Connecticut has started a bundled payment program for its state employees to help save healthcare costs.
Connecticut’s employee health plan cost the state $1.3 billion in fiscal year 2019, and Connecticut faces a deficit of over $2 billion. The new program, along with other efforts related to the health plan, are proposed to save the state $185 billion by fiscal year 2021, according to the state.
So far, 180 providers in Connecticut have agreed to participate and more are expected to join before the end of the year, said Joshua Wojcik, assistant comptroller for the state. Commercial insurers in Connecticut haven’t been as eager to offer alternative payment models, Wojcik said, so “we are hearing from the provider groups that they are excited the state is going down this route.”
The providers include hospitals such as Griffin Hospital and physician practices like the Community Medical Group. The program currently involves more than 20 procedures and conditions including knee replacements, pregnancy care and cataract surgery.
The program encourages the 220,000 state employee health plan members to select providers with lower than average costs and higher than average quality through monetary incentives that range from $100 to $1,000. On the flip side, providers who participate in the program can pocket the extra profits when they exceed benchmarks.
Connecticut is using claims data from Anthem to determine the average costs of procedures. The insurer agreed to provide the information. Quality data is also from claims and public sources.
The cost and quality benchmarks for procedures are largely universal across the state although Connecticut has made exceptions for some areas where healthcare spending is much higher than the average, Wojcik said. The goal is for the provider to meet quality and cost standards that are better than the state average. The state will update its benchmarks each year.
Connecticut has contracted with technology company Signify Health to help determine the details of the bundles and work with providers on the contracts for the episodes they’ve agreed to. “There is a big administrative component,” said Francois de Brantes, senior vice president of Signify Health.
Additionally, Connecticut has partnered with the company Health Advocate to engage directly with members. The company provides “concierge” services in which they are available to answer any questions members have about their health plan, direct patients to use providers participating in the bundled program and help set up appointments. In order to receive the monetary incentive, members must engage with Health Advocate, Wojcik said.
Physician practices are also working with the state to encourage patients to participate in the bundled payment program. The state has created with some large physician groups a referral tool that identifies providers that are part of the program.
“They (the physician practices) are adopting that across their book of business and changing their referral patterns,” Wojcik said. “Our goal is to have a significant and long-term impact on the market dynamics in Connecticut and we are just starting to at least hear of and see the first glimmers of the impacts of changing the financial motivations of our provider groups.”
Connecticut will evaluate evaluated each year the savings from the program.
The ability for bundled payment programs to achieve cost savings and improve quality have been scrutinized. Recent studies show Medicare’s voluntary program has only been shown to decrease spending for joint replacements while other clinical episodes haven’t shown any savings yet. Research has not shown that bundled payments improve quality overall.
De Brantes pointed to analyses that show Medicare’s bundled payment program has been successful. He added that Connecticut’s program is different in that it focuses on procedures and episodes that can be done in the inpatient and outpatient settings whereas Medicare focuses mostly on acute medical events and inpatient procedures.
De Brantes, who is familiar with value-based payment programs, said the program from Connecticut “sets a new standard in the industry.”
“Connecticut isn’t unique. It has the same dynamics that many other states face and I think the importance of the state employee plan as one of the largest purchasers in advancing the cause of value-based payment is really essential, to lead and show the example to other employers,” he added.