How New York Employers are Cutting Healthcare Costs with Value-Based Care

Two professionals walking in New York City, representing employers exploring value-based care to reduce healthcare costs.

Marcus has been with your company for eleven years. He manages a team of fourteen, is one of your most reliable people, and has been dealing with a degenerating knee for most of the past two years. He’s put off surgery because the last time he looked into it, he couldn’t get a straight answer on what it would cost, whether his surgeon was any good compared to others, or how much time he’d be off his feet.

Eventually, the pain wins. He picks a surgeon from your in-network directory, schedules the procedure, and finds out afterward that the total bill—before his out-of-pocket share—was nearly $40,000. You pay most of it. He pays several thousand dollars he wasn’t prepared for. And nobody, at any point in the process, told him that a second opinion might have recommended physical therapy instead.

This scenario plays out across New York workforces every week. And for self-insured employers already carrying the highest single-coverage premiums in the country, it’s not a healthcare story. It’s a financial strategy problem—and a solvable one.

New York’s healthcare cost problem is in a category of its own

The national picture is already difficult. According to the 2025 Kaiser Family Foundation (KFF) employer health benefits survey, the average annual premium for employer-sponsored family coverage reached $26,993 this year—6% higher than in 2024, and 26% higher than five years ago.

New York employers face a substantially steeper climb than that national average.

According to a 2024 federal survey of employer-sponsored insurance analyzed by the Empire Center for Public Policy, New York businesses paid an average of $9,589 for single coverage—the highest in the entire country and 13% above the national average. For employee-plus-one coverage, New York ranked first nationally at $19,431. For family coverage, it ranked fifth at $27,188 per year.

And the drivers of that cost aren’t going away. The New York State Department of Financial Services approved premium increases averaging 13% for individual coverage and 8% or more for small group coverage for 2025—roughly three to four times higher than recent U.S. inflation levels, which averaged 2.9% in 2024 and 2.6% in 2025. The Empire Center’s analysis of insurer rate filings found that state-imposed insurance taxes alone—including a 9.63% surcharge on hospital services and a covered lives assessment—add an estimated $500 per year for individual coverage or $1,400 per year for family coverage to every plan in the state.

Most large employers are self-insured, which exempts their plans from state premium regulation under ERISA. But self-insured New York employers still operate in the same provider market—one where hospitals have significant pricing leverage, hospital and health system consolidation is advanced, and specialty care costs are among the highest in the country. Self-funding removes the regulatory tax, but it doesn’t remove the underlying cost structure.

For benefits leaders, that means managing the problem directly at the plan level—by controlling what you pay for specialty care and how that care is delivered.

Surgery is one of the largest and least-managed line items in your benefits plan

Across employer health plans, musculoskeletal (MSK) conditions—joint replacements, spinal surgeries, and other orthopedic procedures—consistently rank among the top two cost drivers. Analysis of UnitedHealthcare’s book of business found that MSK conditions cost employers $40.51 per member per month—and that MSK conditions affect nearly 40% of U.S. adults.

Cancer has now surpassed MSK as the single largest condition driving employer healthcare costs, according to the Business Group on Health’s 2025 Employer Health Care Strategy Survey. 80% of surveyed employers cited cancer as a key cost driver, and 86% reported that their cancer care spend increased in the past year—by a median of 11%. For large New York employers, cancer can account for up to 16% of total annual healthcare spend, with individual treatment episodes ranging from $120,000 to over $400,000 per employee.

What makes this painful is that a significant share of this spend is both variable and avoidable—not because the conditions aren’t real, but because the fee-for-service system has no built-in mechanism for directing people toward the right care, at the right quality, for a fair price.

Research published in Arthritis & Rheumatology found that roughly 34% of total knee replacements performed in the U.S. are inappropriate—meaning they’re performed on patients who don’t meet clinical criteria for the procedure. Meanwhile, the price for the same surgical procedure can vary by four or five times depending on geography, facility type, and payer relationships—with no meaningful correlation to outcomes.

New York’s hospital market, heavily consolidated and predominantly urban, sits at the higher end of that price range. Employers paying in-network rates assume they’re buying quality. Often, they’re buying access to a building.

What a centers of excellence program actually does

A Centers of Excellence (COE) program is a benefit design strategy that connects employees with high-performing providers for complex, high-cost procedures. While COE programs vary by vendor, the most effective models combine rigorous provider selection with value-based payment arrangements, care navigation, and accountability for outcomes.

Carrum Health’s COE model is built around these principles. In practice, that includes:

Value-based payment models with transparent pricing: Carrum leverages value-based payment models that align with quality and outcomes. One example is bundled payments, in which a single transparent price covers the entire episode of care, including surgeon fees, facility costs, anesthesia, pre-op testing, post-op care, and more. Employers and members know what to expect before care begins.

Clinical vetting. Providers included in the COE network are selected based on outcomes data, complication rates, readmission rates, and case volume

Surgical necessity review. Before a procedure is approved, each case goes through a clinical evaluation. For a meaningful percentage of members, that review leads to a different recommendation—conservative treatment, physical therapy, or a watchful waiting approach that achieves better long-term results without surgery.

