How Carrum Health Built Its Best-in-Class Value-Based COE Network

At Carrum Health, we firmly believe the best way for employers to provide their members with the highest quality specialty care, while also reducing healthcare spend, is by leveraging a value-based Centers of Excellence (COE) solution. Why do we stress value-based as such a critical component in building a COE network?

The traditional fee-for-service healthcare system is fundamentally broken, primarily due to misaligned incentives that lead to unnecessary care and surprise medical bills for both patients and employers. It’s a system in which many patients end up falling through the cracks or facing insurmountable bills that cause them to sink into debt or forgo care altogether.

Value-based care, on the other hand, prioritizes people over profit and value over volume. The goal is to reward providers for health outcomes rather than for each service performed. Our approach includes value-based payment models (e.g., bundled payments) in which costs are all-inclusive and transparent and providers are accountable for outcomes through risk-sharing mechanisms like warranties. Without these features to align incentives, other COE solutions do not address one of the most fundamental failures in the U.S. healthcare system.

Carrum’s value-based COE network

We have been building our value-based COE network for over 10 years, starting with knee replacement in 2014, then gradually expanding to include additional surgeries, cancer treatment, substance use treatment, and more.

Carrum’s COE network is curated to hand-pick physicians performing in the top 10% of their specialty in the country. Delivering true high-quality care has been our core priority since day one. We are relentless about our quality standards, which means that broad access didn’t happen overnight—it’s simply not possible to do so without sacrificing quality of care. Slowly but surely, however, we have expanded our footprint to cover 90% of Americans within 50 miles without compromising on our quality standards merely for the sake of access.

Over the past several years, care has been steadily moving beyond the hospital setting, and this trend will only accelerate in the years ahead. Fortunately, Carrum is at the forefront of this shift, with approximately 80% of our network already consisting of non-hospital locations, including outpatient and ambulatory surgery centers (ASCs). By prioritizing access to ASCs alongside inpatient and outpatient hospital settings, we ensure patients receive care in the most appropriate and cost-effective environment. For procedures that are safe and effective in an ASC setting—such as knee replacements, spinal decompressions, many single-level spinal fusions, hysterectomies, and minor MSK surgeries—patients benefit from outstanding outcomes without the higher cost profile of a hospital (those dreaded facility fees). However, the fact remains that some procedures (e.g., a multi-level anterior/posterior spinal fusion surgery) should be performed in a hospital due to their levels of complexity and acuity. This diversity of facility types is intentional and allows us to provide the best care at the right time and at the best possible cost for both employers and members. Over time, this mix of sites of service results in better health outcomes and has a meaningful impact on employers’ healthcare spend.

Our specialty care offerings have the ability to impact 40% of an employer’s healthcare spend, and our network has been independently validated to reduce unnecessary procedures by as much as 30%, lower readmissions by 80%, and save employers up to 45% per episode of care.

But building a best-in-class COE network requires much more than simply amassing providers that have passed basic credentialing checks. We take pride in the network we’ve built—and will continue to build—and will always follow our principles of integrity and transparency.

Here are two important details about our network-building philosophy:

1. A rigorous selection process

We don’t just onboard any provider who wants to be a part of our network, nor do we onboard providers who simply pass basic credentialing checks or are in the top 25% for performance.

Before a provider can officially join the Carrum circle, the physician and the facility where they’d like to treat our patients go through an intense evaluation process that includes more than 55 quality metrics, such as appropriateness, complication rates (including readmission and infection rates), adherence to clinical pathways, patient-reported outcomes, patient satisfaction scores, and more. We also conduct a thorough qualitative review—including things like on-site visits and stakeholder interviews—to get behind the numbers and better understand each COE’s strategies for engaging with patients, how they think about access, their approach to continuous quality improvement, and the support services they may offer.

It’s important to note that we take a layered approach to our quality evaluations, starting at the physician level and evaluating each physician per individual procedure and each facility they want to take our patients to. For example, a surgeon may be approved to join our network for total knee replacement but not a shoulder replacement depending on our evaluation results. Or they may be approved in an ASC and one hospital but not in the other hospital they usually take cases to.

