Episode-based payments have 'huge' savings potential, UnitedHealthcare exec says

Episode-based payments are leading to cost savings while boosting care quality, execs from UnitedHealthcare and Horizon Blue Cross Blue Shield of New Jersey unequivocally shared during a session at the AHIP Institute conference last week.

"The challenges are significant, but the potential is huge," said Robert Greene, national vice president of clinical analytics at UnitedHealthcare. To establish episode-based payments, insurers must first define and "implement" an episode, he said.

"Make sure an episode is appropriate, meaning that it's good for patients and ties to smarter medical necessity," Greene added. The process of defining an episode "takes work," he cautioned, but suggested starting with best practices and quality indicators.

Risk assumption can also help drive the definition, said Weslie Kary, director, episode payment at Integrated Healthcare Association. She recommended that healthcare payers hold providers accountable for the quality and cost of the care they provide. "We need to change how doctors think," she said.

Horizon Blue Cross Blue Shield of New Jersey has launched five separate models for episode-based payment since January. "We want to aggressively deal with the healthcare crisis," said Richard Popiel, president and chief operating officer of Horizon Healthcare Innovations. The insurer even created a separate company to launch innovative reimbursement pilots driving types of care.

Horizon determined that 17 conditions account for 65 percent of all costs, with hip and knee replacements as the top cost-driving condition. So it launched an episode-based payment addressing hip and knee replacements, Popiel explained. The company then created an academic advisory group, including members from University of Pennsylvania and Rutgers, to validate the program. The group also advises Horizon on pilot structure and helps it analyze results.