Healthcare costs continue to rise beyond inflation, and these increases are unsustainable for members and employers. Blue Shield of California has recognized that major structural change is the only way to seriously address this skyrocketing cost trend. Over the past five years, Blue Shield has developed new payment models in collaboration with provider and hospital partners to bring better value into the healthcare market and bend the cost of health care trend.
Blue Shield’s pay-for-value strategy focuses on payment models that support providers to deliver quality care at lower cost while improving both the member and provider experience. It’s clear that one size will not fit all, as providers and hospitals have different priorities, so we have created models to meet providers where they are:
Primary Care Reimagined – Primary care is the foundation of the healthcare system, and Primary Care Reimagined rewards practices that do a great job delivering preventive health care that helps members stay healthy through standard tests, check-ups and education. This bold approach shifts the healthcare system away from traditional fee-for-service to empower physicians with the flexibility to make clinical choices based on patient needs rather than incentivizing care based on billable services.
“Quality over quantity is at the center of our Primary Care Reimagined strategy. This value-centered approach promotes quality outcomes and positive experiences with primary care,” said Krishna Ramachandran, senior vice president for Health Transformation and Provider Adoption. “The results are there. This year alone we are seeing a 7.4% reduction in overall cost of health care from this prevention-focused model.”
Accountable Care Alliance – Our new Accountable Care Organization (ACO) model pairs cost savings with strong incentives for clinical quality and member experience, putting the member at the center.
“As an early leader in the ACO movement, Blue Shield is once again transforming the vision for what these effective collaborations can look like,” said Aliza Arjoyan, senior vice president for Provider Partnerships and Network Management. “Expanding beyond traditional ACOs to a holistic, value-based performance program that balances both healthcare quality and cost, we now have 46 HMO collaborations serving 550,000 members, and 29 PPO collaborations serving 210,000 members throughout California. In 2023, this new approach yielded $31 million in net savings.”
Episode-of-Care payments – Our new Episode-of-Care payment model ensures providers are paid for care coordination before, during and after a surgery or procedure, preventing unnecessary readmissions and costs. With 14 surgeries/procedures included in the model, orthopedic, women’s health, gastroenterology and cardiology are specialties that are taking the lead. The results are significant, with orthopedic procedures seeing 7.4% savings due to improved quality and coordination of care.
Hospital Value Model – Blue Shield’s newest model, the Hospital Value Model, takes a fresh approach to hospital payments by linking reimbursement to hospital quality outcomes. Hospitals must meet or exceed industrywide benchmarks for quality, specifically on hospital safety, utilization and patient experience. By the end of the model’s second year, over 45 hospitals will have signed on.
Paying for value is what members deserve. It’s a structure that reduces providers’ administrative burdens, enabling them to focus on their patients. We will be working on additional models as part of our continued evolution. Blue Shield’s bold vision is to have 90% of eligible cost of health care spending flow through these pay-for-value models over the next few years. This is what the future of health care looks like when payers, providers and hospital systems work together to improve healthcare quality, making it sustainably affordable.