Anthem Blue Cross Pilot Reduces Surgery Costs by 19%

Margaret Dick Tocknell, for HealthLeaders Media , August 9, 2013

A reference pricing strategy, in which an employer agrees to pay a certain amount for a procedure and anything above that amount is the employee's responsibility, cut the price of hip and knee replacement surgeries by 19% in a one-year trial.

A pilot program that teamed Anthem Blue Cross of California with employees at the California Public Employees Retirement System (CalPERS) trimmed the price of members' hip and knee replacement surgeries by 19% in one year.

Hospital costs have come under intense scrutiny as healthcare reform has focused on cost transparency that has revealed a wide variation across hospitals for the same procedures. In 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, a 2009 Anthem study showed.

But getting patients to pay attention to cost differences as they purchase healthcare services has been a seemingly insurmountable challenge.

"[Consumers] don't care what [healthcare] costs their insurers or employers, but when it is their own money they will move," states James C. Robinson, a health economist at the University of California-Berkley, who analyzed the pilot results and co-authored a report on the pilot that appears in the August issue of Health Affairs.


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