“Carrum goes deeper than any other COE solution when it comes to vetting quality. I continue to be astonished by their relentless, meticulous, and deep methodology for assessing the quality of their Centers of Excellence,” says Dr. Steven F. Schutzer, a former physician executive at the Connecticut Joint Replacement Institute. “Many others simply check for obvious things like board certifications. Carrum is dedicated to true high-quality care, and their integrity when it comes to this matter is incredibly admirable.”

This evaluation process is not a one-and-done sort of thing. We regularly re-evaluate every provider and facility on at least a yearly basis, and we’ll also step in if we see any issues arise in between evaluation dates. Though it doesn’t happen often, thanks to our initial rigorous evaluation, we are not afraid to remove providers from our platform if the high level of quality and service we expect from them is not met.

Our members are—and always will be—our number one priority; we won’t keep a provider on the platform just to increase our numbers. Maintaining the integrity of our network sometimes means making tough calls, but it’s worth it for our members. For example, at one facility, only four of the ten surgeons made the cut to join our network. While these conversations are uncomfortable, they are necessary for us to raise the bar on quality care.

Quality has been Carrum’s north star since our founding in 2014, and that’s not ever going to change. We know lowering spend is important to our employer customers, but those cost savings are much less meaningful if their members are receiving low-quality care.

“Choosing the right provider is challenging under any circumstance, but in substance use treatment it’s absolutely critical—and often confusing for families and patients. Carrum’s rigorous evaluation process and value-based model bring a level of clarity, quality, and accountability that is desperately needed. They make it easier to trust the care path at a time when people can least afford to get it wrong, and they give employers confidence that their members are receiving high-quality care with predictable, responsible costs,” says Bob Poznanovich, Carrum’s advisor for substance use disorder treatment and former Chief Business Growth Officer at Hazelden Betty Ford Foundation.

2. Comprehensive contracts to prevent leaky billing

We have individual, multi-year agreements with each COE in our network. Our contracts are comprehensive, covering the complete set of medical services that are delivered in a single Carrum episode of care.

These are legitimate, real contracts. A provider cannot join our network, let alone treat one of our members, until a contract is finalized. These airtight agreements and upfront pricing are built to curtail claims leakage—errors or inefficiencies in healthcare claims processing that lead to unnecessary bills and costs—and eliminate surprise bills for patients.

Some of the safeguards we’ve built into our contracts are:

• COEs are prohibited from balance billing
• We have established clear, rapid procedures for resolving billing discrepancies
• Continuous audits (in addition to robust agreements) result in very minimal claims leakage

This is a critical distinction in the COE industry. Unfortunately, outside of Carrum, leaky contracts are rife. Everything may look good on paper, but things start to fall apart when in practice, leaving patients exposed to unexpected out-of-network charges and employers stuck with unpredictable costs—and the promise to produce savings for both is broken.

Carrum’s contractual model eliminates these risks by accounting for every part of the episode, including possible complications within a certain time frame, from the very beginning.

A quick dive into bundle conveners 

Contracts are, of course, complex. We can’t fully explain our contracts without talking about bundled conveners.

As you likely already know, there are countless laws and policies in the healthcare industry. Due to the Corporate Practice of Medicine (CPOM) and Stark Law restrictions, virtually all bundled payment providers use conveners, an organization or entity that brings together and coordinates multiple stakeholders (e.g., providers, payers, employers, vendors) to implement and manage value-based care models like bundled payment programs.

These conveners typically come in one of three flavors, depending who handles the technical aspect of the bundling:

• The same legal entity as one of the participants in the bundle (e.g., the hospital, the physical group, or the ASC operator)
• An affiliate, such as a management services operation (MSO) or a clinical integrated network legal entity co-owned by one or more of the bundle participants
• A professional convener who works on behalf of many providers to handle their bundle administration

Ultimately, whether the contract has a convener or not, two facts remain: Carrum individually selects each provider who enters our network—and they must pass our quality evaluation—and our comprehensive contracts prevent leaky billing. These two differentiators are key contributors to our position as the only complete value-based care COE network available to employers today.

Partnering with Carrum 

Building a center of excellence network the right way isn’t easy, but we believe it’s the only way. Through individualized contracts, careful navigation of legal structures, and an unwavering focus on quality, we’re creating a network that delivers real value—for patients, providers, and employers alike.

Learn more about how Carrum can help employers lower their healthcare spend while still providing members with high-quality specialty care here.

*Hazelden Betty Ford Foundation is part of Carrum Health’s substance use disorder treatment network.