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NC's Largest Health Insurer Reaches Landmark Deal With Five Health Systems

Blue Cross and Blue Shield of North Carolina headquarters in Durham.

It's become cliché for executives of health systems and insurers to talk about the need to move away from a fee-for-service reimbursement model toward one that pays for value and rewards health providers for keeping patients healthy, not for simply treating them when they are sick.

Value based models have become a buzzword, with various pilot programs showing success.

Now, in what appears to be the largest such arrangement in the United States, Blue Cross and Blue Shield of North Carolina agreed to a value-based reimbursement model with five major health systems in the state. Others could follow as their existing reimbursement contracts expire.

The health systems are Duke University Health System, UNC Health Care, WakeMed Health and Hospitals, Cone Health, and Wake Forest Baptist Health. The top executives for each of those five systems joined Blue Cross and Blue Shield of North Carolina CEO Patrick Conway at the BCBSNC campus in Durham to make the announcement.

Health systems and health insurers can sometimes be at odds with each other, and it was symbolic that the chief executives of all five health systems were present to show support.

Blue Cross already has some value-based contracts in place, but those cover small patient populations or pilot programs. With the buy-in from these five systems, it means 25 percent of the 3.8 million BCBSNC members fall under these new contracts, a designation called Blue Premier. Conway said he hopes to reach 50 percent by 2020. This does include large employers with self-funded plans but not the nearly 730,000 members on the State Health Plan, though it could opt-in at some point in the future.

"At its core, Blue Premier really allows us to put the primary focus on the patient in a way that we haven't in the past," said Dr. Eugene Washington, President and CEO of the Duke University Health System.

Put simply, these value-based contracts reward health systems for keeping patients out of the hospital, or coordinating care with other providers. Under the fee-for-service model, a health system is paid a fee for a service, say an MRI. If a patient has had an MRI from a different provider just one week prior, the insurer might be charged for two procedures, when simply reporting the results from the first MRI to the second provider would have sufficed.

Going forward, Blue Cross will share patient data across providers – an uncommon arrangement in American health care, but one that could save millions.

If health systems meet patient health benchmarks and reduce costs, they will share in the savings, but the opposite is also true.

"And when we say joint accountability it means if things go well, and we lower cost and improve quality and experience, we all share in that," said Conway. "If things don't go well, which hopefully won't happen, we also share in those losses."

Editor’s Note: A earlier version of this story said Blue Premier doesn’t have any large employer self-funded plans signed up yet. That is correct but only because the program is brand new. Blue Premier does, in fact, include large employers with self-funded plans.

Jason deBruyn is the WUNC health reporter, a beat he took in 2020. He has been in the WUNC newsroom since 2016.
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