By Thomas Vincz, Public Relations Manager, Horizon Blue Cross Blue Shield of New Jersey

Three years ago, Jerry¹, a retired school administrator in southern New Jersey, had surgery to fix a bad knee. And like many people, he was concerned about getting the best quality of care possible.

“You’re always careful about having an operation,” Jerry said. “You hear stories about the kinds of problems that might develop.”

But Jerry didn’t have to worry. His procedure was covered under an innovative program at Horizon Blue Cross Blue Shield of New Jersey (Horizon BCBSNJ) that is starting to change the way healthcare is delivered in the Garden State.

The program is called Episodes of Care (EOC), a new approach in which doctors and insurance companies work together to improve the quality of care to give patients a better health care experience and lower overall costs. In Horizon BCBSNJ’s EOC program, one doctor oversees all aspects of care for an episode (a specific medical condition or procedure) rather than just the care that he or she provides. By taking on this role, the doctor is responsible for making sure the patient receives the best care possible. If the doctor is successful in meeting certain quality and cost targets, he or she shares in the savings achieved.  Most importantly, the patient gets care – from diagnosis to recovery - that is coordinated, efficient, and effective.

The EOC program is a change from the traditional healthcare payment approach that focuses on individual services and pays doctors and hospitals based on how many tests and procedures they deliver, rather than paying only for those that will benefit the patient. Under the EOC approach, what counts is delivering the right care, in the right setting, at the right time.

All of this is invisible to the patient. Jerry, for example, wasn’t even aware that he was participating in the EOC program when he had his knee surgery. But he was clearly pleased with his care – particularly with all the advance information he received about his treatment and how his surgeon coordinated the various service providers who were involved – from radiologists to physical therapists.

“I felt good about the whole process,” Jerry said. “Everything was very well planned out. Coming from an educational background, I appreciated all the information and communications I received before the procedure. It really put me at ease about having the operation. Then afterward, the doctor went over everything that was going to happen next, including the physical therapy and my six-month follow-up visit.”

Improving Quality and Costs

A recent Blue Cross Blue Shield analysis showed that patients who had orthopedic procedures covered under an EOC program had lower infection and readmission rates than patients under standard programs. And costs for EOC-covered procedures were 30 percent less.

This cost reduction occurred without reducing payments to providers.  In fact, it allowed providers to share in the savings.  Because this is a relatively new model and because it takes time for change to evolve, Horizon designed the program to be “after-the-fact” and “upside only.” That means that providers continue to be paid based on their fee-for-service contracts. Once the episode is reviewed after-the-fact, they have an opportunity to share in any savings that are achieved. It’s an opportunity for providers and payers to work together as partners to figure out how to create success and improve patient outcomes and experiences.

That opportunity appealed to Dr. Stephen Zabinski, MD, of Shore Orthopedics Association in Somers Point, NJ, the surgeon who performed Jerry’s operation and who was one of Horizon BCBSNJ’s original partners in the EOC program.

“My patient care is much better because of my involvement in the Horizon Episodes of Care program,” Dr. Zabinski said. “It’s really made me think about everything it takes to optimize patient health so we can minimize complications and improve patient outcomes. In elective surgery, such as hip and knee replacement, reduction in cost is directly related to improvement in quality of care.”

Horizon BCBSNJ’s Episodes of Care program has also caught the attention of some of the most recognized and respected leaders working to fix America’s healthcare system.

“We have to have change the way we pay for care if we’re going to lower costs and improve quality,” said Dr. Ezekiel Emanuel, M.D., head of the Department of Medical Ethics and Health Policy at the University of Pennsylvania and a former special advisor for health policy in the Obama White House. “All these experiments with different payment models are vitally important. Horizon was out early, experimenting on episodes of care and other bundling approaches. They are definitely on the cutting edge.”

In the EOC Program, physicians orchestrates all aspects of care to ensuring the patient receives the best quality and most appropriate care possible.

Michael Porter, a professor at Harvard Business School, has pioneered the main ideas that have become part of this new payment approach. Like Dr. Emanuel, Dr. Porter is excited that Horizon BCBSNJ is bringing doctors, hospitals, and other health professionals together in new ways and reorganizing healthcare around patient value.

“Through its innovation, Horizon has shown that it’s possible for health plans to structure payments to reward value and help providers innovate and become more efficient,” Dr. Porter said. “Horizon’s Episodes program directly addresses the high cost of healthcare and uneven quality that affect patients in the U.S.”

The person behind Episodes of Care at Horizon BCBSNJ is Lili Brillstein, Director for Specialty Care Models, who took over the program in 2013. The EOC program began as a small pilot project in 2010 with just two episodes – hip replacement and knee replacement. Knee arthroscopy, pregnancy and colonoscopies were added in 2013, and the program has expanded every year since.

The EOC Program provides millions in savings for patients.

Today the program has 26 episodes. Between 2014 and 2018, it delivered $90 million in savings, and more than 40,000 Horizon BCBSNJ members have participated. In 2018 alone, there were more than 38,000 episodes and savings of $43.8 million, making it one of the largest programs of its kind in the country.

Expanding Coverage to More Complex Conditions

“We recognized very early on that the traditional payment model led to disjointed care and can’t be maintained over the long term,” Ms. Brillstein said. “We began asking questions like, ‘How do we improve quality of care? How do we make sure that patient care is better coordinated while eliminating unnecessary spending that adds no benefit?’ That ultimately led to the Episodes of Care program. Following the successful pilot, my task was to grow the program – to include new conditions where we could have a large impact and continue to learn.”

