A pilot program for the California Public Employees’ Retirement System lowered the price of members’ hip and knee replacement surgeries by 19 percent in one year while also demonstrating similar to better outcomes at lower-cost hospitals. The analysis, conducted by HealthCore, WellPoint’s outcomes research company, will be presented at the AcademyHealth Annual Research Meeting today in Baltimore. The study is based on findings for the referenced-based purchasing design program for CalPERS members developed by CalPERS and WellPoint’s affiliated health plan in California. In May, the Centers for Medicaid and Medicare Services released a database of 2011 hospital charges for Medicare services showing a wide disparity in charges for some services by hospitals in the same areas. California hospital charges for total knee replacement and total hip replacement surgeries ranged from $15,000 to $110,000 without evidence of difference in outcome or quality, according to WellPoint’s California affiliated health plan analysis conducted in 2009. “We are pleased to see this program resulted in both substantial savings for CalPERS, and on several measures, with higher quality outcomes for its members,” said Dr. Sam Nussbaum, WellPoint chief medical officer. “Our programs demonstrate the power of innovative product design, aligned financial incentives and better informed decision-making.” As part of the CalPERS intervention program, members of the California Public Employees’ Retirement System were given a list of designated facilities that charged less than $30,000 for in-patient costs associated with each knee and hip replacement surgery. To qualify for the list, hospitals had to have already contracted with the network of WellPoint’s California affiliated health plan, which manages a robust credentialing process. Participation includes requiring all participating hospitals maintain accreditation by at least one of several nationally renowned accreditation organizations. In addition, hospitals had to perform enough procedures to ensure results could represent credible measurement that positively demonstrated the hospital’s skill in the surgeries.