CalPERS Members Had Similar to Better Outcomes at Facilities Charging Less for Hip and Knee Replacements

CalPERS Members Had Similar to Better Outcomes at Facilities Charging Less for Hip and Knee Replacements

Media contacts:WellPointKristin Binns, 917-697-7802orLori McLaughlin, 317.407.7403

A pilot program for the California Public Employees’ Retirement System lowered the price of members’ hip and knee replacement surgeries by 19 percent in one year while also demonstrating similar to better outcomes at lower-cost hospitals.

The analysis, conducted by HealthCore, WellPoint’s outcomes research company, will be presented at the AcademyHealth Annual Research Meeting today in Baltimore. The study is based on findings for the referenced-based purchasing design program for CalPERS members developed by CalPERS and WellPoint’s affiliated health plan in California.

In May, the Centers for Medicaid and Medicare Services released a database of 2011 hospital charges for Medicare services showing a wide disparity in charges for some services by hospitals in the same areas.

California hospital charges for total knee replacement and total hip replacement surgeries ranged from $15,000 to $110,000 without evidence of difference in outcome or quality, according to WellPoint’s California affiliated health plan analysis conducted in 2009.

“We are pleased to see this program resulted in both substantial savings for CalPERS, and on several measures, with higher quality outcomes for its members,” said Dr. Sam Nussbaum, WellPoint chief medical officer. “Our programs demonstrate the power of innovative product design, aligned financial incentives and better informed decision-making.”

As part of the CalPERS intervention program, members of the California Public Employees’ Retirement System were given a list of designated facilities that charged less than $30,000 for in-patient costs associated with each knee and hip replacement surgery.

To qualify for the list, hospitals had to have already contracted with the network of WellPoint’s California affiliated health plan, which manages a robust credentialing process. Participation includes requiring all participating hospitals maintain accreditation by at least one of several nationally renowned accreditation organizations. In addition, hospitals had to perform enough procedures to ensure results could represent credible measurement that positively demonstrated the hospital’s skill in the surgeries.

Members were able to either choose from 46 facilities on the list that would result in them paying little to no out-of-pocket costs beyond deductible or co-insurance or pay the difference if they used another facility that charged more than $30,000.

The result was that CalPERS health plan costs dropped significantly – by 19 percent from $35,408 to $28,695, per surgical-related admission.

“This program was an effective tool in managing costs as we all know that current spending levels are not sustainable if we’re going to provide benefits that are affordable now and into the future,” said Ann Boynton, deputy executive officer for Benefit Programs Policy and Planning for the California Public Employees’ Retirement System, which has 356,543 PPO members in California served by WellPoint’s affiliated health plan.

“We believe that innovative benefit design is an important component of controlling health care costs and increasing access to quality care,” said Ken Goulet, WellPoint executive vice president for Commercial and Specialty Business. “As we continue developing benefits that have a positive impact on cost and quality for employers and consumers, HealthCore’s research findings offer validation that we are not only making progress, we are actually moving the needle.”

The analysis also found:

The study compared utilization of CalPERS PPO members of WellPoint’s affiliated health plan in California. The analysis used administrative medical claims for patients who had elective, non-emergency total knee replacement or total hip replacement surgeries from Jan. 1, 2010 and Dec. 31, 2011.

At WellPoint (NYSE: WLP), we believe there is an important connection between our members’ health and well-being—and the value we bring our customers and shareholders. So each day we work to improve the health of our members and their communities. And, we can make a real difference since we have nearly 36 million people in our affiliated health plans, and nearly 68 million people served through our subsidiaries. As an independent licensee of the Blue Cross and Blue Shield Association, WellPoint serves members as the Blue Cross licensee for California; and as the Blue Cross and Blue Shield licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (as the Blue Cross Blue Shield licensee in 10 New York City metropolitan and surrounding counties and as the Blue Cross or Blue Cross Blue Shield licensee in selected upstate counties only), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.), and Wisconsin. In a majority of these service areas, WellPoint’s plans do business as Anthem Blue Cross, Anthem Blue Cross and Blue Shield, Blue Cross and Blue Shield of Georgia and Empire Blue Cross Blue Shield, or Empire Blue Cross (in the New York service areas). We also serve customers in several additional states through our Amerigroup subsidiary and in certain markets through our CareMore subsidiary. Our 1-800 CONTACTS, Inc. subsidiary offers customers online sales of contact lenses, eyeglasses and other ocular products. Additional information about WellPoint is available at .

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