IBJNews

Anthem, Franciscan sign accountable care contract

Back to TopCommentsE-mailPrintBookmark and Share

This could change everything.

Anthem Blue Cross and Blue Shield has signed a new kind of contract with the Franciscan Alliance hospital system that allows Franciscan to make more money only if it saves money for Anthem.

If more doctors and hospitals sign similar deals with Anthem, it would start to end the payment arrangements that are widely blamed for the ever-rising costs in health care.
 

David Lee Lee

Franciscan and Anthem have created what’s known as an accountable care organization. That means Franciscan is financially accountable for what it spends to care for 63,000 patients its doctors and hospitals treat regularly, who also have Anthem benefits provided via employers or purchased individually.

The three-year contract, which begins April 1, involves all 11 of Franciscan’s hospitals around Indiana, including the three it operates in the Indianapolis area. About 300 physicians are also part of the contract.

“We’re very enthused with Franciscan and their willingness to go this route,” said Dr. David Lee, Anthem’s vice president for provider engagement and contracting. “It says they want to do what’s best for patients.”

This is the first accountable care organization, or ACO, Anthem has formed in Indiana. Its parent company, Indianapolis-based WellPoint Inc., now has 84 ACOs nationwide. And other health insurers are looking to sign similar arrangements with health care providers.

Franciscan already has formed multiple ACOs in partnership with the federal Medicare program for seniors. Medicare was authorized to start forming ACOs by President Obama’s health reform law, the Affordable Care Act.

Under all accountable care contracts, health care providers take responsibility for cost and quality of the care provided to a specific group of patients. In Franciscan’s case, that means it is even responsible for bills those 63,000 Anthem patients rack up with non-Franciscan hospitals and doctors.

Doug Leonard, president of the Indiana Hospital Association, said that even though he has no direct knowledge of the Anthem-Franciscan deal, he views it as a step in the right direction.

“It’s a good sign that the insurance company and the hospitals are working together to experiment with new payment models,” said Leonard, who is the former CEO of Columbus Regional Hospital. “It sounds like a way to align their incentives to improve their cost and quality of care.”

The contract with Anthem will pay Franciscan a small amount each month for each patient Anthem assigned to the ACO to help cover the cost of the staff required to keep track of those patients—even when they aren’t in a doctor’s office or hospital facility.

In a similar program for physician practices, Anthem pays $3.50 per month for each patient. While Anthem would not disclose the payments it will make to Franciscan, it said that amount is a good guide. That would mean Franciscan receives $2.5 million to $3 million a year in these payments.

The new deal also will score Franciscan on 38 quality measures. Those measures include how many patients have received proper preventive screenings, how many diabetes patients are taking their medicines and getting regular blood sugar tests, how often physicians are prescribing generic medicines when they’re available, and how many patients are making avoidable emergency room visits.

If Franciscan earns enough points for its quality, it qualifies for a year-end bonus.

That bonus will come from any savings Franciscan achieves in caring for those 63,000 patients. Those “shared savings” payments will be calculated by comparing total costs of care with expected costs of care for the year.

The expected costs will be calculated based on the total spending for those 63,000 patients in the past 12 months, plus the average percentage increase in costs experienced by all health care providers in Indiana.

care-factbox.gifIn the second and third years of the contract, Franciscan still will be eligible for a bonus if it achieves savings. But it also will be on the hook to pay Anthem back if the cost of its care exceeds the projected costs. Anthem calls this “downside risk.”

Franciscan has been one of the few hospital systems to actually earn “shared savings” bonuses in its Medicare ACO programs. Out of 32 hospital systems that signed up for the Medicare Pioneer ACO program in 2012, Franciscan was one of only 13 that saved money for Medicare.

Franciscan pulled in $6.6 million—half the money it saved Medicare in 2012.

“Our health care system formed the first Medicare ACO Shared Savings in Indiana in 2012 and was among the first nationally to do so,” Kevin Leahy, CEO of Franciscan Alliance, said in a statement.

Teams from Anthem and Franciscan already are having meetings and sharing data to help track the 63,000 patients in the Franciscan-Anthem ACO. They’ll look to save money by reducing the number of patients coming back to the hospital a second time for the same condition and cutting back patients’ use of the emergency room.

