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Premera to pay Everett Clinic for patients’ health

Rather than a fee-for-service model, the insurer will pay Everett Clinic and others based on patient's outcomes.

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By Kurt Batdorf
The Herald Business Journal
Published:
MOUNTLAKE TERRACE -- Premera Blue Cross will expand its Global Outcomes Contracting model, an innovative approach to working with medical providers, including The Everett Clinic, which the insurer believes will reduce costs and improve health-care delivery in the Pacific Northwest.
Premera is one of the first health insurance plans in the country to offer this type of payment model, which rewards cost-effective, outcome-based care instead of the fee-for-service system that many insurers now use.
"Under the current fee-for-service payment model, providers receive a fee for each test or procedure. Not surprisingly, this payment system encourages overuse and drives up costs," said Rick Cooper, chief executive officer of The Everett Clinic. "With the outcomes payment model, however, providers are being rewarded for keeping patients healthy through prevention, care coordination and disease management."
Across Washington, 12 major physician groups and an independent physician association, which, combined, manage care for nearly 100,000 Premera members, have joined the program.
Through Premera's new payment model, groups earn an annual financial reward based on a combination of savings they achieve and the quality of care they provide over the course of the preceding year, Cooper said. The Everett Clinic, for example, saved $1.2 million in patient treatment costs compared to traditional fee-for-service treatment.
"This is fairly new and evolving," Cooper said of value-based care. "From our point of view, we've been very pleased. It's kind of a fundamental change to how health care is paid for."
Premera spokeswoman Amy Carter said that rather than negotiating an annual rate increase for The Everett Clinic, the Global Outcomes Contracting model offers the clinic a financial reward based on the cost savings it can achieve while improving patient results using specific health measurements. Global Outcomes compares those costs with the general cost of patient care within the same geographic area and shares the savings with the clinic, she said.
Premera officials say initial results indicate the new approach is helping to moderate rising medical costs, judging by the first groups participating in the new payment model. For example, the total health-care cost trends last year for Premera patients managed by The Everett Clinic and The Polyclinic in Seattle were 3 percent to 5 percent below the average of other Premera patients in the same area who have a regular physician, after accounting for differences in health.
"The results prove this model is making an impact," Rich Maturi, senior vice president of health care delivery systems at Premera, said in a news release.
Many traditional models for changing the fee-for-service system focus only on specific cost measures. Premera's new payment model takes it a step further by examining the total cost of the patient and incorporating an important quality component. The intent is to ensure that costs are contained without reducing the quality of care. The physician groups participating in this initiative are implementing other new strategies to improve quality and control health care costs.
Based on the first-year success of Premera's payment model, Cooper said The Everett Clinic is actively negotiating with Group Health, Regence Blue Shield, First Choice, Humana and UnitedHealthcare to implement value-based care with those insurers.
Additional groups participating in Premera's new payment model include Family Care Network, Franciscan Medical Group, Northwest Physicians Network, Pacific Medical Centers, Pediatric Associates, Puget Sound Family Physicians, Rockwood Clinic and Wenatchee Valley Medical Center.

Kurt Batdorf: 425-339-3102; kbatdorf@heraldnet.com.

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