Value-Based Care News

How Blue Cross Blue Shield Achieved Value-Based Care Payment

Blue Cross Blue Shield of Michigan is leading the way in implementing value-based care payment models and patient-centered medical homes.

By Vera Gruessner

The transition to value-based care payment from fee-for-service payment methodology has come about due to the constant rise of healthcare spending. In fee-for-service, healthcare providers are incentivized to perform more services and offer often wasteful or redundant diagnostic testing. This often leads payers to cover unnecessary costs.

Patient-Centered Medical Homes

In value-based care payment models, however, providers are incentivized to reduce their overall spend, keep their patients healthy, and improve their quality of care. Value-based care payment involves care quality metrics that providers must adhere to in order to obtain full revenue under their payment contract. Otherwise, providers are penalized financially if they don’t meet quality of care benchmarks or cost reduction goals.

There are a number of different models that can utilize value-based care payment including accountable care organizations, pay-for-performance structures, and patient-centered medical homes. Blue Cross Blue Shield of Michigan is one health payer that focuses on implementing value-based care in patient-centered medical homes.

David A. Share, M.D., the Senior Vice President for Value Partnerships at Blue Cross Blue Shield of Michigan, spoke with HealthPayerIntelligence.com about some of the steps that his organization takes to include value-based care among patient-centered medical homes.

“Starting in 2009, we began to hold our basic physician fee structure stable. We’ve maintained basically flat fees. We don’t have annual across-the-board increases in these fees,” Share clarified. “All new money - inflationary increase and professional reimbursement - goes into what we call a value-based reinforcement authority. We use that amount, which increases over time, to fuel a value-based reimbursement structure for the physician community.”

He went on to explain that primary care practices and medical facilities that work to function as a successful patient-centered medical home model will obtain higher rates in revenue.

“If they work hard and become a PCMH-designated practice, they’ll get a higher rate in the fee schedule. If they’re part of a physician community that achieves high value in terms of cost on a per member per month basis or keeping the cost trends low annually, then they will get another increment of value-based reimbursement. If they are providing high quality to the population of patients, they’ll get another incremental increase in their value-based reimbursement rate. Finally, if they are providing comprehensive team-based, enhanced care management and care coordination, they’ll get another incremental increase in reimbursement,” Share noted.

Those medical practices and primary care facilities that do not meet the requirements of their value-based care payment contracts are left with a 40 percent lower rate of reimbursement than others, said Share. In this manner, Blue Cross Blue Shield of Michigan incentivizes providers to reduce spending and improve the quality of care.

“Currently, the PCP practices have a potential opportunity of variable reimbursement in a 40 percent range. That means if they don’t do this value-based work and achieve success and outcomes in cost and quality terms, then they’re stuck at a 40 percent lower rate. It’s a really a risk of losing substantial revenue,” he continued. “So they have to work hard and deliver value to get the full potential revenue. We’ve been deeply in a value-based reimbursement mode with primary care practices since 2009 and have increased the emphasis and the proportion of reimbursement tied to value yearly since that time.”

Dr. Share also spoke about the obstacles that primary care practices used to face alongside payers before value-based care payment systems were put in place. The healthcare system was more fragmented and primary care was underfunded and lacked the support it needed. Today, there is much greater care coordination and incentive to improve quality especially among patient-centered medical home models.

“Our patient-centered medical home program is a major component of our physician group incentive program, which began in January of 2005. About a year before that, we actively worked with leaders in the physician community throughout Michigan to ask two questions. If given that the health system is very fragmented and not much of a system at all, what would a highly-functioning organized system of care look like? Secondly, what would we have to do to transform reimbursement in order to realize the vision of achieving that transformed, high-functioning health system?” Share questioned.

Blue Cross Blue Shield of Michigan wanted to bring multiple providers together to engage them and begin “bringing to life that vision.” Additionally, the health plan looked to strengthen primary care.

“The vision started out with this notion of shoring up primary care, which was in disarray, underfunded, and poorly supported,” Share added. “This was not just primary care isolation but the idea at the outset was, as we strengthen primary care, we’d find ways to create a sense of interdependence and achieve integration across the primary care and specialist community. Finally, over time, as the physician community began to organize itself more effectively and build the infrastructure needed to be more system-like, to broaden the circle to include hospitals.”

“As our thinking evolved, coincidentally, the patient centered medical home model became better articulated in the provider community,” he continued. “So we were able to harness that. Our ideas and structure we were using was already in place and aligned with the concept of medical homes.”

Health insurance companies like Blue Cross Blue Shield of Michigan are leading the way in transitioning to value-based care reimbursement and supporting new care delivery models like patient-centered medical homes. Other payers may not be as quick to jump on the bandwagon of value-based care, research shows.

The healthcare alliance Premier released a survey last month showing that 66 percent of C-suite executives are looking either form their own provider-sponsored health plan or work with another provider-sponsored plan due to the inability to find commercial payers looking to invest in value-based care reimbursement.

The work of Blue Cross Blue Shield of Michigan has grown significantly in its pursuit of patient-centered medical homes, explained Dr. Share.

“The physician organizations were incentivized by our plan to work with the practices to build medical home capabilities and then to also build capabilities in the specialists’ offices to interconnect them with the primary care offices,” Share concluded. “By 2009, we had supported enough of that work across the state in what grew from 10 physician organizations to 45 physician organizations so that we were able to begin designating patient-centered medical home practices.”

 

Dig Deeper:

How Payers Should Prepare for Value-Based Reimbursement

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