This week, the Health Policy Commission met for their annual Cost Trend Hearing to address the challenges our industry faces in controlling health care costs. While many questions remain, some progress has been made, and insurers and providers alike were on hand to share the efforts that collectively they have taken to reduce costs.

For example, Partners HealthCare is one of a handful of providers to participate in new, innovative contract models with Blue Cross Blue Shield, which were announced on Monday. As The Boston Globe reported, the contracts “set budgets to care for patients and reward providers for keeping patients healthy and away from expensive hospital stays and procedures.” It’s an alternative payment model that gives added incentive for positive outcomes, rather than providing reimbursement for all services rendered.

“The single most promising approach to improve patient care and lower costs is to change the way we pay for care — to realign financial incentives to reward the quality, outcome and efficiency of the care patients, our members, receive,” Andrew Dreyfus, CEO of Blue Cross Blue Shield of Massachusetts, told the Commission.

We’ve seen success with alternative payment models in the past, as we continue to integrate population health management throughout our hospitals. In 2013 our total medical expenses charged to Blue Cross Blue Shield, Harvard Pilgrim Health Care and Tufts Health Plan were all below the cost growth benchmark, as reported by the Center for Health Information Analysis (CHIA).

Another topic raised by the Commission was the variation in reimbursements that health care providers receive from insurers. While the Commission had questions about these discrepancies, national health care experts testified that markets across the country experience price variation.

At Partners, we attribute price variation to a number of factors, including the complexity and uniqueness of clinical services our hospitals offer, the severity of patients seen, research capacity, clinical training programs, community health programs, the quality of care, the cost of providing care and others.

Quality is especially relevant. The market demand that Partners experiences “comes from the public perception of our quality and the willingness of the public to recommend and return to our institutions,” Dr. David Torchiana, CEO and president of Partners, told the Commission.

Rather than looking at health care costs from the perspective of a fee-for-service model, we believe that greater emphasis should be placed on total medical expenses. Lowering unit prices will not have the same long-term positive impact as reducing the overall total medical expense.

As we continue to grapple with these challenges, our industry as a whole will need to adapt, but we’re committed to doing what it takes to improve care and reduce costs. As Dr. Torchiana told the Commission, “We’re making a concerted effort to comply in the environment we’re working in, not just because of the rules, but because we believe in it.”

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Topics: Affordability, Industry Interactions, Access to Care

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