Fierce Q&A: Premera Blue Cross reforms provider payments with global outcomes contracting

Reducing healthcare costs is a constant issue payers grapple with, so many have chosen to adopt new and innovative methods to transform the current provider payment model, including collaboration between payers and providers.

Washington-based Premera Blue Cross has launched its global outcomes contracting model, which rewards physician groups for providing cost-effective, evidence-based care. The insurer works with 13 physician groups that provide care for almost 100,000 members. So far, the results are promising; two of the participating provider groups, The Everett Clinic and The Polyclinic, already saved $1.2 million and $2 million, respectively, in 2011. To learn more about this payment reform method, FierceHealthPayer chatted with Rich Maturi (pictured), Premera's senior vice president of healthcare delivery systems.

FierceHealthPayer: Can you explain how Premera's global outcomes contracting model works?

Rich Maturi: Premera's global outcomes contracting model moves away from the traditional fee-for-service payment system and instead rewards physicians groups if they demonstrate cost savings for their attributed patients while maintaining certain quality metrics. This unique model ensures that costs are contained without a reduction in the quality of care for patients. The groups are rewarded annually based on combination of the cost savings they demonstrate and the quality of care they provide to their patients' total health over the course of the preceding year.

FHP: How is the global outcomes contracting model different from other payment reforms, including the alternative quality contracts (AQC) in Massachusetts?

Maturi: The AQC program in Massachusetts is capitation payment adjusted for quality, while the global outcomes contracting model is fee-for-service payment adjusted for quality and total healthcare cost trend. 

Unlike Massachusetts (and some other markets) where provider groups have been managing large numbers of capitated HMO lives for years (over half of commercial enrollment is HMO), in Washington, there is very little HMO business and no capitation other than for Group Health and its owned clinics. So, the global outcomes contracting model introduced total cost trend accountability without requiring wholesale conversion to capitation. The similarity is that both programs focus on rewarding providers for quality and total healthcare cost trend moderation.

FHP: What goals is Premera trying to achieve by implementing this payment model?

Maturi: Premera recognizes that the current healthcare system is unsustainable and is actively finding ways to lower the cost of healthcare. Therefore, our main goal with this initiative is to provide a new financial model that rewards clinics for lowering costs while still providing high quality care to our members.

This model helps doctors transition away from the current fee-for-service business model to an outcomes based business model, which we believe is a key component to creating a high quality, affordable healthcare system. 

FHP: What are the specific measures that participating providers must meet to receive rewards from Premera? And how does Premera measure those outcomes?

Maturi: Premera is using the same, widely accepted quality measures as are used in the Washington state multi-payer medical home program. Cost is measured by comparing the risk-adjusted total healthcare cost trend for members attributed to the subject clinic compared to that for members attributed to any provider in the region.

Metric
Description
Diabetes HbgA1c
% of attributed members with diabetes that had a hemoglobin A1c test in the last year
Diabetes LDL
% of attributed members with cardiovascular diseases that had an LCL-C screening in the last year
Diabetes kidney screening
% of attributed members with diabetes that had a kidney screening test in the last year
CAD – LDL
% of attributed members with cardiovascular disease that had a LCL-C screening in the last year
CAD – Cholesterol Rx
% of attributed members with cardiovascular diseases who are prescribed a lipid-lowering therapy in the last year
Depression – 12 weeks medication management
% of attributed members 18 years of age and older of the measurement year who were diagnosed with a new episode of major depression, were treated with antidepressant medication and remained on an antidepressant drug during the entire 84-day (12 week) acute treatment phrase
Depression – 6 weeks medication management
% of attributed members 18 years of age and older of the measurement year who were diagnosed with a new episode of major depression, were treated with antidepressant medication and remained on an antidepressant drug the entire 180-day (6 months) continuation phase

FHP: Does Premera have plans to expand the global outcomes contracting model in the future? How so?

Maturi: We do plan to grow our global outcomes contracting model, as there are additional clinics who are eligible based on their size. In addition, we would like to find a way to adapt the current model to work for smaller practices.

This interview has been edited and condensed for clarity.

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