In January 2012, CalPERS expanded its referencing pricing program to include arthroscopic procedures.
Arthroscopy is a minimally invasive procedure that can allow an orthopedic surgeon to visualize the inside of a joint and sometimes treat damage within the joint. Common sites for arthroscopic procedures include the shoulder, knee, hip, ankle, elbow, and wrist.
The orthopedic surgeon starts by making a small incision near the joint, then inserts a long, thin device with a light and camera on the end. The device transmits the image to a video monitor, allowing the surgeon to see the inside of the joint.
Arthroscopy can help diagnose or treat a variety of conditions, including cartilage tears, joint infections, torn ligaments, and loose bone fragments (Mayo Clinic, 2017).
Distribution of prices in hospital outpatient departments (HOPD) and freestanding ambulatory surgery centers (ASC) prior to to implementation of reference-based benefits for knee arthroscopy.
Prior to implementation, there was wide price variation for knee arthroscopy between hospital outpatient departments and ambulatory surgery centers.
In hospital outpatient departments (HOPD) the median price for knee arthroscopy was $5,668, with prices ranging from $1,280-$15,503 (see graph).
In ambulatory surgery centers (ASC), the median price was $3,083, with prices ranging from $604-$10,803.
The price variation for shoulder arthroscopy was similar.
CalPERS limited its payment contribution for both knee and shoulder arthroscopy to $6,000.
Implications
After implementation of reference pricing, the percentage of CalPERS members selecting ambulatory surgery centers increased from 60% to 82%.
The median price charged to CalPERS declined by 8.8% for knee arthroscopy, and by 19% for shoulder arthroscopy.
Overall, the shift toward freestanding ambulatory surgery centers reduced CalPERS spending in the first two years after reference pricing implementation by $2.3 million (13%), compared with what would have been spent on these two procedures in the absence of the new benefit design.
FULL ARTICLE: Consumer Choice Between Hospital-Based and Freestanding Facilities for Arthroscopy