Fierce Q&A: Premera Blue Cross reforms provider payments with global outcomes contracting

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Reducing healthcare costs is a constant issue payers grapple with, so many have chosen to adopt new and innovative methods to transform the current provider payment model, including collaboration between payers and providers.

Washington-based Premera Blue Cross has launched its global outcomes contracting model, which rewards physician groups for providing cost-effective, evidence-based care. The insurer works with 13 physician groups that provide care for almost 100,000 members. So far, the results are promising; two of the participating provider groups, The Everett Clinic and The Polyclinic, already saved $1.2 million and $2 million, respectively, in 2011. To learn more about this payment reform method, FierceHealthPayer chatted with Rich Maturi (pictured), Premera's senior vice president of healthcare delivery systems.

FierceHealthPayer: Can you explain how Premera's global outcomes contracting model works?

Rich Maturi: Premera's global outcomes contracting model moves away from the traditional fee-for-service payment system and instead rewards physicians groups if they demonstrate cost savings for their attributed patients while maintaining certain quality metrics. This unique model ensures that costs are contained without a reduction in the quality of care for patients. The groups are rewarded annually based on combination of the cost savings they demonstrate and the quality of care they provide to their patients' total health over the course of the preceding year.

FHP: How is the global outcomes contracting model different from other payment reforms, including the alternative quality contracts (AQC) in Massachusetts?

Maturi: The AQC program in Massachusetts is capitation payment adjusted for quality, while the global outcomes contracting model is fee-for-service payment adjusted for quality and total healthcare cost trend. 

Unlike Massachusetts (and some other markets) where provider groups have been managing large numbers of capitated HMO lives for years (over half of commercial enrollment is HMO), in Washington, there is very little HMO business and no capitation other than for Group Health and its owned clinics. So, the global outcomes contracting model introduced total cost trend accountability without requiring wholesale conversion to capitation. The similarity is that both programs focus on rewarding providers for quality and total healthcare cost trend moderation.

FHP: What goals is Premera trying to achieve by implementing this payment model?

Maturi: Premera recognizes that the current healthcare system is unsustainable and is actively finding ways to lower the cost of healthcare. Therefore, our main goal with this initiative is to provide a new financial model that rewards clinics for lowering costs while still providing high quality care to our members.

This model helps doctors transition away from the current fee-for-service business model to an outcomes based business model, which we believe is a key component to creating a high quality, affordable healthcare system.