Featured in Health Business Daily, April 11, 2017

Blues Plans Accelerate Move to Value-Based Products Despite Uncertainty Around ACA

Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry. Subscribe today!

March 6, 2017Volume 27Issue 8

An earlier version of this story incorrectly stated that Anthem, Inc. had 17 accountable care organization (ACO) agreements in place. The entire Anthem enterprise has 159 ACO agreements in place. The figures stated in the story apply only to Anthem’s California health plan unit, Anthem Blue Cross. This version has been corrected.


Blue Cross Blue Shield plans are accelerating their move to value-based insurance products and reporting strong results from new initiatives, even as lawmakers in Washington are debating the future of the Affordable Care Act (ACA), which has been a catalyst for these changes. The results, and the enthusiasm for payments that shift away from the traditional fee-for-service system, indicate that the transformation will continue quickly, regardless of what happens to the ACA.

Nationwide, Blues plans sponsor more than 700 “patient-focused” care programs, which include accountable care organizations (ACOs), patient-centered medical homes (PCMHs) and bundled payment programs. In late 2015, the Blue Cross Blue Shield Association said it would group many of these programs together into the Blue Distinction Total Care network, which is available to national employers.

“We are weaving together all these regular PCMH and ACO programs into a whole cloth of value-based programs,” says David Share, M.D., senior vice president of value partnerships at Blue Cross Blue Shield of Michigan (BCBSM). “It’s being offered up to national customers who have covered lives across states, but we’re able to retain the rich local character.” The national Blues program created common criteria defining value-based programs, and “we all have to meet those standards,” he says. BCBSM’s patient-centered medical home plan “dovetails nicely” with the national program.

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Meanwhile, the association’s Blue Distinction Plus program establishes centers of excellence based on value and efficiency for a variety of medical procedures and conditions, including bariatric surgery, joint replacement and complex and rare cancers.

Still, individual Blues plans are taking value-based care even further. For example, BCBSM, an early adopter of PCMHs, now sees 85% of care provided — as measured by its medical spend — to patients attributed to primary care doctors in its PCMH program. “The program is touching the vast majority of patients in the health plan and the care provided to them,” Share says (see box, below).

The Michigan Blues’ PCMH program is built on what Share calls a “fee-for-service chassis,” but value-based bonus payments now account for some 40% of all payments to primary care providers. That means physicians are strongly incentivized to excel on the value-based metrics the plan sets up in partnership with physician organizations in the state, and the health plan estimates the program has prevented $427 million in medical costs over the past six years.

Meanwhile, Anthem Blue Cross, the California Blues plan unit of Anthem Inc., says it has 17 ACO agreements in place with large medical groups, and is approaching 50% of its medical spend within value-based payment arrangements. Its ACOs have shown strong results, saving $70.4 million over the most recent 12-month measurement period while improving quality.

And Horizon Blue Cross Blue Shield of New Jersey has been a leader in bundled payments; the insurer’s Episodes of Care program includes 18 active episodes in orthopedics, cancer and gastroenterology, says spokesperson Thomas Vincz. The Blues plan also collaborates on PCMHs — including a pediatric PCMH — and ACOs, affecting 1.6 million enrollees across all efforts.

Horizon offers value-based insurance products to individual and group markets through the Omnia Health Alliance, a partnership between the insurer, several New Jersey health systems and a large multispecialty group, Vincz says. Omnia has a tiered structure in which members have lower cost sharing by using a Tier 1 provider; Tier 1 includes all OMNIA partners, plus other providers in the state to ensure geographic coverage, he says.


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