In this case study, we will tell you how Aetna, specifically the Aetna-GA market worked successfully with IPG, in conjunction with Kearny Street Consulting, Pinnacle Orthopaedics and several of their leading ASC partners to implement a targeted plan to shift outpatient procedures to an optimal cost and quality setting.
As one of the nation’s leading diversified health care benefits companies, Aetna serves an estimated 46.5 million people with information and resources to help them make better informed decisions about their health care. Headquartered in Atlanta, Georgia, the Aetna-GA constituent serves over 550,000 members.
At the time the IPG program was rolled out within Aetna, there was limited transparency and predictability around surgical and implants cost in the Georgia market. Aetna was exposed to increased procedure inflation due to the demographic shift and baby boomer impact, and faced the need to manage and reduce risk exposure under the Accountable Care Act (ACA). They were also exposed to annual medical cost increases due to the dramatic differences in cost of care between settings and providers.
“The IPG-Pinnacle model is a great success story that we are replicating across Georgia and other Aetna markets to promote the appropriate coverage and reimbursement structure that supports eligible procedures, like total joints and spine cases to be delivered in the optimal cost and quality setting. Working with IPG allows us to identify those eligible facilities, surgeons and procedures that can be done in a more affordable setting thereby helping us manage our surgical costs to the benefit of our members.”
Director of Network Management
Health plans are faced with finding new ways to contain medical expenses on behalf of their membership. One key area driving those expenses is surgical procedures, more specifically those surgeries requiring an implantable device, such as knee replacement and rotator cuff surgeries just to name a few.
Not only has the utilization of those procedures gone up, but so have the relative costs. US demand for implantable medical devices is forecast to increase 7.7% annually to $52 billion in 2015, with orthopedic implants forecast to rise 8.8% annually. The spinal surgery device market is expected to grow at a Compound Annual Growth Rate (CAGR) of 4% from $6.5 billion in 2011 to $8.7 billion in 20181.
In addition, a mere 15% of implant procedures are performed in an ambulatory surgery center (ASC) outpatient setting. On average, there are over 2,000 unique Site of Care eligible procedures and almost 500 implant-related Site of Care procedures capable of being performed in an ASC environment2. Recently, more complex procedures such as total joint replacements and spine procedures are safely and more affordably being performed in ASCs. However, due to fee differentials, many of these procedures are redirected away from an ASC location to hospitals or HOPD’s. The higher cost associated with the procedure being redirected away from ASCs are passed onto the health plan, employers and members.
Once Aetna incorporated IPG as a strategic partner in helping them meet their Surgical Cost of Care goals, Aetna-GA and IPG successfully teamed with partnering facilities and physicians to identify and redirect eligible procedures to lower cost settings while maintaining comparable patient outcomes.
Opportunity Identification & Program Prioritization
Utilizing the deep expertise and proprietary data analytics from IPG, Aetna-GA was able to get more clarity around the pricing and utilization of their implant related procedures; identify eligible procedures that could be shifted from inpatient to ASC or HOPD to ASC; and to prioritize their efforts toward the most impactful cost of care savings opportunities. This was accomplished while maintaining the highest quality standards and delivering benefit to their facility partners and members.
Strategic Approach to Reimbursement & Program Impact
The primary obstacles that most ASCs like Pinnacle Orthopaedics face are getting the right reimbursement for the procedures to make them viable revenue source and having the financial infrastructure to be able to perform those procedures profitably. Pinnacle was initially out-of-network, and the majority of their contracts did not have a provision for implants. These factors limited the number of cases they could take to the ASC. In collaboration with IPG and Kearny Street Consulting, Aetna and Pinnacle were able to construct a program that was mutually beneficial to both of them.
“We knew that we could offer a big savings to Aetna from what they were paying, and yet, still have a reasonable rate for Pinnacle to cover their costs within their surgery center. We also believe the quality is better within the surgery center because of the more focused approach versus the mass approach at the hospital outpatient surgery center.”
Dave Smith (President)
Kearny Street Consulting
Over the next 6-12 months, IPG will be actively tracking and delivering the projected results of the Georgia program to Aetna. Simultaneously, they will identify and prioritize new opportunities to roll out what was successfully done with Pinnacle Orthopaedics at other facilities within Aetna-GA and across the country. One crucial aspect of this will be to evaluate eligible procedures and providers, and to develop a physician and facility recruitment program.
“Currently partnering with Aetna in some capacity in 19 markets, part of our go-forward will be to expand implementation and impact of the core surgical cost management program across the country and then identify additional opportunities for them to address not only their implant and surgical costs, but their total surgical costs. This will be integral in helping them achieve high quality and cost effective care delivery, while driving down costs for their members.”
President and CEO
Since the initial implementation of the IPG program, Aetna has started to see significant surgical cost savings through the targeted shift of procedures to lower cost, high quality settings.
For example, at a fraction of the cost to Aetna, Pinnacle Orthopaedics is successfully performing uni-knee procedures and will start to do total joint replacement procedures under the IPG program by the end of December 2015. They have begun negotiations through IPG and Kearney Street Consulting with Aetna and others to begin doing spine procedures in early 2016. Pinnacle’s goal is to gain experience and demonstrate better quality outcomes and patient satisfaction at lower costs to Aetna and their patients.
Facilities live with the IPG program
in the Georgia market
Significant Savings through movement
of eligible care to optimal cost
and quality settings
Improved network strategy and
market share growth
$2.7M in estimated Site of Care
shift savings opportunity
A key barriers which IPG resolves for Aetna’s facility partners is the considerable cash outlay by the facility for implants. IPG handles the financial responsibility for replenishment of the implants, and the facility does not have to outlay the cash for their implant-related procedures. This has enabled facilities like Pinnacle Orthopaedics to bring in more, higher dollar procedures, resulting in financial profitability for the centers and lower costs to their patients and Aetna.
“Not having to outlay the cash for these procedures with the IPG program was a huge consideration for us in being able to perform these higher acuity, higher dollar cases.”
Chief Administrative Officer