Your local BC/BS plan has experienced high costs and unpredictable cost increases for total joint replacement cases in recent years. They have approached three competing hospital systems about taking a case rate for total knee replacements. The 'case rate' will cover all diagnostic work, the surgery itself and all rehabilitation needed to get the patient back to full functionality. Last year, BC/BS paid for 1000 total knee replacements in this region, and they project the same volume next year. The working assumption here is that the 'winning' bidder will get 100% of that volume next year