Premera Blue Cross, a Washington State-based insurer, has reduced its healthcare costs by increasing the fee-for-service reimbursements it pays to some of its physicians. Participating physicians can increase their FFS payments on an annual basis by reducing the cost of care for their attributed Premera patients compared to all of the Premera members in a geographic area. The savings are calculated each year so bumps in reimbursements are on a year-to-year basis.
"FFS is simply the vehicle to pass back savings based on overall healthcare costs," explains Rich Maturi, senior vice president of healthcare delivery at Premera.
What Premera calls its global outcomes contracting model doesn't focus on certain diseases or conditions, nor does it prescribe goals and incentives. Instead, physicians manage the care of an attributed group of Premera patients whose health status can range from very healthy to suffering from multiple chronic diseases.
The idea is for physicians to take more responsibility for the overall healthcare costs and the quality of care. "But they have flexibility to decide how they want to achieve the savings," says Maturi.
He says the process, which includes risk adjustment and quality metrics, allows all Premera patients to be part of the payment system. "There's no change in product and nothing needs to be rolled out member by member." That means no new contract negotiations. To keep things simple, Premera adopted the quality metrics used in the state's medical home program.
An added plus: physicians can simply add their Premera patients to existing programs. There's no need to develop special programs exclusive to Premera members. Maturi explains that one clinic already had in place a program to manage high-risk, multi-chronic disease patients, which included a team of primary care physicians, nurse care managers, pharmacists, and behavioral health specialists. As part of the global outcomes contracting the clinic wants to include Premera's high risk patients in the existing program.
Premera began signing up physicians for the payment model in 2010. Acceptance is building in a state that is not well known for its acceptance of managed care or capitated payments. To date, 100,000 Premera members, about a quarter of its membership, are provided care under the global outcomes contracting model. Twelve physician groups, including The Everett Clinic, and one IPA are part of the program.
Results from The Everett Clinic and The Polyclinic, two early adopters with a total of 18,000 Premera members, indicate that the total healthcare cost trends for these Premera patients in 2011 were 3% to 5% below the average cost of other Premera patients in the same region who have a regular physician. Maturi says that translates into savings of $1.2 million for The Everett Clinic and $2 million for The Polyclinic.
Lloyd David, CEO of The Polyclinic, says the group is trying to develop similar arrangements with other health plans. "We all know that payment based on volume isn't sustainable."
David says the Puget Sound-based clinic, which has more than 175 primary care and specialty physicians and serves about 170,000 patients, has incorporated Premera members into a number of existing programs such as its follow up after hospital discharge program and a program that contacts members after they visit the emergency department to help resolve the problem and to reduce expensive revisits to the ED for the same problem.
Premera wants to expand the payment program, but acknowledges that it may need to find different ways either to organize the delivery system or to adjust the payment methodology to enroll more groups.
As it stands now, the program requires access to reliable data that smaller physician groups simply can't produce. Over time, Maturi envisions smaller groups joining together into accountable care organizations or similar arrangements that would allow Premera to collectively implement the global outcomes contracting model into small practices.
Premera has taken a first step in that process with the signing of Northwest Physician Network, an IPA with several hundred independent physicians.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
