10:33 AM

Partnering on Value-Based Care is Key to Reining In Health Care Costs



This is fourth in a series of essays by Horizon’s executive leaders describing their approach to improving health care quality, affordability and customer experience to achieve what’s known as “The Triple Aim of Health Care."

By Christopher M. Lepre, Executive Vice President, Commercial Business

I came across an article recently in Managed Care about Dr. Stephen Zabinski, a surgeon at Shore Orthopedics Associates in Somers Point, New Jersey, who also happens to participate in the Episodes of Care program here at Horizon Blue Cross Blue Shield of New Jersey (Horizon BCBSNJ).

The article is about Dr. Zabinski’s efforts to perform joint-replacement surgery on an outpatient basis instead of in a hospital. As the population is aging, the number of these surgeries is projected to nearly triple over the next 10 years, and the shift to outpatient treatment could save millions of dollars in health care expenses.

I was struck by one particular line in the story: “In New Jersey, an episode-of-care payment program introduced by Horizon Blue Cross in 2010 inspired Zabinski and his partners at Shore Orthopedics to overhaul their processes and protocols so that the vast majority of their joint-replacement patients under age 65 could avoid inpatient surgery and rehab.”

The underlined section gets at the heart of what we’re trying to do at Horizon BCBSNJ to get better control of health care costs for our members across the state. By incentivizing our physician partners to come up with better and smarter ways of helping their patients, we’re helping to lower costs while improving the quality and experience of care for our members.

Rising costs are felt by our members in two ways: through health insurance premiums and out-of-pocket responsibilities – co-pays, deductibles, and co-insurance – they pay for their care. At Horizon BCBSNJ, nearly all (89 cents) of every premium dollar goes directly to pay for our members’ medical expenses. So, to meaningfully lower health insurance costs we have to lower the total cost of health care.

That’s exactly what we’re doing in the Episodes of Care program highlighted in Managed Care. It is a great example of the collaborative approach we take with doctors and hospitals to lower costs, while producing healthier outcomes and improving the experience of our members. Dr. Zabinski’s patients, for example, not only avoid the extra cost of inpatient care, they get to spend more time with friends and family and return to living their lives faster.

It might be easier, of course, to lower costs by simply reducing services, sacrificing quality care or just unilaterally cutting payments to doctors or hospitals. But that would be shortsighted. At Horizon BCBSNJ, we never pursue cost savings in isolation. It’s always part of an integrated approach to achieve the Triple Aim: improved affordability, quality and member experience.

The Rising Cost of Health Care

That said, we recognize the urgency of addressing the cost issue. In 2017, health care expenditures in the U.S. reached $3.5 trillion – $10,739 per person – or 17.9 percent of U.S. GDP – twice that of comparable countries. New Jersey’s per capita spending on health care is the fifth highest in the nation, and our costs are rising faster than the national average – an 18 percent increase versus a 15 percent increase nationally.

At Horizon BCBSNJ, we’re committed to changing that and to achieving a cost trend that is lower than the equivalent industry average by 2021. To reach this goal, we’ve fundamentally changed the way we work with the health care system, moving away from traditional fee-for-service reimbursement to value-based care.

The value-based model is about delivering better care, not just more care. It requires collaborating with like-minded providers to identify the outcomes we all want to achieve on behalf of patients and then building payment models that foster those outcomes. By aligning our interests and putting patients first, we’re able to help shift New Jersey’s health care system toward providing better care at lower costs and cutting out services that don’t contribute to better outcomes. And when our partners achieve jointly agreed-upon goals around quality, member experience and cost, they share in the cost savings.

Blazing the Trail in Value-Based Care

Horizon BCBSNJ has been a leader nationally in developing value-based programs. Right now, 1.8 million of our 3.5 million members are covered under value-based arrangements, and 68 percent of our total medical spend goes through value-based providers.

By far our biggest value-based program is our OMNIA Health Alliance, a first-of-its-kind partnership with leading health systems and physician groups across the state. OMNIA focuses on keeping members healthy – not just helping when they’re sick. And, like the Episode of Care program, it rewards doctors and hospitals for providing better care. Because we’re able to lower the total cost of care, premiums for OMNIA programs are 15 percent less expensive, on average, than comparable plans.

Taken together, programs like OMNIA and Episodes of Care are having a real impact on costs. In 2017, for example, members using value-based providers experienced:

  • 4 percent lower total cost-of-care trend
  • 4 percent lower rate of hospital inpatient admissions
  • 6 percent lower medical cost trend for patients with congestive heart failure
  • 2 percent reduction in potentially avoidable ER visits year-over-year

In total, we’ve achieved millions in gross medical cost savings from our value-based providers, resulting in significant value-based payments to our partners.

Neighbor to Neighbor

At Horizon, improving health care affordability is part of our longstanding commitment to the people and businesses of New Jersey. As a not-for-profit, we exist for the benefit of our members, not shareholders or investors. That’s why nearly all premiums we collect go to pay for our members’ medical care.

But there’s even more to it than that. At Horizon BCBSNJ, we’re New Jersey’s insurer, focused solely on New Jerseyans. As a former baseball player, I like to call Horizon “the home team.” Our mission is to help the people here achieve their best health. So, we work closely with our physician partners to close gaps in our members’ care. And we even offer innovative programs to address the environmental factors that can affect our members’ health – things like access to nutritional foods, adequate housing and transportation.

More New Jerseyans choose Horizon than any other health insurer. Unlike the out-of-state, for-profit health insurers who decide which communities or members they’ll serve based on what’s best for their shareholders, we live and work here, too - all 5,500 of us – and offer coverage for everyone in every community. No other company can say that. And being New Jersey’s home team also means we understand and have the deepest relationships with the hospitals, doctors and employers in this state. Nobody knows New Jersey better than Horizon.

At the end of the day, our members are also our neighbors, our family and our friends. So are the doctors, nurses and thousands of people working in hospitals and clinics helping our members get the care they need. What motivates us is being New Jersey’s home team - that singular focus on this state – and working for and with those in our communities. More affordable health care isn’t something we just talk about at Horizon. It is a promise we work to deliver on every day.