Such collaboration is almost unheard of in typical insurer-hospital contracts. In fact, as recently as four years ago, Anthem and Franciscan engaged in a 10-month court battle when a contract negotiation broke down.

“That’s really refreshing,” said Steve Morgan, an Anthem negotiator who worked with Franciscan on the deal. “Most negotiations, it’s this chess match.”

Anthem’s Lee said the insurer is having discussions with other hospital systems in Indiana about forming ACOs or entering other kinds of payment arrangements that reward low-cost, high-quality care, rather than simply pay health care providers more for doing more things to patients.

Leonard, the hospital association president, said nearly all his members agree these new contracts need to happen, but they are fearful of making the finances work in the transition.

“A lot of hospitals are waiting to see how these things are unfolding,” Leonard said. “The logic of it, the theory of it, is clear. The fearful part is, how do you throw the switch? And what is the financial bridge that will get you there?”

Lee said Anthem is willing to help providers make the transition to accountable care before making them liable for costs that exceed projections.

“We’re very willing to take a gentler approach,” Lee said. “We really would like to have a value-based contract with any provider that’s willing and capable.”•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Hello Dear Are you tired of Seeking Loans and Mortgages,have you Been Turned down constantly By your banks and Other Financial Institutions or Micro Finance scheme. This is let you know with 100% guarantee that we Offer loans ranging from $1,000 Minimum to $1,000,000.00 Maximum at 3% interest rate per Month. We give out LOANS for developing business. a competitive edge/business expansion. email address: michealscottloan124@gmail.com We offer the following kinds of loans and many more; * Personal Loans ( Unsecured Loan) * Business Loans ( Unsecured Loan) * Consolidation Loan * Combination Loan * Home Improvement * Xmas Loans for contact to seek for loan email this email address: michealscottloan124@gmail.com Thanks

  2. My name is Mr Henry Josh and i live in the USA California and life is worth living right now for me and my family and all this is because of one man sent by GOD to help me and my family, i once had a life filled with sorrow because my first SON needed a kidney transplant and all our savings were going towards his medications and this normally leaves us with no money to pay our bills or even put enough food on our table and our rent was due and no funds to pay these bills and life felt so unfair to me and every night my wife will cry herself to sleep every night until one day, i was browsing through yahoo answers and i saw a striking advert of a man that gives out personal loans and that the offer is opened to all and i have heard so many things about internet scams but at this point of my life, i was very desperate and ready to take any risk and at the end of the day, i applied for this loan and from one step to another, i got my loan within 12 hours through bank transfer and you know, it was all like a dream and i called Mr Daniel Jones A Man who is the GOD sent lender i found and said, i have received my loan and he smiled stating that to GOD be the glory and i was so shocked as i have never ever seen anyone with such a GOD fearing and kind heart and today, i am the happiest man on earth because by GOD’S grace, my SON kidney transplant was successful and today he is healthy, i and my family are living very comfortable and happy and if you are in my former situation or in serious and legitimate need of a loan, you can reach this GOD sent lender via fidelityloanfirm@outlook.com

  3. Greetings to everyone reading this comment!!! I am Greg William by name. I am out here to recommend the effort of Mark Oscar,I was in need of a consolidation loan amount of 50,000 and as soon as I got in contact with Mark Oscar Loan Firm on Wednesday last week and on Friday last week as well I receive an alert from my bank(Royal Bank of Scotland Group) that the fund was transferred,I want everybody on this site to contact Mark Oscar now via email on how to get a loan because I got my loan from them and I am very happy,so contact them now. Oscarloanfinance@hotmail.com Thanks!!!!!!

  4. Elected officials, like Mourdock, get vested in 8 years. It takes 10 years for all other public employees, most of whom make a lot less money. So much for the promise to finish out his term.

  5. Great state treasurer and a good man!! Just curious if the folks who didn't quite understand his quote would like to tell my daughter-in-law that God didn't intend her! Mourdock's comment was correct but twisted and the article didn't mention that his opponent and the press let the impression stand that Mourdock meant that the rape was intended. Stupid people!!

ADVERTISEMENT