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Blue Cross, South Shore Change Formula on Health Costs

March 29, 2019
By Andrew Dreyfus and Dr. Gene E. Green
Imagine this: A person suffering a fever and chills calls an ambulance. When the EMTs arrive, they recognize the symptoms of the flu in a robust middle-aged male. Under their contract, they have to take the patient to the emergency room unless he refuses care entirely. 
At the hospital, the admitting nurses and doctors also recognize likely flu symptoms. But the hospital won’t be paid if they refer the patient to an urgent care center or physician’s office that could quickly and less expensively test for the virus, dispense medicine and provide advice.
So the patient is admitted to the ER, along with hundreds of others suffering minor ailments such as sprained ankles, ear infections, even poison ivy. The hospital charges those patients and their insurers for the steep cost of emergency care and in turn, those bills help contribute to increases in premiums and health costs in the region. 
Sound familiar? This is, of course, how many of our hospital reimbursement systems currently work. Insurers pay hospitals for filling beds. Hospitals receive money for admitting, testing and performing procedures on patients. They don’t get paid for trying to keep people healthy and out of the hospital in the first place. And costs go up for employers and members. 
As CEO of Blue Cross Blue Shield of Massachusetts and president and CEO of South Shore Health System, we are changing that.  
Under a first-of-its kind pilot program, Blue Cross is paying South Shore Hospital to control health costs while improving patient outcomes – even if that means referring patients to a clinician’s office that is unaffiliated with the hospital. South Shore will be rewarded for keeping its community healthy. 
The program breaks new ground in payment reform for hospitals, but follows the decade-long path forged by Blue Cross’ Alternative Quality Contract with physicians. Under the AQC, which is in effect with the majority of Massachusetts physician groups and has become a national model, Blue Cross pays doctors a set amount to care for patients and rewards them for meeting certain standards. The model has a strong record of constraining costs and improving quality: Massachusetts has outperformed the rest of the country on constraining cost growth every year since 2010. 
We are confident our new program -- the first to change volume-based payment incentives for hospitals – will see equal success and potentially expand to other hospitals in 2020.
Under the new model, hospitals have latitude to devise creative ways to constrain costs and improve outcomes. South Shore has taken an ingenious approach: It bought a local leader in urgent care, Health
Express, and partnered with its hometown, Weymouth, to provide ambulance services. It is hiring and training a large, experienced team of EMTs and paramedics, and investing in new technology to allow that team to assess each patient’s condition on each 911 call. The team has the ability, with each patient and each patient’s family, to choose care best suited to their medical needs.
Patients who do not have life-threatening, complex or acute injuries or illnesses (like our flu patient) can be cared for at clinicians’ offices that are closer to home, more cost-effective and more convenient. They can be brought to an urgent care – Health Express or a service unaffiliated with South Shore – for fast and appropriate care. They can even be treated by EMTs or paramedics in their own home, when suitable. The Emergency Department’s precious resources of time, space, equipment and expertise will be reserved for patients who need critical care. 
In other words, the hospital reimbursement system has been reimagined, with a goal of creative collaboration that leads to a healthier population. Blue Cross is rewarding the health system for that collaboration.
We believe this innovative approach will make a difference not only for our own patients and members, but to employers and our broader community. As local not-for-profits, we are committed to such meaningful advancements.
After all, hospitals want to focus on keeping people healthy. Insurers do too. 
Andrew Dreyfus is president and CEO of Blue Cross Blue Shield of Massachusetts, a not-for-profit insurer with 2.8 million members and 26,000 employer customers. Dr. Gene E. Green is president and CEO of South Shore Health, the largest independent health system in Southeastern Massachusetts. 
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