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Win-Win Payments for Providers and Payers

Rene Letourneau, for HealthLeaders Media, September 26, 2013

"The most significant change is the sharing of medical cost savings based on providing services to our patients," he says of the agreement.

Between Hawai'i Pacific's participation in the ACA and its other payment contracts with HMSA, the financial incentives for improving value are high.

"The ACA represents about 15% of incremental reimbursement under our HMSA commercial agreements over the next five years. If you include hospital and physician payments, which are tied to pay-for-quality, more than 60% of expected, incremental payments under our HMSA commercial agreements are based on performance," Okabe says.

Like Raethel, Okabe believes increased transparency of data is critical to the success of the program. "Without the sharing of data, we would not be able to understand how we are performing under various metrics and whether there are any opportunities to improve the care being provided to our patients."

Okabe says Hawai'i Pacific wants to be proactive in the way it handles evolving payment reimbursement methods and sees its contracts with HMSA as a step in the right direction. "The U.S. healthcare system is not sustainable. No matter what happens in the future with federal healthcare reform, our view is the underlying healthcare system needs to fundamentally change. Healthcare organizations can decide to embrace the change or be reactionary, but either way, there is no option to stay in place."

Raethel says Hawai'i Pacific also is driven by a desire to increase its market share.

"Hawai'i Pacific Health's primary motivation is they believe they can outperform the other hospitals in their market in terms of quality and efficiency," he says. "They believe that by being successful in this program, they will score better and attract more patients to come to their system."

CHE Trinity Health, a Livonia, Mich.–based system with $13.3 billion in annual operating revenues, has recently entered into a new value-based reimbursement agreement with Blue Cross Blue Shield of Michigan.

Benjamin Carter, executive vice president for finance at CHE Trinity Health, says the health system wanted to turn its relationship with Blue Cross into a partnership as a way of moving toward effective population health management.

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