Employers Adopt Priceless Strategy for Cutting Costs

In Priceless, I argued that a typical employer could cut the cost of elective procedures in half by choosing narrow networks, within which cost is low and quality is high, and making employees pay the additional charges if they go out of network.

WellPoint was the first insurer to adopt this strategy:

Last year, WellPoint worked with the Kroger Company, a large grocery chain, to start a…program in which payments for certain M.R.I.’s and CT scans were capped at around $800, and employees were given a list of places that would charge that amount or less.

This year, the insurer is working with the California Public Employees Retirement System (Calpers) to expand the idea:

Under the program, some employees are being given the choice of going to one of 54 hospitals, including well-known medical centers like Cedars-Sinai and Stanford University Hospital, that have agreed to charge no more than $30,000 for a hip or knee replacement. Prices for the operation normally vary widely in the state, with hospitals billing from $15,000 to $110,000 for the same operation, a spread that is typical for much of the nation.

Reed Abelson in The New York Times.

Comments (10)

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  1. Jim says:

    Its about time they start listening!

  2. Tony says:

    This gives me hope. Maybe now, we’ll start to see more common sense solutions!

  3. Taylor says:

    This is encouraging. Perhaps some of your other recommendations will begin to be adopted more frequently since the alternative we have is clearly going to hurt many businesses and increase costs for many patients.

  4. Tommy says:

    I also think this is encouraging. Hopefully more will follow suit and this will at least give patients more options and save them money.

    • JD says:

      Right. That is really the way to figure out what is best. Give people options and let them choose.

  5. JD says:

    Hopefully the expansion of this kinds of solutions isn’t curtailed by companies responding to Obamacare. I don’t think it will be… does anybody know?

    • Dewaine says:

      I don’t think so because this is only talking about elective procedures.

    • Dewaine says:

      Although, many companies are having to adjust the way that they provide insurance which could cause a domino effect that would make it infeasible to provide certain kinds of elective care. So, no I don’t think so directly, but maybe indirectly.