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BCBS of MI Launches Bundled Payments for Hip, Knee Replacements

BlueCross BlueShield of Michigan launched a program that uses bundled payments to reimburse providers for hip and knee replacements.

BCBS of Michigan

Source: Thinkstock

By Thomas Beaton

- BlueCross BlueShield of Michigan has launched a pilot program that will use bundled payments for knee and hip replacements in order to manage costs and improve member outcomes.

BCBS data estimates that knee and hip replacements can cost between $28,000-$55,000 for a complete episode of care. BCBS of Michigan’s bundled payment program aims to save 10 percent of the average cost of total hip or knee replacements care episodes. The bundled payments are designed to cover both the surgery and 90-days of post-surgery care.

The bundled payment program covers surgeries in nine Michigan counties and is likely to provide quality care for lower costs across multiple geographic locations, said Steve Anderson the Vice President of Contracting and Network Administration at BCBS of Michigan.

“The variation in cost across hospitals and geographies is significant. We are working with surgeons and healthcare systems to manage the cost and outcome variation of these procedures, and to consider appropriate sites for care,” Anderson said. “For example, many patients may be more comfortable and rehabilitate better at home, versus a rehab facility.”

Employer-sponsored Blue Cross PPO plans and Blue Care Network HMO plans will have access to the pilot program, which includes seven participating health systems. Sixty-four surgeons across the health systems will receive bundled payments as reimbursements for hip and knee replacements.  

“The participating providers in this program account for about a third of the hip and knee procedures performed, so it’s a good-sized test program. We expect to have representative data to review after one year,” said Anderson.


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