In Minnesota, Blue Cross Blue Shield and Allina Join in a Forward-Looking Six-Year Contract around VBC

Sept. 2, 2020
On August 27, senior executives at Allina Health and Blue Cross and Blue Shield of Minnesota announced a groundbreaking six-year value-based contract that aims to lock the right incentives into population health work there

On August 27, the senior executives of Allina Health and Blue Cross and Blue Shield of Minnesota, both based in the Minneapolis-St. Paul metro area, announced a new partnership capped by a six-year value-based contract. As a press release published that day explained it, “Following more than a year of collaboration and planning, Allina Health and Blue Cross and Blue Shield of Minnesota (Blue Cross) today announced a six-year, value-based payment agreement between the two organizations, which collectively serve a significant percentage of Minnesotans. Allina Health performs more than 6 million patient visits per year, while approximately one in three residents in the state have coverage through Blue Cross. The agreement is designed to provide enhanced value for Blue Cross members while fostering even more high-quality care and healthy outcomes that Allina Health is well-known for across the state.”

The press release noted that, “Months prior to the onset of the COVID-19 pandemic and its impact on nearly every aspect of the American health care system, Blue Cross and Allina Health began reimagining the traditional construct between provider and payer in order to better align the relationship around a shared vision of lower cost, higher quality and more accessible health care. The pandemic underscores the timeliness and importance of this agreement, which will provide more stable and predictable revenue, while supporting care models that aim to improve individual and community health.”

Per the partnership, the press release noted that “The new agreement aims to reduce the cost trend of Blue Cross-specific care at Allina Health by 10 percent over five years. Notably, the portion of payments made by Blue Cross that are tied to achieving optimal patient outcomes are 5-to-10 times larger than what is outlined in typical outcomes-based risk arrangements.” It noted that “Blue Cross is Allina Health's largest payer and Allina Health is Blue Cross' largest provider of care for its Minnesota members. Altogether, Allina Health and Blue Cross believe this agreement will positively impact the cost and quality of care for around 130,000 people. Both organizations believe the sheer scale of this agreement will set a high bar for value-based care, driving innovation and transformation in health care at a pace that would take decades under more moderate contract terms.”

Further, the announcement stated, “The rewards placed on additional preventive and coordinated care were designed to maximize the time available for building doctor-patient relationships, streamlining the care delivery experience and simplifying administrative requirements. Both organizations believe that such an emphasis is necessary to foster more proactive and preventive care, and catalyze work to reduce the unacceptably high rates of health disparities across our community.”

The press release quoted the CEOs of both organizations, with regard to the announcement. "COVID-19 accelerated the imperative that health care in the U.S. needs to be more coordinated, accessible and affordable for all who need care," said Dr. Penny Wheeler, president and chief executive officer at Allina Health. "The pandemic also unearthed significant gaps throughout the health care community that contribute to unacceptable health disparities. Through this agreement with Blue Cross, we will be better equipped to address health disparities and positively impact the future of health care in Minnesota." And, “"We've lived in a volume-based health care world where the profitability of sickness is greater than the profitability of wellness," said Dr. Craig Samitt, president and chief executive officer at Blue Cross and Blue Shield of Minnesota. "COVID-19 has hastened the need for change, and our value-based partnership with Allina Health is already proving to be a positive example of what's possible when health care plans and health care providers work collaboratively on shared challenges to improve the physical, mental and financial health of our patients and members."

Among the key provisions of the agreement:

Ø The pandemic rapidly increased the adoption of telehealth, as in-person care options were curtailed for the safety of providers and patients. Part of succeeding in value-based models is the ability to provide care at the most appropriate time and place. Providers and patients are increasingly comfortable with expanded options for giving and receiving care, and this agreement will allow the expansion of these options to continue in a sustainable way.

Ø  Ultimately, the significant commitment to this value-based care model will help more Minnesotans to improve and maintain their health. Improving quality is foundational to the agreement and any savings will be measured against quality improvements first.

Ø  Another important metric will be the renewed focus on preventive care to help reduce future chronic and acute cases using societal factors that impact health and key health measures including, but not limited to, diabetes A1c control, statin therapy for patients with cardiovascular disease and controlling blood pressure.

Allina Health, based in Minneapolis, encompasses 90-plus clinics, 11 hospitals, 11 retail pharmacies, specialty care centers and specialty medical services, home care, home oxygen and medical equipment, and emergency medical transportation services. Blue Cross and Blue Shield of Minnesota, headquartered in St. Paul, serves more than 2.6 million members—one in three Minnesotans—and offers a range of individual and group health insurance plans, as well as dental and vision plans, serving all markets, including private, Medicare, and Medicaid.

Shortly after the announcement, Dana Erickson, R.N., senior vice president of health services at Blue Cross Blue Shield of Minnesota (BCBSMN), and Ric Magnuson, executive vice president and CFO at Allina, spoke with Healthcare Innovation Editor-in-Chief Mark Hagland regarding the new partnership. Below are excerpts from that interview.

Tell me about the strategy of your two organizations in developing this partnership, at the highest level?

Ric Magnuson: If you step back, we’re both fortunate that we’ve got CEOs at Blue Cross Blue Shield of Minnesota and Allina Health who are passionate about improving value to enhance quality and reduce cost. Both are very passionate about that. At the 40,000-foot-up level, that’s a very important part of this. We recognized 12-plus months ago that both organizations were passionate about it, but that we were coming at it different ways; we agreed to do it in a collaborative way, to build trust and to figure out how we could change the dynamic.

Dana Erickson, R.N.: I would echo what Ric has said, but maybe also add that, when you think about the power of us as a payer with Allina as a provider, aligning together, is really setting a new standard in the industry. We can be a leader in this space, with this partnership model. So we’re hoping to be a catalyst to do this with other provider systems, and for Allina to partner with other payers, around this.

