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Premera's payment model allows providers flexibility in moving away from FFS
MOUNTLAKE TERRACE, WA - While many private payers across the country have rushed to launch payment initiatives wrapped around healthcare delivery models like ACOs and patient-centered medical homes (PCMH), Washington-based Premera Blue Cross has found success via its unique payment model it calls Global Outcomes Contracting.
While still a fee-for-service (FFS) payment model at its core, GOC nonetheless provides incentives for practices both to decrease the overall cost of care of its patients while also meeting predetermined quality standards. But instead of giving the upfront payments to practices that are common in PCMH models, Premera bases future FFS unit cost payment increases on how effectively the practice has achieved the quality metrics and reduced the cost trend of its patient population compared to the cost trend of all its members not attributed to the program.
According to Rich Maturi, senior vice president of healthcare delivery systems at Premera, the intent of the program is to give individual practices the latitude to decide for themselves how to derive savings from their own patient populations.
"The practices don't have to redesign radically the way (they) do healthcare initially," Maturi added, "but they can go after the sickest patients and the clearest opportunities to eliminate unnecessary and wasteful utilization."
Internal work on the program began roughly five years ago, Maturi said, and its data on the savings potential is beginning to take shape from two of its earliest participants, The Everett Clinic, in Everett, Wash., and Seattle-based The Polyclinic, both of which began operating under the payment model in 2010. Analysis of the first two years of data show both groups were able to reduce the cost trend between 3 percent and 5 percent per year, which has generated savings of $1.2 million and $2 million respectively.
The Everett Clinic, which has a patient base of nearly 300,000 and operates eight walk-in clinics, and two outpatient surgery centers, was a natural fit for the program. It is one of only 10 physician groups in the country selected for CMS' five-year Physician Group Practice (PGP) demonstration project that ended in 2010 focused on providing coordinated care for Medicare beneficiaries. Today, it applies the lessons learned in the PGP project across its entire patient population and is moving away from the FFS payments, which Rick Cooper, CEO of The Everett Clinic, said "encourage overuse and drives up costs" to payments focused on health outcomes.
"The Everett Clinic's prevention and disease management programs result in early detection, improved quality of life for our patients, reductions in hospitalizations and an overall decrease in the cost of care," according to information supplied by the clinic.
It's those savings, however each provider finds them, that Maturi and management at Premera believe will help practices find new ways to accelerate savings in future years.
As Michael Tronolone, MD, chief medical officer of The Polyclinic noted: "Changing reimbursement from a pure fee-for-service system to one based on performance... gives us a chance to finance care process improvements. The fact that we were successful now allows us to fund further innovation."
Now in the third full year of operation the Global Outcomes Contracting model now counts 12 major physician groups and an independent physician association, which comprise more than 100,000 Premera members, or roughly one-fourth of all its members who have an attributable primary care physician.
While the early results are encouraging, Maturi is clear that the program is only now beginning to reach maturity.
"In terms of the arrangements, we've arrived at scale. On the other hand, this is the beginning after five years of evolution," he said. "Now we will see what happens as a result of the providers learning to find the low hanging fruit and us learning to share data and the providers beginning to share information about what works."