Tennessee Taps Carrum Health for Centers of Excellence Network

The state of Tennessee has selected Carrum Health as its specialty care Centers of Excellence solution, Carrum announced on Thursday. It comes after the company announced a significant expansion last week that puts 90% of Americans within 50 miles of a Carrum Center of Excellence.

By working with the state of Tennessee, Carrum Health’s services are now available to all employees covered by the state health plan. Its Centers of Excellence solution connects employers’ members to a vetted network of specialty care providers, including musculoskeletal care, cardiac care, cancer care and substance use treatment. 

Carrum uses an upfront, bundled payment model, in which providers receive a single payment for all services for an episode of care. This compares to the fee-for-service model, in which providers are paid for each individual service and procedure. Bundled payments are a form of value-based care, as providers are rewarded for providing efficient and quality care, but have to take on the losses if costs go beyond the target price.

Tennessee vetted Carrum over the last nine to 12 months and selected the company because of its “focus on quality, negotiating value-based payment contracts with providers and local coverage,” according to Sach Jain, Carrum Health’s founder and CEO. A RAND study on Carrum Health found that the company reduced costs by 45% per surgery, reduced readmissions by 80% and reduced surgeries by 30%.

With this partnership, Carrum’s public sector footprint is now at over 1 million lives. The company has been working with the state of Maine since 2019 and the state of Nevada since 2023. In total, the company supports 5 million lives.

Carrum Health also announced last week that it has expanded its network to over 1,000 locations, which puts 90% of Americans within 50 miles of a Carrum location. It has also expanded its specialty care offerings to include gastroenterology, general surgery, gynecology, pain management, urology and ear, nose and throat surgeries.

With this expansion of specialty care offerings, Carrum now covers 40% of employer medical spend. This comes at a time when employer healthcare costs are skyrocketing: an 8% increase in healthcare costs is expected this year. And specialty care represents about half of employers’ healthcare spend.

However, this expansion did not come without its challenges. The company had to learn how to take its model for its initial service lines (musculoskeletal, cardiovascular, bariatric) and adapt it to new service lines.

“It was not easy to move and take the same model and apply it to cancer care or substance use disorder, because in our initial service lines, providers will give us roughly 30 days of readmission warranties,” Jain said in an interview. “That doesn’t work for cancer, because the length of the episode is years, and not just weeks or months. 

“As employers demanded a broader solution, we had to roll up our sleeves and figure out a model that on one side will deliver on our promise to make providers accountable for the cost and quality of care they are delivering for those specialties, but also be acceptable to the providers, so that they see the value in the model and work with us. And that just takes time,” he continued.

The company built this Centers of Excellence network based on a four-part framework called C.A.R.E., according to Christoph Dankert, chief network officer:

• Curating for the top 10%: The company evaluates providers based on 55 metrics to ensure that it only contracts with the top 10% of providers. For example, when looking at surgery, the company assesses how many surgeries the provider has done, the kind of complications patients have and how often complications occur.
• Appropriateness: Carrum incentivizes providers to focus on the care that is most appropriate for patients versus the most profitable one.
• Risk-bearing providers: The company ties payments to outcomes to incentivize providers to provide the highest quality care.
• End-to-end transparency: Employers receive information on Carrum’s provider network and pricing upfront so they know what they’re paying for.

“If you’re a current customer, you have a spreadsheet that you get with all these locations, all the prices, everything transparent ahead of time,” Dankert said in an interview. “As the employer who pays for all of this care, you know exactly which providers people are going to go to, you know exactly what you’re going to pay ahead of time.”

Looking ahead, Carrum aims to continue to expand its network, including pregnancy care. Eventually, it hopes to have 95% of Americans close to a Carrum location.

“There’s still a big chunk of the market that has not adopted a COE solution yet, and we want to make sure over the next few years, we are bringing up a solution to those employers,” Jain said. “But at the same time, beyond self-insured employers, there are other purchasers that are facing similar challenges when it comes to cost, quality and member experience, whether that is fully insured book of business of health plans or Medicare Advantage plans, just to name a few. We want to bring up a solution to all those different stakeholders.”

Other specialty care companies include Lantern and Transcarent.

Photo: Natali_Mis, Getty Images