As a longtime health care insurance executive, Allen Karp can recall many a meeting when his side sat across the table from a provider and negotiated — and argued — about rates of reimbursements. In the end, neither side ever really won.
And the patients always lost.
That’s why Karp, who serves as the executive vice president of health care management and transformation at Horizon Blue Cross Blue Shield of New Jersey, and Brian Gragnolati, the CEO of Atlantic Health System, were eager to explain how their organizations have been saving consumers money — and improving quality of care — in a unique partnership that began in January 2019.
The groups are seeing early success in their payer-provider shared accountability program where the two organizations have agreed to tie payments for health care services directly to outcomes in achieving quality and cost goals. Simply put, they are better aligning their goals.
In the model, Atlantic and Horizon share all the data related to the care and the associated costs for a population of patients. It represents a significant step away from the traditional “fee-for-service” model under which providers get paid based on the volume of services they deliver.
And it’s paying off.
The groups announced Thursday that the arrangement has resulted in a reduction of more than 9% in unnecessary hospitalizations and, correspondingly, better overall health outcomes for those involved. Furthermore, these efforts to improve quality and the consumer experience have resulted in a 5% reduction in the total cost of care for patients/members in the first program year.
Karp is thrilled.
“I think that what we’ve found by working collaboratively is that, if we bring the strengths of a health plan — which are our analytic capability, the rich data we have, our ability to show the physicians where their opportunities are and improve insights into care delivery — and you couple that with the strong clinical capabilities that the physicians and the health systems bring to the table, you end in a place where we are driving more affordable cost, and more critically, quality outcomes,” he told ROI-NJ.
“If incentives are aligned, they drive a result for both the payer and the provider that meet the needs that they have and that we have.”
All of this begins with trust, Karp and Gragnolati both said.
“It starts with trying to create a relationship having shared accountability,” Gragnolati said. “And, quite frankly, that’s been difficult to do. I really applaud what Horizon has been willing to do, because not a lot of payer organizations are taking this approach.
“We’ve been doing these experiments with ACOs under the Medicare program for the last five years. We’ve been getting good results, and we built a big infrastructure associated with that. To be able to do this with an organization like Horizon, which represents a lot of our patients that we have an opportunity to care for and is very well regarded in the state, puts a real fine point on the importance of having a different relationship going forward.”
Examples of this close and collaborative relationship at work include:
- Biweekly huddles between Horizon and Atlantic clinical teams to manage care and address complex medical conditions of Horizon members;
- Aiding Atlantic to identify a high-performing post-acute network to facilitate the efficient transfer of members from acute care to the most conducive post-acute environment for patients’ recovery;
- Tighter clinical collaboration that enables both organizations to bring their combined resources to bear more effectively to address the complex physical, behavioral and social needs of the patients and members served;
- Identifying newly diagnosed medical, surgical and catastrophic cases to aid in better managing a patient’s disease states and helping patients self-manage their conditions; and
- Mutual sharing of richer and more frequent claims data and electronic patient records data to inform Atlantic’s care strategies and decisions and support a deeper and more proactive understanding of patient populations.
In the traditional fee-for-service model, the health insurer bears almost all of the financial impact for care delivery and reimburses doctors, hospitals, specialists, diagnostic facilities and others involved in care with little regard for the benefit provided. Under fee-for-service, health professionals are paid for the volume of care they deliver — more services, tests and procedures are the only way a health care provider can increase its revenue.
By contrast, the shared-accountability arrangement incentivizes Horizon and Atlantic to work more closely together to create models of care delivery that reward high quality, coordinated care. The better the outcome for the patient, the better each organization does in achieving its financial goals.
While models that reward health systems for improvement are common, what makes this relationship unique is that Atlantic Health also has agreed to share the cost of care in the event that total costs exceed the agreed-upon targets.
The Atlantic/Horizon risk-sharing arrangement applies to approximately 30,000 Horizon members who are patients of Atlantic’s Clinically Integrated Network. Both sides feel the relationship can grow. They intentionally started on a small scale so they could learn as they grow. They both said they are eager to expand to a larger patient poll.
And the benefits of the relationship grow in other ways. Gragnolati said the trust the organizations now have in each other has helped other programs and services.
“When you get into this type of an arrangement, your economic conversations become much different,” he said. “Through the support of Horizon, we’ve been able to get kind of upfront payments in a different way to help our physicians and our nurses and community health workers and behavioral health folks take initiatives with some level of comfort, knowing that we’ve got a payer that’s supporting them,” he said.
Karp agreed, saying Horizon already is working with Atlantic on other initiatives related to population health.
“There are some things that we’re doing around social determinants of health where we’re collaborating with Atlantic while looking at factors like food insecurities, transportation, etc.,” he said. “We are going to pilot a program with Atlantic around integrated behavioral health and physical medicine.
“The relationship we have, the trust that we have, allows us to do a number of things that benefits both organizations and most importantly, benefit the patients.”
Gragnolati calls partnership such as this the future of health care.
“It’s a bit of a leap from what you normally see,” he said. “Hopefully, we can embrace more of that here in New Jersey. And, hopefully, this stimulates other payer organizations to look at this because, ultimately, this is going to be a competitive advantage as it translates into lower premiums.”
Therein lies the key. Gragnolati and Karp said payers and providers need to better work out their relationship — or someone will do it for them. And that’s usually not a good thing.
“I think both Horizon and Atlantic share a common belief that we got to continue to try to deal with the affordability issues in health care, or they’ll be regulated on us in in in ways that aren’t going to necessarily be good for patients,” Gragnolati said.