Centers of excellence for employers

How does a centers of excellence program work?

A COE program requires agreement on which providers participate, what the plan pays and how members receive care. Four components deserve attention.

1. Provider selection. The employer or its partner reviews outcomes for the specific procedure and identifies centers willing to accept a bundled payment.
2. Payment terms. The bundle defines which services are included, such as the surgeon, facility, anesthesia and implants. It also specifies the period and scope of procedure-related follow-up. Other care received during that period may be billed separately.
3. Member incentives. Plans commonly reduce cost sharing and cover travel and lodging for members using the center. Coverage elsewhere depends on the benefit design; some programs retain the usual cost sharing, while others restrict coverage for the procedure.
4. Navigation. Members need help with eligibility, records, clinical evaluation, scheduling, travel and the transition to local follow-up. Explaining the benefit is one task. Arranging care is another, and the program needs someone responsible for both.

What does the evidence say about centers of excellence?

Employer accounts provide useful evidence about COE programs, although results from a few large employers have limits when applied to other plans.

• Clinical evaluation can change whether surgery proceeds. In its March 2019 account of its COE program, Walmart reported that more than half of 2,300 associates referred for spine surgery received other treatments because surgery was not needed. This is an employer-reported result for that program. It should not be used as an expected surgery-avoidance rate for a new program.
• Walmart also describes bundled payments, shorter hospital stays and lower readmission rates among its COE patients. Those results help explain the rationale for the program, but the account does not establish how all COE programs perform.
• Participation affects both the clinical reach and financial results of a program. Travel, family responsibilities and time away from work can prevent eligible members from using a center. Savings estimates should reflect those constraints.

An employer should therefore assess a proposed center using its own claims, expected referral volume and likely participation. Another employer’s experience can inform that assessment without becoming the forecast.

What should a committee ask before signing a COE agreement?

Ask the carrier, TPA or specialist vendor to explain the terms below before comparing the proposal with other options.

• Bundle scope. Confirm the services, providers and follow-up period included in the payment. Ask specifically about implants, anesthesia, imaging and readmissions.
• Complications. Establish who pays for complications and readmissions, and when the bundle’s warranty ends.
• Participation. Request the assumed number of eligible members who will use the center. Recalculate expected savings at half that participation rate.
• Current episode costs. Compare the proposal with what the plan pays for the same services at the facilities members use today. Match the bundle’s scope before calculating a difference.
• Member access. Include travel arrangements, time away from work and a companion’s expenses. Confirm what happens when a member cannot travel.
• Communication at referral. Explain the program when a member is considering surgery, and identify who will help arrange the evaluation. An enrollment brochure alone provides limited support at that point.

These answers allow the committee to compare expected savings, access and implementation requirements across a COE program and other purchasing options.

How can an employer decide whether a COE makes sense?

Start with the care members currently receive and compare it with the proposed program. The employer is evaluating the offered price and terms. The following factors determine whether the offer is useful for the plan.

• Eligible episode volume. Use the plan’s own anonymized claims to identify relevant procedures and expected referrals.
• Clinical suitability and outcomes. Review the center’s experience with the condition, selection criteria, outcome definitions, and alternatives when surgery is not recommended.
• Comparable episode costs. Compare current spending with the quoted bundle for the same services, including travel, lodging, incentives, program fees, exclusions and procedure-related follow-up.
• Realistic participation. Account for geography, time away from work, family responsibilities, member choice and the support needed to use the program. Test lower uptake as well as the proposal’s assumption.
• Access and continuity. Confirm appointment availability, accessibility, local follow-up and responsibility for complications or readmissions.

A site-of-service strategy or a direct contract may offer comparable value with fewer travel requirements. A COE may be more attractive where local episode costs are high and members can use the selected center. Compare those options using the same services, participation assumptions and additional costs.

How Simple Healthcare helps

Roadmap compares a COE proposal with other cost strategies using the plan’s claims and published negotiated rates. Committees can adjust the participation assumption to see how projected savings change. We do not operate COE programs, recommend vendors or receive a share of identified savings. Employers and their advisor can review the published methodology and use the analysis to assess the offer.