. But they will need to invest in a specialty branding expert who can present their offer in a way that resonates with their targeted buyer(s). There are several very gifted healthcare branding experts available in the USA.  

“I believe that most health facilities and ASCs believe they can cut corners and target everyone, much like the international medical tourism providers attempt. That doesn’t work well.  In the domain of group health contracting directly between hospitals and ASC facilities and self-funded employers, the message is different. If your target is TPAs and brokers and insurance producers, the message is very different from that you will aim at employer health benefit plan administrators and their CFOs. It will also be extremely different from messages to consumers.” she added.  If your branding expert doesn’t appreciate the nuances that differentiate these three different targets, you won’t resonate with any of them and you won’t attract your targets to your brand or get them to trust you.

How big are the companies that are seeking direct-with-provider contracts?

Todd says that not all buyers of alternative fee case rate surgery and medical travel are Fortune 500 companies with thousands of employees. Many are the small business owners with 25 employees to 200 that are turning to self-funding under ERISA because there are new innovations available such as level funding programs. She explains that the smaller group employers are willing to meet pre-qualified, accredited, health facilities and board-certified surgeons on their terms to save on both claims expense and reinsurance premiums. They feel every penny that’s spent as it often represents a greater percentage of revenue allocated for benefits expense and reinsurance premium.  I’ve contracted with many with great success, even though they don’t refer more than a handful of patients to the program in a year.

Across all employer sizes, they tend to pay 100% of the agreed price and all the travel because many of the companies don’t pay high wages and without the deductible and copay waiver and travel expense support, the employees would refuse to use the program. Many employers now sweeten the pot by sharing the savings through an HSA contribution upon discharge from care at the completion of the episode of care.

Todd explains, “When an employer saves $20,000 by making a left turn off the highway instead of a right turn off the highway, asking the employee to drive 3-4 hours to the facility in exchange for full travel expense support for the patient and a companion or the patient and two parents, along with a few hundred dollars to the employees’ HSA account is a no-brainer. And the employee generally accepts the offer and usually enjoys the experience.” Even if they must travel by air, the average “all in” base fare including taxes and one checked bag in 2018 was between $360 and $550 per person. If flights are purchased with two weeks or more lead time, that rate ends up on the low side of those ranges. According to Todd who has been coordinating medical travel in the USA since 1983, the average hotel rate for most medical travel stays, according to domestic medical tourism expert, was about $159-209 per night for two people. The average meals and incidentals allowance for two people has been in the range of $90-110 per day away.

How many days away?

It depends on the patient in question and the procedure they had and other contributing factors.

  • Tonsillectomy – Adults 10-14 days off work post op, but only 2-3 days at the destination.
  • Hernia repair – Adults 10-14 days off work post op, but only 2-3 days at the destination.
  • Laparoscopic hysterectomy – Adults 10-14 days off work post op, but only 2-3 days at the destination.
  • Robotic hysterectomy – 10-14 days off work post op, but only 1-2 days at the destination.
  • Laparoscopic gallbladder surgery – 7-10 days off work post op, but only 1-2 days at destination.
  • Knee replacement – 4-6 weeks off work post op, but only 5-7 days at destination.
  • Hip replacement – 4-6 weeks off work post op, but only 5-7 days at destination.

Much of the time at the destination is dependent on the surgeon’s determination of the patient’s fitness to travel by the mode of transportation intended.  Even the model of the car figures in, depending on the distance, they surgery performed, and other physical considerations (weight, age, circulation, other concomitant  conditions of the patient and their companion traveler(s)).

People who reside in small towns and rural areas are accustomed to driving several hours for surgery or to consult a specialist.  An airport may not even be convenient. Many rural towns are served by a regional or municipal airport that only flies small aircraft that may not be appropriate for some patients. These aircraft often have stairs to climb and seating is very cramped and leg room very limited. A flight itinerary from many of these airports may involve two or three connection stops through hubs. Each stop poses additional risk of trip interruption due to delays, storms, changes in aircraft, changes in equipment, lost luggage,  luggage being left behind or mis-routed, and the risk of not arriving at the destination as scheduled. That can create a domino effect that colors or otherwise diminishes the entire patient experience. These risks are introduced in both directions. Many patients from small towns in remote places weigh all these risks and decide to drive, even if it means renting a car. 

Given a choice of locations, they may also elect to stay with close friends and family rather than a hotel. That means that a well-developed program has a checklist for patient safety and appropriateness about staying in a private home post-op. Outdoor inclines, stairs, carpets, area rugs, narrow passageways, bathrooms without grab bars, excess furniture, stairs without railings, all must be reviewed prior to discharge to ensure the optimal conditions exist when the intention is to recover at a private home or vacation home.

With proper advance planning, a local home care provider could be dispatched to make the home safety assessment of the intended domicile where the patient intends to recuperate. Hotel site inspections should be performed by the program organizer if the competency exists to make the evaluation.

Which destinations are more appealing?

According to Todd, who is considered the Roger Brooks of medical tourism destination development, she offers this explanation:

“Health tourism is a complex, hybrid product made up of destination health and hospitality services and care coordination designed to delight medical travelers and their companions.

It is an experiential product that offers an unforgettable visitor experience. It is produced by combining carefully coordinated travel to a destination, an opportunity to enjoy the hospitality of its people, its culture and its history, the rest and rejuvenation of its accommodations, the unique flavors and recipes of local and regional gastronomy, and the precision and compassion its health services providers working collaboratively. Together, they produce the elements to create a unique visitor experience and story-telling value that will be shared for generations.”

Todd advises that if you want to develop and support a surgical or dental tourism program, first examine objectively the destination. Then determine what the local tourism office will be for destination development. Enlist their support to help you build a pilot experiential “product” in the medical, dental specialties in which the stakeholders are superior in terms of quality, safety and service. If you are building your program with a primary target of self-insured employer groups and faith sharing health benefit programs, query some of your target companies first, to see if there are any biases for or against your destination. For example, a faith sharing ministry may not be interested to support travel to Atlantic City or Las Vegas, even if the price and quality and services are exactly what they are looking for.  A farm and agricultural company located in a very rural setting in the American Midwest may not relish sending employees to Chicago, New York City, LA, or San Francisco, if the health facility is deep in the heart of the urban zones of those cities.

A golf destination such as Augusta or Pinehurst or Hilton Head may be attractive to golfers, but not to people with no interest in golf.  Destination bias often puts a thumb on the scale when weighing several otherwise relatively equal medical outlets at comparable prices.  Building a “product” for which no “ideal customer persona” has been identified poses a risk that you’ll build a perfectly acceptable product with all the check marks in all the right boxes that appeals to no one in particular. 

Another reason to travel for care may be to undergo surgery at a safer location with a lower altitude. Todd explains that recent research findings shared at the American Academy of Orthopedic Surgeons indicates that knee, hip and shoulder surgery performed at altitudes above 4000′ in elevation increase risk by 40% for deadly blood clot formation within the first 30 days after surgery.

 Once your program is ready to market, you are most welcome to discuss listing your prices and marketing on Surgeryshopper.com.

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