A six-year contract is a long one; we haven’t heard of many of that length. Can you share about that?

Erickson: Initially, when we got together, we all agreed that in order to achieve the vision we agreed on, we needed to align for a longer period of time. In two-year contracts, you end up chopping it up into little tranches and having to constantly renegotiate. We’re not looking to turn back on this. This is a partnership; it’s more than a contract. So we were very purposeful in making this longer-term, to be successful, to create a glide path.

Magnuson Partnership is a key word here, apart from the contract that underlies it. And this is not an overnight thing. We needed time to change the model.

What are the top-line elements in the contract?

Magnuson: There are several key elements involved. First, it’s rewarding population health, through a population health payment, which is substantial; it really gives Allina money to manage a population. A second piece is that Blue Cross is making upfront investments in Allina, including an upfront cash flow helping us to build infrastructure, to be able to build on this. And the third thing is, there’s a substantial element of risk involved. 

Can you share about the financial terms and risk levels?

Magnuson: The contract takes a percentage of what we used to get reimbursed for under fee-for-service, and locks that in.

Erickson: We’ve been pretty open that our arrangement is try to try to reduce cost over time. The level of risk is 5-10 times larger than in other arrangements.

Magnuson: It’s a moving target for the life of the contract; but it’s substantial. It allows us to provide services, care coordination, telehealth, that may or may not be rewarded in a FFS world, and allows us to cover those expenses in ways that are better for the population. You’ve seen primary care caps, etc.; it’s beyond that, it’s allowing us to do the right things, and not be so dependent on people coming through our doors.

And so the contract encourages upstream-based care and outpatient-based versus inpatient-based?

Erickson: It’s encouraging a population health approach, to move care upstream so that people stay healthier and that their care be given as upstream as possible.

Magnuson: In the fee-for-service world, I’m rewarded for doing a surgery much more than for outpatient therapy. In this world, I’m rewarded for providing the best care for the patient. And it does move us more towards ambulatory. And it allows us to reach out…

What learnings around care management and population health management did you bring into these contract negotiations?

Erickson: For me, it’s about the fact that when we actually got together and talked about our collective goals around the state, that we had the same shared goals; we were just going about it in different ways. We both were pursuing population health. And we did a lot of work around trust and common language; and once we got to an aligned vision—once we put the payment piece in place, and we were looking to support Allina with this population health approach, we fundamentally believed that Allina would be successful in this. I’m a nurse, and have worked on both the provider and payer side, and I believe that the provider-patient relationship can be very strong, and can be supported.

Magnuson: And a key element in this is building trust; and I have to say, we both learned a lot and developed trust.

What kinds of challenges do you see ahead? And how do you plan to overcome them?

Magnuson: This is a significant change to the way we deliver care and are rewarded, so from a change management perspective, it’s a significant change. We have to deliver on it now. This has been our strategy, where we needed and wanted to go; but now we have to operationally deliver on it, and that is a significant amount of change for my colleagues in how they think about it and are rewarded. It means a significant amount of change to reward systems and revenues and how they’re aligned. That’s why six years.

Erickson: We live in an ecosystem here as well that’s been set up for fee-for-service; and we have a lot of commitments as well to Allina with regard to data that we will provide in a different way, or with different sets of data. We have to make sure we’re paying to our own needs, so that we can continue to support this model. Both organizations—we’re both fighting together against entrenched ways of doing things.

How are you going to be leveraging data, and how are you going to be working to marry clinical and claims data successfully?

Magnuson: Having the right kind of data was an important part of the agreement, and built into the agreement itself. So we came up with key data that had to be delivered within certain datelines, including prospective attribution data. And we’re aligned on this; we both want to make sure we have the right data, so we identified where the gaps might be, so they’re working together on that.

Erickson: Ric’s right, and we’ve spent a great deal of time on it. And we have technology teams working on this. How do we automate clinical data exchange, for example? There’s a ton of opportunity. But we have a shared agreement to do exactly those kinds of opportunities, around care management or referrals, etc. But also, how do we make data exchange more timely, more consistent? We definitely see this as a future area of collaboration.

Is there a special element in the healthcare culture of Minnesota that makes these kinds of collaborations possible? Is it unique in some way?

Magnuson: I was born and raised here, left for over 15 years, and came back. What’s different is that it’s truly a community that does try to collaborate in ways I didn’t see elsewhere. So I do think that that’s special. And while provider systems compete, we do try to collaborate and do what’s best for the community.

Erickson: And the non-profit healthcare status in Minnesota does drive a different level of community engagement than in other states. We all think we’re special, but that does bring a different mission focus than in other states, where there’s not-for-profit.

Magnuson: Most of the hospital systems are not-for-profit, though there are for-profit surgery centers and health plans. But the core of the healthcare system here is not-for-profit, and the health plans.

What does the next two years look like in this venture?

Magnuson: We’re excited to be able to talk about this agreement; so now we’ll need to take it to the next levels in the organization, and get teams engaged, and to be able to execute. We worked on this agreement, but then had to go through the pandemic. But it’s exciting to develop the vision; first, we’ve got a lot of work to do internally, and then we need to engage the community; so, a lot of blocking and tackling!

Erickson: I agree. Now is the time where we can really get to work. And here we are in the middle of COVID, so it can be challenging to think about that set of challenges. But we started thinking about this long before COVID. So it now really is around putting our plan into action. During the contract period, we really thought a lot about the governance structure and decision-making, and really relying on the trust we’ve developed. So there’s putting this into place and working on the change management, and letting the agreement help us move forward together.

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