Dive Brief:

• In the ongoing quest to cut rising healthcare costs, some large U.S. employers are offering employees certain major surgical procedures delivered in high-quality hospitals free of charge, according to Time.
• They are doing it by using an emerging strategy called “bundled payments,” which Time reports that Medicare is now adopting to handle hip and knee replacement surgery in 67 metropolitan areas, including New York, Miami and Denver.
• With bundled payments, employers agree to pay a flat rate for a particular procedure from any of a number of hospitals they’ve selected for quality. The medical facility delivers all the treatment within a certain time frame — surgery, physical therapy and any potential complications — for a single price. Sometimes, the article notes, employees even get a free plane ride as part of the deal.

Dive Insight:

According to Time, Bob Ihrie, senior vice president for compensation and benefits at Lowe’s, was the first to use the idea, launching the plan in 2010. It is an option for any employee in the Lowe’s health care plans, though they still have an opt out choice (and can use the hospital of their choice).

But more than 700 Lowe’s employees have taken the company up on its offer, Ihrie told Time, calling it a "great deal" for patients and for Lowe's. “We were able to get a bundled price, which actually enables us to save money on every single operation,” Ihrie told Time.

Time reports that the Pacific Business Group on Health negotiates that price for Lowe’s, Wal-Mart and a number of other large employers. Associate Director Olivia Ross told Time that her team can negotiate rates that are 20-30% below what the companies had formerly paid for the same procedures. When you consider the cost of surgery today, that can add up quickly.

Lowe's Ihrie said apart from cost savings, Lowe’s employees are also taking a more active role in healthcare decisions—a goal most employers are chasing today. “What treatment you receive is not always very black and white,” Ihrie told Time. “The mere fact that people now think about what they’re doing helps us control costs across the board.”