Dedicated care navigation. A care navigator supports the employee through every step: scheduling, travel logistics, pre-authorization, and follow-up coordination. The friction that causes people to fall through the cracks is removed.

Outcome accountability. Providers carry financial accountability if clinical outcomes fall short. This is a structural alignment of incentives that the fee-for-service model simply cannot replicate.

The financial case: What the data shows

This isn’t a theoretical model. A landmark study by the RAND Corporation, published in Health Affairs, analyzed real claims data from Carrum Health’s COE platform and found:

45%+ average savings per procedure compared to standard in-network care
$16,144 average savings per procedure
30% of members initially referred for surgery were redirected to non-surgical treatment—avoiding the procedure cost entirely
74–86% reduction in readmission rates relative to the national average

For New York employers with workforces of 5,000 employees or more, for example, those per-procedure savings can translate into millions of dollars in annual healthcare savings. Even modest reductions in avoidable surgeries, complications, and unwarranted cost variation can have a meaningful impact on overall healthcare spend.

What this means for your employees

The experience matters too—and not just as a softer benefit consideration.

Under a standard in-network benefit, a New York employee facing a knee replacement navigates the system largely alone: identifying a surgeon from a directory that tells them nothing about quality, trying to understand costs in advance (usually impossible), managing separate bills from multiple providers, and absorbing deductibles and coinsurance that can run into thousands of dollars.

With a COE benefit through Carrum Health, most employees enrolled in non-HDHP plans pay $0 out of pocket for the entire episode of care. A care navigator manages scheduling and follow-up. And if the clinical review determines surgery isn’t the right call, the employee is guided toward the conservative treatment that’s actually more likely to help them.

Sue, a Carrum member who underwent bilateral knee replacement surgery, described the experience this way: “Today, I’m back to hiking. I can go for a three-mile walk without any pain… It’s just nice to be able to do things and not have to worry about recovery.” Her story illustrates what employers hope to achieve with a high-quality COE benefit: helping employees return to the activities they enjoy while receiving coordinated, evidence-based care

In a labor market where New York employers consistently compete for talent on compensation and benefits quality, that kind of experience is a retention differentiator—a signal that the organization takes employee health seriously, not just as a cost line but as a responsibility.

Where New York employers should start

For most self-insured employers, the highest-ROI entry point is musculoskeletal surgery—the category with the highest procedure volume, the widest price and quality variation, and the most direct connection to the unnecessary surgery problem. This is where Carrum’s COE platform delivers the most immediate, measurable impact.

But the model extends to other high-cost categories where the same dynamics apply:

Cancer Care. Carrum’s Cancer Care program—the industry’s first all-inclusive, value-based cancer treatment solution—connects members to the nation’s leading oncology centers while delivering up to 30% savings per treatment episode. Prudential, a Carrum client, has cited significant oncology savings alongside $0 out-of-pocket costs for members undergoing cancer treatment. For New York employers, where cancer now represents up to 16% of total healthcare spend, this is an increasingly material lever.

Bariatric Surgery. For workforces with elevated obesity rates, bariatric procedures reduce long-term comorbidity costs—diabetes, cardiovascular disease, sleep apnea—that compound significantly over a member’s lifetime.

Substance Use Treatment. Carrum’s Substance Use Treatment Program provides a value-based approach to Alcohol Use Disorder (AUD) and Opioid Use Disorder (OUD), with risk-sharing contracts that reduce employer costs by 45% per treatment episode while supporting long-term recovery outcomes.

Implementation: Simpler than you’d expect

The most common reason why leaders delay isn’t disagreement on the value. It’s concerned about complexity—disrupting existing carrier relationships, TPA structures, or employee experience.

Carrum’s platform integrates with existing benefits ecosystems without requiring a wholesale redesign. Implementation typically takes four to six weeks. Employers like US Foods have described it as “the easiest implementation I’ve ever been through”—across a nationally distributed workforce. Through Carrum’s nationwide network of Centers of Excellence, employers can connect eligible employees with high-quality specialty care while minimizing administrative complexity and delivering a more consistent care experience.

The bottom line for New York benefits leaders

New York employers face the highest single-coverage premiums in the country, a hospital market with significant pricing leverage, and state-imposed insurance taxes that add hundreds of dollars per member before the first claim is filed. Surgery—and specialty care broadly—is one of the largest and most controllable line items in that picture.

A centers of excellence program through Carrum Health gives New York employers a proven, peer-reviewed path to cutting specialty care costs by up to 45% per procedure, eliminating employee out-of-pocket bills, and redirecting a meaningful share of surgical volume toward more appropriate, less costly care.

The RAND data is there. The implementation is faster than most benefits leaders expect. And for a market as expensive as New York, the cost of waiting is both real and measurable.

See how much your organization can save—get a personalized savings analysis from Carrum Health.

Or if you’re ready to talk specifics, schedule a demo with our team.