The Lynx Group

Shifts to Value-Based Care and Payment Models Are Improving Quality of Care

August 2014, Vol 5, No 6

Blue Cross Blue Shield (BCBS) is implementing value-based care and payment models across the country to reward quality and improve outcomes, and these are amounting to billions of dollars in cost-savings and reduced hospitalizations. According to a company press release (“Blue Cross and Blue Shield companies direct more than $65 billion in medical spending to value-based care programs”; July 9, 2014), these programs “shift payment away from the fee-for-service model...to one that links reimbursement to the quality of care and improved patient outcomes.”

These programs include accountable care organizations (ACOs), patient-centered medical homes (PCMHs), pay-for-performance programs, and episode-based payment programs.

“Through these innovative, value-based care models, Blue Cross and Blue Shield companies provide patients with access to improved care while also creating value for our members, employers and taxpayers supporting public healthcare programs,” said Scott P. Serota, MHA, President and Chief Executive Officer of the BCBS Association, in the press release. “Studies estimate that 30 cents of every healthcare dollar goes to care that is ineffective or redundant.”

PCMHs Cut Healthcare Utilization
According to 2013 data, practices participating in the BCBS PCMH program show a 19.1% lower hospital admission rate; 8.8% and 17.7% lower emergency department visit rates for adults and children, respectively; and 7.3% lower use of high-tech radiology services.

Data from 2012 from a PCMH program in New Jersey showed a 23% lower inpatient admissions rate, a 12% reduced emergency department visits rate, a 5% higher rate of improved control of diabetes, and a 3% higher rate of breast cancer screenings.

In a PCMH pilot from Anthem, practices had 15% lower medical and pharmaceutical costs than in the control practices. In Connecticut, PCMH pilot practices had 18% and 29% fewer hospital admissions and readmissions, respectively, than nonparticipating practices. Similarly, in Colorado, 18% reduced hospital admissions and 15% fewer emergency department visits were reported compared with nonparticipant practices, according to a BCBS report (“Blue plans improving healthcare quality and affordability through innovative partnerships with clinicians”; February 13, 2014).

ACOs Contribute to Cost-Savings
BCBS’s ACO arrangements, which offer financial incentives for improvements in care, have seen similar success. BCBS of Illinois has a 4-year agreement with 10 hospitals in the Advocate Health Care. “This ACO is driving compelling quality and cost impact including a decline of 4.7 percent in the inpatient admission rate per 1000 for Advocate facilities versus an increase of 2.2 percent for the control facilities, a decline of 0.9 percent for length of stay for Advocate facilities versus an increase of 2.7 percent for the control facilities and better results for outpatient utilization,” according to BCBS.

In Minnesota, BCBS has aligned with providers to transition from fee for service to performance incentives that are tied to measurable improvements in quality outcomes and to managing the total cost of care. In this “aligned incentive contracting,” BCBS of Minnesota provides a risk-adjusted per-member per-month payment along with an allowed trend for attributed members’ total cost of care. If the provider’s actual per-member per-month cost is below the target, the provider is eligible to receive a share of the savings. In 2011, 75% of the aligned incentive contracting providers earned incentives, and approximately $13 million in net savings against the expected claims costs were achieved.

In Massachusetts, performance standards tied to nationally accepted quality standards are combined with a population-based global budget adjusted annually for health status and inflation in what is called an “alternative quality contract.” Practice pattern analyses are provided to participating physician groups to provide feedback to clinicians and to identify opportunities for improvement. An independent analysis showed that these contracts led to slower growth in medical spending—2% slower growth in 2009 and 3% slower growth in 2010.

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