Traditional fee-for-service costs
Under a fee-for-service payment system, assuming no complications, Karen’s knee replacement surgery would likely cost $24,000. Of course, there is a great deal of variability based on regional payment standards, what services are performed, and whether there are complications during or after the procedure.
PROMETHEUS Payment budget
Under the PROMETHEUS model, the treatment budget is calculated as a patient-specific “Evidence-informed Case Rate” (ECR®). An ECR includes all covered services related to the care of a single illness or condition, bundled across all providers. The ECR is also risk-adjusted to account for the severity and complexity of the patient’s condition, and includes an allowance for potentially avoidable complications (PACs). If complications occur, this portion of the budget offsets the costs of corrective treatment. But if providers can reduce or eliminate PACs, they keep the allowance as a bonus. A detailed examination of Karen’s personal history finds that, in addition to the need for a knee replacement, she suffers from rheumatoid arthritis, obesity and sleep apnea. She is also taking medicines for her diabetes and arthritis. Considering the severity of Karen’s knee problem, her overall health and the medicines she is taking, the PROMETHEUS Payment model calculates a budget of $24,500 for routine knee replacement. This includes all the costs of the surgery, follow-up physical therapy and rehab, and any other routine care needed. The model also calculates a PAC allowance of $3,500, resulting in a total care budget of $28,000.