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Insurer's Reimbursement Model Rewards Lower Costs

July 08, 2013

As value-based purchasing takes shape, some commercial insurers are offering incentives designed to reward provider organizations for improved outcomes and decreased overall costs.    

Through its Collaborative Accountable Care (CAC) initiative, Bloomfield, CT-based insurance giant Cigna is partnering with hospitals and medical practices that have a substantial primary care component to restructure reimbursements.

"The ultimate goal is to achieve the triple aim for the individual patient, which is better quality, better affordability, and a better overall healthcare experience. We believe the best way to do that is to make sure incentives for healthcare professionals are aligned," says Richard Salmon, MD, PhD, Cigna's national medical executive, performance measurement and improvement.

When a group joins the CAC program, Cigna pays an initial fee of $1.50 for each of its members who receive care at the practice. The money is typically used to hire registered nurses as clinical care coordinators to help patients with chronic conditions or other health challenges navigate the healthcare system.

Cigna continually provides the care coordinators with a list of patients who are about to be discharged from the hospital so they can make outbound calls to assist patients with understanding their medications and scheduling follow-up appointments with their primary care physicians.

Additionally, Cigna supplies a monthly list of patients who are considered to be "at risk," such as patients with a chronic illness who have long gaps in care and patients who have used the ED more than once in a short time frame.

"We provide a broader view of the information on their patients so the nurses can make those calls to get patients to come in and get care," Salmon says.

Providers that succeed in reining in costs while sustaining quality reap additional financial benefits after the first year in the CAC program.

"The real benefit is at the end of each year, we look to see if total medical costs have been lowered and quality has been improved or maintained. If quality has gone down, there is no financial reward. If they pass that threshold and if total medical costs have come down, the fee is increased in the second year by about half of what the group achieved in decreasing the medical cost," Salmon explains.

For example, if the practice decreases the total cost of medical care per person by $4 compared to market trends, the fee would jump from $1.50 to $3.50 per person in the second year.

As part of the CAC program, Cigna also provides a quarterly performance report to each participating hospital and physician group that measures total medical costs and drivers such as emergency department admissions, hospitalization rates, readmission rates, and use of high-tech imaging devices, so that the practices can track their performance and improvement.

"One typical example of how groups use this report is if the report shows a high ER visit rate among patients, the group expands office hours and makes it easier for patients to make an appointment, which can improve measures," Salmon says.  

"As a payer, we can modify the incentives, but we also have an important role to play in helping healthcare professionals to be successful… by providing useful information to help them provide more comprehensive care to their patients."

The CAC initiative began in 2008 with Dartmouth-Hitchcock Health, an academic, integrated delivery system based in Lebanon, NH, and one of the ten groups participating in the CMS Physician Group Practice Demonstration project. 

Prior to 2008, Dartmouth-Hitchcock was already working with Cigna to restructure its reimbursement model, says Lynn M. Guillette director, payer contracting & ACO relationships. 

"We were working with Cigna to implement changes designed to improve care and align financial rewards with clinical outcomes. We saw the opportunity to pilot Cigna's Collaborative Accountable Care initiative as a way to further advance our goal to transform the healthcare delivery system while also transforming the healthcare payment model."

"We wanted to be able to test out concepts being applied in the Medicare patient population to a commercial sector patient population," she adds. "Our vision is to achieve the healthiest population possible, leading the transformation of healthcare in our region and setting the standard for our nation. Participating in and helping to design Cigna's Collaborative Accountable Care initiative aligned with our mission and vision for creating a sustainable healthcare system."

For the 2011-2012 performance period, Dartmouth-Hitchcock's actual total medical cost per member per month decreased by 2.2% over the prior year period, Guillette reports.

"It is important to note that Dartmouth-Hitchcock only provides about 40% of the total cost of care within our own health system. The remaining 60% of care is provided by hospitals and providers outside of the Dartmouth-Hitchcock system," she says.

Guillette believes Dartmouth-Hitchcock's early success in reducing the total cost of care can be attributed to aligned financial incentives, the availability of actionable information identifying opportunities to improve care and avoid higher costs, referral of patients with complex conditions to case management services, and periodic performance reports on costs and quality measures.

"Early results highlight the synergy fostered by collaboration between health plans and delivery systems," she says.  

Salmon says Cigna is pleased with the results of the CAC initiative so far and plans to expand it in the near future. Currently, 65 providers are enrolled in the program, representing 600,000 Cigna customers. The company's goal is to have 100 contracts in place by the end of 2014.

 "This is the right step. It's the right direction," Salmon says.  

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