When a health system and a health insurer form a relationship based on mutual trust and aligned goals, the future is filled with possibilities – perhaps including the end of prior authorizations and provider/payer disagreements over insurance coverage for treatments and services.
Utilization-management practices that lead insurers to require prior authorizations or decline claims based on insufficient evidence of medical necessity have become a de facto part of the traditional fee-for-service model, which pays providers based on the volume of services they deliver. But when this model shifts to shared accountability – where payments for health care services are tied to achieving quality and cost goals – then the old ways of doing business may no longer apply.
A break from past methods to deliver more affordable, quality care is driving the innovative shared accountability arrangement between Horizon Blue Cross Blue Shield of New Jersey (Horizon BCBSNJ) and Atlantic Health System (AHS). The two organizations share the financial accountability for the health, quality of outcomes and total cost of care for 30,000 Horizon BCBSNJ members who are patients in Atlantic Health's Clinically Integrated Network.
Started in January 2019, this risk-sharing model is already seeing dividends. The arrangement has resulted in a reduction of more than 9 percent in unnecessary hospitalizations, and a 5 percent reduction in the total cost of care for patients/members in the first program year alone.
And by aligning goals, Horizon BCBSNJ and AHS have drawn closer together. Whereas payer-provider relationships are often strained by contentious negotiations around rates or the back-and-forth over pre-approvals, prior-authorizations, and medical necessity reviews, this relationship is grounded in collaboration.
“Health care is a team effort, including how we pay for care. This unique partnership has created a framework to deliver high-quality, affordable and accessible care that is increasingly proactive and preventative,” said Brian Gragnolati, President and Chief Executive Officer of Atlantic Health System. “I am proud to lead a health system that has entered into a shared-accountability arrangement and hope that our commitment will serve as a catalyst to others, so that together, we can address the major issue of health care costs in our state.”
How shared accountability works
Under this risk-sharing model, Horizon BCBSNJ and AHS use prior trends to jointly set a total cost of care target for their patient/member population. AHS's reimbursement for caring for those members is adjusted annually based on how it performs as compared to cost targets in addition to the quality of care and patient outcomes it achieves.
What makes this relationship unique as compared to many other payer-provider partnerships is that AHS also has agreed to share the cost of care if those total costs exceed the agreed-upon targets.
This partnership shares more than risk and financial accountability, though. Data sharing is also critical.
The two organizations built a private health information exchange, where administrative and clinical data are pulled in. Horizon BCBSNJ adds an analytic layer that allows information and insights to be passed back to Atlantic Health, even for patients who go outside the health system for other services like pharmacy.
“By bringing the strengths of a health plan — analytic capabilities, rich data, our ability to show the physicians where their opportunities are and improve insights into care delivery — coupled with the strong clinical capabilities that the physicians and the health systems bring to the table, together we’re able to drive more affordable costs, and more critically, quality outcomes,” said Allen Karp, executive vice president of health care management and transformation for Horizon BCBSNJ.
Clinical teams from both organizations also work together, huddling biweekly to manage care, address complex medical conditions and identify newly diagnosed medical, surgical and catastrophic cases to aid in better managing a patient’s health.
This close coordination helps doctors and hospitals deliver higher quality care, which in turn produces better outcomes for patients – and offers each organization a better shot at achieving its financial goals.
The shared accountability model thus forms a virtuous circle, where major issues like quality and affordability are brought to the forefront and squabbling over reimbursements and utilization management can be set aside.
The real winner from this new model, though, ends up being the patient. “This arrangement puts the focus on achieving the best result for the patient and that is our highest priority. The model empowers physicians by giving them more accountability for the care they deliver along with greater incentives for them to help lower the total cost of care,” said Gary D. St. Hilaire, President and Chief Executive Officer of Horizon BCBSNJ.