The Exec: Peter Long Shares How Blue Shield of California Became a Payment Innovation Leader

"We've been given a set of directions by the government and our job is to build this micro ecosystem with sticky floors." — Peter Long, EVP-Strategy and Health Solutions

Editor’s note: This article appears in the October-December 2023 edition of HealthLeaders magazine.

Peter Long—executive vice president of Strategy and Health Solutions for Blue Shield of California—is a health services researcher by trade. He previously led the Foundation for the health plan, which serves 4.8 million members statewide, and co-authored the 2023 National Academy of Medicine (NAM) paper Valuing America's Health: Aligning Financing to Award Better Health and Well-Being.

The following Q&A with Long includes NAM recommendations and how the plan convinced payers across California to follow its hybrid value-based payment (VBP) model.

HealthLeaders: The NAM paper states that "in the absence of a legislative or government-based solution, health care, public health, and other stakeholders are obliged to act to the best of their ability." Can you talk more about that?

Long: Healthcare stakeholders have many constraints. Policy hasn't allowed us to go above and beyond things like basic access, emergency response, and affordability to help people achieve truly better health. We're trying to work on value-based payment models, but there's just so much regulation and how are we supposed to do it for free? The NAM paper was a great thought exercise in asking: If we changed some of the rules, could we actually get to our goal which is the health of the population?

HL: About VBP, the paper seemed to make conflicting statements—that these models had remained financially resilient during COVID but also that the pandemic had renewed interest in them? How do you reconcile those two things?

Long: First, value-based care adoption has been very steady and yet very slow—somewhat like virtual care, and I think these examples are related to COVID. We've known how to do virtual care for 25 years but weren't sure how to integrate it with in-person care, how to document it, how to make it all work. But when COVID hit, we had no choice. It was a very instructive moment for healthcare.

The same is true for VBP. We've known how to do the mechanics of it—the outcomes measures, the per-member per-month [PMPM] payments—for 30 to 40 years. But there has been a low-trust environment. The pandemic showed us that fee-for-service-only providers were in huge financial trouble because there were no services to get fees for. With COVID, they took another look and said, 'If I'd been on a VBP model, I would have received a PMPM payment, even if I had just emailed my members or had a virtual visit. I would have had a continuous stream of revenue for my practice.'

Peter Long, executive vice president of Strategy and Health Solutions, Blue Shield of California.

HL: That's a great explanation.

Long: This is why Blue Shield has chosen a hybrid VBP method that includes three parts. For primary care, providers receive a monthly payment—a steady revenue stream to sustain the practice. On top of that, we pay for services we want to happen as much as possible: immunizations, well-child visits. The third component—and this is part of what the NAM paper stated—is addressing incentives that have been small and conflicting.

Blue Shield has significantly increased the amount of money that practices can earn and for things that are very tangible. Is the patient happy with their experience? If they have diabetes, is their blood sugar under control? By focusing on simple things that are simple and aligned, we've had a very positive response from providers. It's the best of all worlds.

It also can't just be about Blue Shield. We have more than four million members but there are 40 million Californians. We shared our model with all of the other plans, which is uncommon in the industry. We got a memorandum of understanding for this hybrid payment model because we think it makes sense. I think it was the first time health plans have voluntarily agreed to do something like this, and it's a good example of what we can actually create when we put our heads together. As the NAM paper suggests: You achieve bigger things by conducting smaller actions that create alignment.

HL: The NAM paper included multiple recommendations, rated by impact and feasibility. Two payer recommendations that stood out were identifying plan members with social drivers of health needs and holding health systems accountable for whole-person health outcomes via contracting. Can you speak on those?

Long: A health plan can actually get SDOH information more readily compared to providers. At Blue Shield, we are huge believers in addressing social drivers of health. The open question is what does the financing look like? Healthcare spend is already $4 trillion in this country. If we drive housing money through it, we now become a $10 trillion industry and we could become more distracted.

At Blue Shield, we're aligned on social determinants that are related to medical care. It wouldn't be necessary or appropriate to get housing vouching for all of our members, but it does make sense to ensure there is air conditioning in the house and on mold problems for someone with asthma. That makes sense and fits within what health insurance can do.

As for health systems, it's challenging holding then someone accountable if they only see a person once or twice. There are three issues. It can be a long time for patients from the cause to the effect, there are a lot of multi-factorial things involved, and it's been hard to agree upon what the outcomes should be. They are surmountable problems, but they require a fair amount of work and some pretty good levels of trust.

In my mind as a health plan executive, all of this is doable.