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Midwest Orthopaedics at Rush (MOR), in Chicago, Illinois, is now offering patients package pricing—a flat fee payment option—for treating some of the most common orthopaedic conditions. MOR has listed the price structure on their website.
At present, there are five surgical procedures that are included in the MOR Package Pricing:
- Anterior Cruciate Ligament (ACL) Repair, $10,800
- Hip Arthroscopy, $13,250
- Knee Arthroscopy, $5,000
- Rotator Cuff Repair (Arthroscopic), $11,300
- Shoulder Arthroscopy, $10,000
Services provided in this program are not billed to any third parties or insurance plans. Some expenses not included in the MOR Package Pricing include preoperative diagnostic tests, travel expenses, durable medical equipment and physical therapy.
“We wanted to create something that was geared towards consumers,” says Dennis Viellieu, CEO, Midwest Orthopaedics at Rush. “This has not really been done. Some states have required that some of this information be put out there, but it doesn’t necessarily help consumers because they don’t understand CPT codes, for example. You can’t expect them to understand that.”
The program is geared toward the uninsured and individuals with high deductibles. Viellieu says that as the Affordable Care Act has marched forward, out-of-pocket expenses for plans offered on the exchanges have increased dramatically. For some, it now makes more sense to pay the penalty rather than enroll in an exchange-based plan. Largely, that means MOR’s packaged, transparent pricing is targeting young people and those who may not access the healthcare system frequently.
Package pricing gives those patients an option to go out-of-pocket, without accessing a third-party, and receive one price for the whole surgical episode. The package pricing is also attracting interest from those outside the country. Viellieu specifically mentioned strong interest from Canadians, because they understood the quality of MOR’s physicians and could understand the pricing structure easily.
MOR determined the pricing structure by visiting facilities where these procedures are performed, and asking them to provide what they would consider to be a reasonable reimbursement for each procedure. Then they put the numbers together, created an average and set a price for the whole service. Villieu says that it was a straightforward process that largely involved talking to other providers and partners.
“We’re going to expect some variation around the average. Some of that you’ll know going in, some of it you won’t,” he says. “We’ll live with the variation that we don’t know and if we do know, and it meets exclusion criteria, then we’ll have a conversation with the patient.”
While setting those prices, MOR’s team didn’t focus on implant pricing or cost, Villieu says. They figured out the average cost of an implant or medical device for a specific surgery and then set the average. However, now that the program is public, there have been unintended consequences on the implant side.
“Having the surgeon be more aware of implant cost as a variable element within a price package, over the long term, will have a beneficial impact. It makes sure that we’re being as efficient as possible,” he says.
He adds that there are cases in which a surgeon might feel more comfortable taking two implants into the OR, but only one implant may be needed. In those cases, it may be more efficient to take only one implant into the OR to avoid the waste.
“There will be more thought about efficiency as a result of this package. That’s not something that we counted on when we went into this, but it’s a natural extension of seeing how these cases perform versus how we thought they would perform,” Villieu says.
After being public for only a week, MOR already plans to add more package options to its offerings. The bundles will target other common orthopaedic procedures performed by the physicians at MOR.
In 2009, the Surgery Center of Oklahoma (SCO) transitioned to a similar model. The hospital provided a complete list of procedures with an accompanying price tag and posted it on their website.
In an interview with ORTHOWORLD, SCO co-Founder and Medical Director Kevin Smith, M.D. said that self-funded companies with 1,500 employees experience health plan savings of about $1 million per year compared to their Preferred Provider Organization allowable amounts. He added that SCO prices are typically 1/6th or 1/10th that of “big box” hospitals for the same procedures.
By 2015, SCO’s volume had increased 30 percent and its profits had doubled, according to Smith.
