Getting Bundled Payments to Small Employers

Bundled payments may work well for large organizations with bargaining power, but they’re not as easy to put in place for smaller companies.

Sach Jain, founder and CEO of Carrum Health, wondered why that was the case.

In searching for the answer to that question, he found the underpinning for his company.

Carrum Health aggregates data on its self-insured clients and negotiates bundled-payment contracts with centers of excellence on their behalf.

“Our ability to negotiate better prices with the provider is much better than a small employer’s,” Jain explained. Whereas large, self-insured employers— like Walmart and Boeing—have enough leverage to negotiate bundled-payment contracts with top hospitals, smaller employers typically lack the bargaining power, infrastructure and utilization to do the same.

So Jain set out to create the volume.

“I thought that perhaps there was a way to scale these programs and make them more accessible to employers of all sizes,” he said.

Thus, Carrum Health was born. The cloud-based platform aims to streamline the bundling process for employers.

“Our solution is plug and play for employers,” Jain said.

Instead of the employers fending for themselves, Carrum Health handles the negotiation of bundled payments, contracting with centers of excellence for specific services, such as musculoskeletal bundles and some bariatric and cardiac procedures. The company eventually plans to expand to new service lines, including maternity, oncology and mental health. Before anyone undergoes a procedure, the center of excellence makes sure it’s necessary, checking documented evidence that other treatments have failed, and then Carrum initiates a third-party review.

The result of this work is sizable cost savings. Midsize employers—with 5,000 to 10,000 covered people—save about $5 to $8 per employee per month.

The company helps lower the price of procedures, which are 25% to 45% less than they would be for the traditional PPO population, according to Carrum. That could spell big savings: A joint replacement bundle that would cost about $40,000 for the commercial population might cost just $22,000 for Carrum Health’s population.

Read the full article on Modern Healthcare here.