Blue Cross and Blue Shield of Minnesota and Allina Health formed a six-year value-based payment model, the organizations announced Thursday.
The insurer, which covers about a third of Minnesotans, and the 11-hospital system based in Minneapolis aim to reduce costs by 10% over five years by incentivizing more preventative and coordinated care, the organizations said. This would boost doctor-patient relationships, limit administrative expense and ultimately improve outcomes for around 130,000 Blue Cross members who receive care at Allina each year, executives said.
The organizations had been planning the payment model for months prior to the COVID-19 pandemic, but it underscored the need for stable, diverse revenue sources and long-term care models that aim to improve individual and community health, said Dr. Penny Wheeler, president and CEO at Allina Health.
"If anything, COVID-19 has amplified the need for this type of arrangement," she said, adding that the pandemic not only illustrated the risk of relying predominantly on fee-for-service care but also amplified disparities in care. "We're confident this time is an inflection point."
Allina and BCBS Minnesota hope that their agreement can serve as a road map for others exploring similar partnerships, Wheeler said.
Both organizations had struggled with the transactional and bureaucratic relationship between payers and providers that often puts patients in the middle, said Dr. Craig Samitt, president and CEO at Blue Cross and Blue Shield of Minnesota.
"There's this saying I often refer to: 'An ounce of prevention is worth a pound of cure.' But historically we haven't rewarded the ounce, only the cure," he said. "If we shift the incentives so that payers and providers are rewarded to move care upstream and focus on wellness prevention and the physical and social needs of the community, we should ultimately reduce the cost of care."
BCBS Minnesota will pay Allina an upfront sum for certain subsets of patients, and how much Allina ultimately yields depends on how it performs on quality, accessibility and affordability measures, Wheeler said.
Allina and BCBS Minnesota plan to leverage their collective data to expand and hone care management services and care coordination as well as establish more affordable and accessible sites for care delivery, like via telehealth. But that is a big lift, requiring accurate projections of who Allina will be taking care of and how to best align quality metrics, sites of care, caregivers and community resources to tackle issues like food insecurity, housing and transportation, Wheeler said.
Wheeler noted Allina's cancer care coordination program, which connects newly diagnosed cancer patients to community resources and helps them holistically manage their prognosis by addressing their mind, body and spirit. Although Allina estimates that it saved the community around $1.2 million over a six month span by avoiding nearly 100 hospital admissions, the organization lost $600,000, she said.
"There wasn't a sustainable model for that," Wheeler said. "This partnership changes the game completely."
Under traditional payment models, acupuncture services for a patient's chronic back pain wouldn't be covered. They would have likely been directed toward surgery, even though that option is often more expensive and less effective, Samitt said.
If a patient's bloodwork suggests they were pre-diabetic, a fee-for-service model would jump to medications and clinic visits to treat the disease without treating the cause or focusing on the cure, he said.
"This partnership allows us not to just jump to conclusions, but begin with the foundational drivers, which could be nutritional and behavioral, and not just medical," Samitt said.
Many providers only dabble in payment models that aren't based on the number of patients seen and services rendered. But COVID-19 has illustrated the tenuous nature of fee-for-service healthcare as non-urgent procedures—often hospitals' and physician practices' primary revenue source—have been incrementally halted amid the pandemic.
Those that participate in alternative pay models like capitation, where providers receive a pre-determined monthly amount to care for a group of patients and are on the hook for the cost and quality of care, have been more insulated. This has caused providers to either double down on existing at-risk payment models or explore their options for those that have been reluctant to leave traditional models.
"Our hope is that this partnership doesn't just benefit Allina and the patients we both serve, but is a catalyst for the entire community," said Samitt, noting that their partnership is longer than the typical value-based arrangement. "Change is long overdue in this industry."