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Bundled Payment Program Yields Big Savings for Commercially Insured Patients

Analysis  |  By Alexandra Wilson Pecci  
   March 02, 2021

There was an average savings of $16,144 per procedure when the surgery was performed through the Carrum Health program.

A bundled payment program for commercially insured patients saved employers and patients money and improved health outcomes, according to a new Health Affairs study.

In a first-of-its-kind study of bundled payments for commercially insured populations, researchers from RAND Corporation examined surgeries performed through the digital health company Carrum Health, which develops bundled payment arrangements with selected providers and directly contracts with them for common, high-cost surgeries. It then connects self-insured employers to these providers.

The negotiated prices cover the procedure and all related care for 30 days after. It also waives patient cost sharing if they receive care from those providers.

The RAND study, which was supported by the National Institute on Aging, analyzed medical claims data from eight Carrum Health clients with 1,000 to 100,000 employees. It evaluated two years of medical claims data prior to the implementation of Carrum Health and two years after, from 2016 and 2020. It included data for all health services, including surgeries not accessed through the Carrum Health bundled offering.

Researchers included a total of 2,372 surgeries in the study, with a focus on three surgery types: total joint replacement, spinal fusion, and bariatric weight loss surgery.

Overall, employers achieved an 11% medical cost reduction after implementing Carrum Health across all covered procedures, including those not performed through the Carrum Health benefit.

Patients saved money, too. Cost-sharing payments were waived for the 21% of patients who went through the program. Following implementation, patient payments decreased by $498, a 27.7% reduction.

Because employers bear the largest portion of costs, employers effectively saved $7 for every $1 in patient copayments they waived, the researchers said.

The study also found:

  • An average savings of $16,144 per procedure when the surgery was performed through the Carrum program.
  • Before Carrum Health, patients were responsible for out-of-pocket costs, co-pays, and deductibles ranging from $998 to $2,387 for their surgery. By using Carrum Health's bundled offering, patients paid nothing.
  • 30% of members who were initially recommended surgery were later redirected to less invasive treatment options.
  • Carrum Health's program reduces readmissions by 74% to 86% relative to the national average.

Last month, Carrum Health launched the industry's first cancer care bundle in partnership with Memorial Sloan Kettering Cancer Center.

It also has programs with Tenet Healthcare, Cleveland Clinic's Heart, Vascular & Thoracic Institute, Johns Hopkins, and many other institutions.

Alexandra Wilson Pecci is an editor for HealthLeaders.

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