Can insurers really achieve better care at lower costs?

November 27, 2013 | By Dina Overland

There's no mistaking the fact that healthcare costs continue to rise regardless of whether quality of care improves. So a new study from the Commonwealth Fund examines if it's possible to get better care at lower costs, analyzing several payment reform initiatives already underway.

"We know for certain that more spending does not translate into better care or a better-functioning healthcare system," the study states. "The good news is that a lot of activity is already taking place in the private and public sectors to obtain greater value for our health care dollars."

The most successful strategies to improve care and lower costs include encouraging providers and patients to make good healthcare choices, expanding access to medical homes and primary care, and promoting an increased use of technology.

Some of the most promising initiatives to provide a high-quality, affordable health system, according to the study, are:

Bundled payments: When insurers pay providers one amount for all services rendered to treat certain conditions, including cardiac bypass surgery or knee replacement surgery, providers are essentially paid to keep patients healthy. Doctors coordinate care and rely on cost-effective treatments. Blue Cross Blue Shield of North Carolina has launched a successful bundled payment program for knee replacement surgeries, partnering with two prominent health systems to bill members one total amount for each service related to their knee replacement, FierceHealthPayer previously reported.

Global payments: Under this payment model, insurers give a single healthcare organization one sum to provide all the care for a specific population, such as one company's employees or all people living in a certain geographic area. In addition to saving money, doctors focus on meeting certain quality standards and receive bonuses when patients avoid expensive hospitalizations. Some of the most well-known global payment initiatives come from insurers in Massachusetts, including Harvard Pilgrim and Blue Cross Blue Shield of Massachusetts, that pay providers a fixed amount of money each year to care for patients. However, a 2011 report concluded these global payments weren't saving money.

Accountable care organizations: ACOs usually involve partnerships between insurers and providers that share responsibility and financial risk for delivering quality care to patients, which limits overutilization of medical services. Insurers pay the participating provider for the cost of patient care and the providers can share in any savings achieved. Aetna, for example, has found success in the ACO model by empowering providers with an unprecedented level of access to medical claims data. ACOs may be the most popular model, with one of every 10 Americans receiving care from one of more than 400 ACOs across the country. Cigna operates almost 60 of those ACOs, which rely heavily on patient care coordinators to ensure members receive appropriate care.

To learn more:
- here's the Commonwealth Fund study