You are using an outdated browser. Please upgrade to the latest version for the best experience. Upgrade your browser now.
Skip Navigation

In the News: Paul Markovich on Opioids, the Cost of Care and Surprise Billing

The president and CEO of Blue Shield of California tells Modern Healthcare , 'the system falls short'

Paul Markovich, the president and CEO of Blue Shield of California, recently spoke with Modern Healthcare. He told the publication that the plan is working to keep the cost of care in line with inflation and wage growth, about the strides made in combating the opioid epidemic, surprise billing from hospitals and what health care may look like in the future.

MH: What are some of your goals in creating more value-based arrangements with providers?

Markovich: The way I like to describe our mission is we’re here to create a healthcare system that’s worthy of your family and friends and sustainably affordable. The system falls far short of that description today. There are things that we can as a health plan on our own help make that transformation happen. But there are also things that have to happen that go beyond just one organization and one health plan.


One of the frustrating things for providers is that every health plan has a different set of quality measures that they use to do value-based payment, or different methodology for figuring it out. It becomes very difficult. There’s a lot of administrative burden to tracking these things. Providers are chasing report cards all over the place, so they can’t focus their energy in one area. We participated with the Integrated Healthcare Association in California to develop a common set of quality measures, and we were the first health plan to agree to that. Most of the rest of the major health plans have also signed up since then.

What we are talking to our trade groups about is getting the health plans to agree that if they do value-based payments it only draws from this menu of quality measures.

So if you’re a physician or a hospital you can say, “Alright this is it. This is how we’re defining quality. These are the measures that we need to perform on. This is how we’re defining value. This is how we’re defining patient value.” And when you do something like that, now as a provider you can really focus your energy on driving value because it’s been better and more consistently defined across the industry. 

That’s an example of something to do as an industry.

As a health plan, we developed a global-based budget with quality bonuses in our accountable care organization. We effectively said, “Here’s the population we’re serving. We’re going to work with the physicians. We’re going to work with the hospitals.”

We generally try to keep growth in healthcare costs for this population anywhere from flat to a 3% increase, somewhere in that range. So we set a global-based budget. We set targets and then we work with them, and we basically share the risk. If we can hit the budget then there’s a potential additional bonus if the providers hit quality measures. We’ve been doing that for almost 10 years now.

We have a network that’s exclusively made up of these ACOs and it’s been averaging over the course of its entire existence about a 3% compound annual growth rate in a healthcare cost trend that’s compared with more like 6% to 7% for the rest of our business. 

We’re now actually getting into how to pay the individual physician, and we have a set of payment models. We’ve identified the eight usual suspects—oncology, maternity, diabetes, heart failure, etc. You could probably fill in the blanks.

You can read the full story here.