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Sunday, 04 January 2015 21:00

Holland Hospital signs value-based contract with Blue Cross Blue Shield

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The addition of a half-dozen hospitals into value-based reimbursement contracts furthers Blue Cross Blue Shield of Michigan’s ongoing transition to a model that bases payments to care providers on quality rather than on the number of procedures they perform.

Since initiating the move in 2011, Blue Cross Blue Shield has signed value-based contracts with 18 health systems across the state that operate 71 hospitals. The number of organizations with the value-based contracts has doubled from a year ago.

More importantly, the hospitals and their affiliated physician groups now working under a value-based contract with the state’s largest health insurer represent 80 percent to 90 percent of the payments to hospitals made by Blue Cross Blue Shield for medical claims in 2014.

Among the latest West Michigan additions to the new reimbursement model was Holland Hospital. Holland joins Spectrum Health, Mercy Health’s hospitals in Grand Rapids and Muskegon, and Metro Health Hospital — plus Borgess Health in Kalamazoo — as organizations that have adopted a value-based contract with the Blues and have moved away from the traditional fee-for-service system.

A “couple more” hospitals “are in the conversation stage” and could transition in 2015, said Sue Barkell, senior vice president for health care value at Blue Cross Blue Shield. Blue Cross Blue Shield aims to eventually sign all of the 154 acute-care hospitals in Michigan to a value-based contract.

As more health systems and hospitals sign on, it provides the impetus for others to do so as well, especially as research starts to show the ability of a value-based payment model to eliminate waste, reduce cost, and improve quality and outcomes by better managing a patient population, Barkell said.

“All of the progression has caused more of those relationship developments because people don’t want to leave money on the table, and there’s opportunity to work together to do that,” she said. “We’re about to be at the point … where we are going to start paying out some of the savings that have been generated, so they’ll start to see that and that the fruits of their labor, if you will, are going to pay off.”

Value-based contracting or purchasing is predicated on rewarding hospitals and doctors with higher payments for eliminating waste, reducing redundancy in costly diagnostic tests, and improving quality by better coordinating care as a patient moves through the system.

The model represents a major shift in the economic model for health care that for generations has based compensation to hospitals and doctors on volume, a practice that’s widely blamed for driving unnecessary or duplicative procedures.

“When you look at the entire nation as a whole, it’s clear that the cost of health care is not sustainable,” said Paul Clippinger, executive director of Holland Hospital’s Physician Hospital Organization.

The PHO consists of 125 physicians who are employed by or affiliated with Holland Hospital.

Through value-based contracting, the financial motivation for insurers, hospitals and physicians become aligned to drive cost, efficiency and quality improvements, Clippinger said. As the value-based model gets further deployed, now was the right time for the 189-bed Holland Hospital to adapt, he said.

“The incentives are where they need to be,” Clippinger said. “You don’t want to be kind of left behind with the transformations that are taking place in the market.”

The transformation, if it works as intended, has potentially significant cost implications. Blue Cross Blue Shield of Michigan paid $4.74 billion in hospital and medical claims in 2013, according to an annual financial report filed with state regulators.

Blue Cross Blue Shield estimates that early participants in value-based contracting generated $50 million in cost savings in just 2012 and 2013 through improved efficiency and less fragmentation in patient care, an amount that will grow as the model further takes hold.

“By evolving reimbursement away from volume and toward value, we are elevating the importance of quality care and collaboration between doctors and hospitals to achieve the best possible outcomes for patients,” Blue Cross Blue Shield President and CEO Daniel Loepp stated. “Hospitals are working closely with Blue Cross and their physician partners to improve efficiency and quality of care for a shared population of patients. The hospitals that have joined us today, as well as those over the past 18 months, deserve credit for changing the paradigm for how health care is paid for across the state. Michigan residents reap the benefits.”

Nationally, the federal Centers for Medicaid and Medicare Services started using value-based purchasing under the Affordable Care Act. CMS last month said that 1,698 hospitals that met performance measures for inpatient stays qualified for higher Medicare payments totaling $1.4 billion in the 2015 fiscal year.

As more research on the effectiveness of a value-based contract comes out, it does help to better frame conversations with care providers that have yet to transition their agreements with the Blues, Barkell said. The dialogue, however, is never easy, given the significant change it represents for hospitals and physicians, she said.

“The proof is still in the pudding because while we have seen some changes in trend lines and overall total cost of care for those systems, they still and we still have work to do,” Barkell said. “Just like any project or anything that you do, you just can’t discontinue your old process today and say, ‘I’m starting this new process tomorrow.’ It takes work.”

Sidebar: Blues contracts

Here are the health systems and hospitals that have transitioned to a value-based contracting model with Blue Cross Blue Shield of Michigan, the largest health insurer in the state:

  • Allegiance Health, Jackson
  • Ascension Health, including Borgess Health’s Borgess Memorial Medical Center in Kalamazoo, Borgess Pipp Hospital in Plainwell and Borgess Lee Hospital in Dowagiac
  • Beaumont Health System, Royal Oak
  • Botsford Hospital, Farmington Hills
  • Detroit Medical Center
  • Dickinson County Memorial Hospital, Iron Mountain
  • Henry Ford Health System, Dearborn*
  • Holland Hospital*
  • Hurley Medical Center, Flint*
  • Marquette General Health System
  • Metro Health Hospital, Wyoming
  • MidMichigan Health, Midland
  • Munson Healthcare, Traverse City
  • Oakwood Healthcare, Dearborn
  • Sparrow Health System, Lansing*
  • Spectrum Health, Grand Rapids
  • Trinity Health, including Mercy Health in Grand Rapids and Muskegon
  • University of Michigan Health System,
  • Ann Arbor*
  • U.P. Health System, Marquette*

*new contracts

Read 3590 times Last modified on Sunday, 04 January 2015 21:36

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