Horizon Blue Cross Blue Shield of New Jersey’s OMNIA health plan took center stage when it was created in September 2015 as the tiered network plan that launched a round of lawsuits aimed at the insurer and the state Department of Banking and Insurance.
In the process, company officials say it upstaged what was supposed to be the bigger part of the program: The OMNIA Alliance.
The alliance is a contractual joint research, strategy and financial venture with six health systems and one physician group in the state, said Allen Karp, senior vice president of health care management at Horizon.
Rather than having insurer and provider sitting on opposite sides of the negotiating table, squeezing the other for as much cash as possible, Karp said the goal was to change the dynamic between health provider and insurer while providing a safe space for competitors to sit at the same table and discuss best practices.
Karp said several ideas for change have taken root.
“The hospital piece is big,” he said. “If you get the hospital piece locked in and everybody aligned, you’re going to get much better results.”
But the relationship with each health system is different.
“Each part is asked to do certain things and bring certain things to the table,” Karp said.
To begin with, the structure of the Alliance includes a few of the top ranking C-suite executives of the Alliance members along with Horizon executives, including Karp, who meet quarterly. These meetings, the first of which was this year, discuss strategies and benchmarks, and share best practices being developed by one of the members.
This governing committee is comprised of three Horizon executives and about the same of the health system executives. Each health system has its own governing committee, and Horizon conducts these quarterly meetings separately with each system.
Weekly and bi-weekly meetings take place among operating committees, which focus on gathering the internal data of the programs and filtering out what is and is not working.
For example, Horizon launched an emergency department navigator program in March that focuses on guiding patients to the right course of care.
“We weren’t able to do that before our partnership because they didn’t want us in their ED,” Karp said. “Now, on the back end, they benefit from having us in there to lower cost.”
What is being done in Newark with RWJBarnabas Health’s Beth Israel center is one example of the difference between partners.
In Newark, Horizon identified about 900 Medicaid and commercially insured patients whose spending is roughly $20 million — all from not being connected to the health care system at all, Karp said.
This is a combination of certain diagnoses left untreated or undetected until a patient is in the emergency room or because of social determinants agitating the patients’ health without external support.
“So, what we are doing with Barnabas here in Newark, as a pilot, is identifying diagnoses that are driving a lot of the cost,” Karp said.
This includes opioid and drug abuse, HIV, and diabetes, he said.
By partnering with social service centers in the area, the hospital and insurer are able to reduce the cost of care for all, he said.
“If this model works, we can use it in Paterson, Elizabeth — you name the city,” Karp said. “Even in the suburbs.”
And it takes care of duplication of processes, too, he said.
“There is a lot of duplication in the health care system,” Karp said. “They have case managers and we have case managers. They have social workers, we have social workers. And the (patient) is being contacted 10 times and you get nothing out of it. So, how do you take that and how do you rationalize it so that the (patient) knows what they are getting is really to help them? How do you move it from a phone call eventually down to the point of care?”
The benefit to the health system is a lower cost of care and preventing over-burdening of their resources. The benefit to the insurers is lower cost of claims and being able to predict costs better.
“Right now, it’s bouncing up and down,” Karp said, adding the alliance “puts the delivery of care into the hands of the people who are providing it.”
Horizon pitched the idea to the health systems by promising an increase in revenue.
“Say the average model is 5 percent on clinical revenue,” Karp said. “They would have to open another hospital to generate any real earnings. So, this revenue on shared savings, the margin might be 70 to 75 percent. Every dollar they are saving, they get 70 to 75 cents.”
And the plan is to ensure stickiness for the partners, so they don’t fly off to do their own thing, by continuing to own the data of its members and offering plug and play tools to help with analytics.
There wasn’t always this much enthusiasm, he said. The health systems were slow to get on board.
“It was slow at first because the top level executives (needed convincing), but as we drilled down into the system with our team, there (was) so much engagement,” Karp said. “It was a big bet.”
And when OMNIA first rolled out, the entire Horizon operation was put through “the OMNIA drill.”
“They had to understand what it was,” Karp said. “We had cardboard elevators to make the elevator speech. We promoted it a lot, both internally and externally.”
If the end goal of controlled costs becomes a reality, then step two, shifting the risk of health care coverage, comes into play.
This was a key component in determining the Alliance partners, Karp said.
“We looked at what is their population health capability,” he said. “(Some health systems) focus on cost and quality, and they are clearly two major drivers, but there are all these other things we looked at. One is, how ready are these systems to move into a risk environment?”
In addition, