The Arizona-based model echoes some components of dominant Medicare VBP models but also differs in key ways.


Nov. 26—Commercial insurers—and Blue Cross Blue Shield plans, in particular—have been shy about moving into value-based payment (VBP). But one southwestern insurer’s experience may help change that.

Not-for-profit Blue Cross and Blue of Arizona (BCBSAZ) has found positive first-year results from its first expansion into VBP beyond well-established patient-centered medical homes.

The insurer created a joint venture—called ACO Partner—with healthcare IT and services company Change Healthcare that established a network of 603 independent primary care providers that serve commercially insured BCBSAZ enrollees (the insurer also sells Medicare Advantage and Part D plans). The providers were offered bonus payments for reducing costs, enhancing the patient experience, and improving population health. Their key cost and quality metrics were compared with those of a nonparticipating cohort.

The model—which, despite the name, is not an accountable care organization (ACO)—was credited with driving a 3.7 percent reduction in the risk-adjusted claims cost trend from 2016 to 2017, compared to the trend in a nonparticipating cohort. However claims costs still increased in the model. 

The total number of treated patients of the participating providers was more than 41,500 enrollees. Providers that met quality and cost metrics garnered a total of $1 million in bonus payments in 2017. Those payments were the result of an even split—net of fees—between the joint venture and the providers, said John Wallace, president and COO of ACO Partner.

“This emphasis on cost, quality, and value has been a challenge for many of my Blue Cross Blue Shield brethren across the county,” said Woodrow Myers, Jr., MD, chief medical officer and health strategist for BCBSAZ. “We’ve got something special here.”

Other one-year differences compared to the cohort include:

  • 26.3 percent reduction in 30-day readmission rates
  • 28.1 percent reduction in all-cause readmission rates
  • 20 percent fewer admissions
  • 15.2 percent fewer emergency department visits per thousand treated members
  • 2.7 percent improvement in quality performance

The results “tell me we’re on to something here,” Myers said in an interview.

The model was made possible, in part, through widespread adoption of electronic health records by physician practices in recent years, Myers said.

Arizona, “it’s fair to say, has lagged a little bit behind some of our other states with respect to the adoption of various value-based care strategies and methodologies,” Myers said.

But the model’s results are expected to spawn the launch of several more VBP programs at the insurer over the coming year.

“The majority of dollars spent in Arizona by all providers are still fee for service, primarily, but the percentage of value-based payment is going up rapidly. …  It’s our goal to increase the rapidity to value-based payment,” Myers said.

Medicare Comparison

Among the ways the arrangement differs from Medicare VBP models is participating providers’ access to customized data analytics and risk stratification models.

“We use a straight-line approach to helping the doctors understand which patients to focus on and why, and provide the resources, the people, and the care coordination team to assist them to do so,” Wallace said. “The investments here are to put the resources in place; not to count on the doctors and the practices to make the change, but to allow them to receive the information and act on [patients’] behalf.”

The BCBSAZ model departed from Medicare ACOs in its intention to avoid imposing additional costs on participating providers.

“We wanted to make sure it was easy to get in and that we supplied the resources, the technology, and the information to be successful,” Wallace said. “There really is no cost to providers.”

In contrast, average operational costs for a single Medicare ACO have exceeded $1.9 million, according to a 2016 survey of 144 Medicare ACOs by the National Association of ACOs (NAACOS).

Myers said the BCBSAZ model aims to use a shared savings approach similar to that of the Medicare Shared Savings Program (MSSP) to improve providers’ quality focus in a commercial patient population.

The BCBSAZ model soon will differ from the MSSP also in its use of upside-only risk for participating providers. Although the vast majority of MSSP providers have been involved in its upside-only arm, the Medicare ACO program is moving to require all participating providers to take downside risk within two years.

“It was important to us not to move doctors down the risk continuum early,” Wallace said. “That’s a question that comes up, ‘What more could be had if we take downside risk?’ But today that is not the model.”

Myers said the model’s design was driven less by the desire for financial savings and more as a way to attain quality improvements—an option that for-profit insurers may not have.

Although the BCBSAZ model compares physicians by their individual cost and quality results, the comparison data provided to them are generally limited to other physicians in their practices. But clinicians can request network-wide comparison data.

Bonuses are paid to the enrolled practices, and the model leaves it to the practice leaders to decide whether to share the payment with individual physicians.

Lessons Learned

The model continues to add new providers--it has more than 900 now--and Myers attributes the interest to the results for participating providers.

Myers said other commercial insurers could create similar models without a consulting partnership by creating their own value-based physician networks.

The model’s leaders viewed the ability it allows providers to engage directly with patients as a key component of the early success, Wallace said. That outreach has included digital communications and phone calls to help coordinate the care of high-cost patients—actual or potential.

“That’s the foundation of our success—our care coordinators working on behalf of Blue Cross and the doctors, dialing and talking directly to the patients,” Wallace said.

“You have to have great information,” he added, referring to the use of patient data to stratify risk and of predictive analytics to prevent the need for costly care. 

Changes under consideration for the model include tailoring incentives to specific diseases and conditions, as well as implementing enhanced technological connections among patients, providers, and the joint venture, according to Myers.

The embrace of VBP models by Blue Cross insurers—often the largest commercial plans in local markets—could foster broader change compared with models located just in Medicare or Medicaid. Interest in the BCBSAZ model is apparent in the outreach Myers has received from insurance executives in multiple other regions, including Blue Cross Blue Shield insurers in Puerto Rico and Rhode Island.

“It’s my hope that as they learn about it, they will adopt this model,” Myers said.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Tuesday, November 27, 2018