Ms. Brillstein has done just that. In addition to relatively straight-forward procedures, such as hip replacements, she has added more complex and chronic conditions, such as lung cancer, substance abuse disorders and cardiovascular disease.

“Horizon is not just going where others have gone,” said Dr. Emanuel. “They’re experimenting on episodes across a wide variety of medical conditions. They’ve demonstrated that episodes can be done quite effectively, not just for surgical procedures that have a distinct start and end date, but for far more complex medical conditions.”

Rob Capobianco, vice president of Value-Based Payments at Change Healthcare, a healthcare technology company that is Horizon BCBSNJ’s technology partner in the EOC program, agrees.

“What sets Horizon apart,” Mr. Capobianco said, “is the sheer number of programs they offer, the number of doctors involved and the length of time they’ve been doing this. Their scale and the sophistication is truly unique in the market.”

But it’s not only the breadth of the programs that count, according to Dr. Porter. It’s also the kinds of services Horizon BCBSNJ is willing to cover.

“By focusing on patient outcomes and learning from the experience, Horizon has expanded the definition of what services can and should be covered in caring for a particular condition,” said Dr. Porter. “Working directly with its clinical partners, Horizon has included non-traditional but high-value services in the continuum of care, such as patient transportation, yoga classes for low back pain and peer counseling in Substance Use Disorder.”

The theory behind these new 2019 pilots is that by extending the continuum of care to include non-traditional services, the company is addressing all of the needs of the patient, which ultimately is expected to have a positive impact on overall outcomes.

New Spirit of Cooperation

Mr. Capobianco of Change Healthcare also notes another important aspect of the program: it’s changing the relationship between doctors and the insurance company for the better – creating a more cooperative partnership than anything that existed before.

“The historical relationship between insurers and doctors has been adversarial – which stems from the traditional way we make payments with no connection as to whether a patient ever gets better or has a good experience,” said Ms. Brillstein. “But the EOC model creates communication and coordination in a way that just doesn’t happen in the old model. We work with doctors respectfully and as partners. We co-design the model with our physician partners. We come up with the quality measures together. And we’re engaged in a constant stream of communication – both individually with doctors and in groups of specialists.”

Dr. Jack Feltz, president of Lifeline Medical, a large OB/GYN practice in New Jersey, and chairperson of the U.S. Women’s Health Alliance, which is a national organization of women’s healthcare practices, describes it this way: “You really feel good that you’re doing great things together. It’s changed our relationship with Horizon. It’s not just about sitting down every three years and fighting about a payment contract. You look forward to learning and innovating together. It creates an exciting relationship that to me is really good for patients. When everybody has a positive attitude and works together, patients benefit.”

Dr. Feltz says one of the keys to the program’s success is data.

“The most important part of an episode of care,” he said, “is the ability to measure the way you’re practicing, so that you can improve. We’ve always had best practice guidelines, of course, but now we can measure and deliver outcomes that are important to our patients and continue to learn and improve our care model and practice guidelines.”

Dr. Emanuel concurs: “Most of us have no data comparing us to our peers or to agreed-upon standards. But when an organization can give you data that allows you to evaluate what you’re doing and decide whether you’re actually meeting the standards you think you’re meeting…that’s really valuable. It’s super, super important.”

Change Healthcare is responsible for collecting the data that goes into the episode of care analysis. They review all the claims data looking for so-called “triggering claims.” An example of a triggering claim would be the knee surgery that Jerry received.

Once the system identifies such a claim, it automatically looks back 30 days to find other claims that might be related to the surgery – preliminary lab work, for example, or x-rays. The system then knows to look forward 90 days to check for related claims – for such things as follow-up doctor visits or physical therapy.

Instead of just tracking each of the claims individually as under the old payment model, the system now bundles all related claims into one episode. It can then compare the total cost of the episode against the historical cost. Any savings are then shared, so the healthcare provider, who is still paid a traditional fee, has an incentive to operate as efficiently as possible.

The Ongoing Pursuit of Quality

Members had high overall satisfaction with communication and support from the Episodes of Care program.

Change Healthcare turns all its data into reports that Horizon BCBSNJ then uses in talking with doctors about delivering higher levels of efficiency and, more importantly, higher levels of quality.

The quality measures used in the program are established by the doctors and approved by Horizon BCBSNJ’s Quality Advisory Committee. Horizon BCBSNJ also combines this data with other quality-of-service measures, such as member satisfaction surveys, to create a complete program scorecard. In 2017, for example, members across all Episodes of Care rated their overall satisfaction with communication and support at 94 percent – the same rating they gave for satisfaction with the coordination of and involvement in their care.

So far, doctors who fail to meet quality or cost targets are not penalized – specifically because Horizon BCBSNJ wants to create a low-risk environment as they work together with doctors to develop models that work. Moving forward, however, Horizon expects the after-the-fact, upside-only model to evolve into a forward-looking model with both an upside and a downside, which ultimately will provide even more price transparency and where the outcomes improvement will be even more robust.

“We’re not putting all the risk on the doctors,” Ms. Brillstein said. “This is a joint learning process. But the more important reason is that these new models are about quality of care and the patient experience. That’s where we want to keep the focus.”

And that’s fine with Jerry, who has had a full recovery and is back to golfing and working out at the gym.

“I never had any worries,” Jerry said. “With all the information I received and with how accommodating Dr. Zabinski’s office was, I was at ease the whole time.”

1. At the patient’s request, we have used a pseudonym to protect his privacy.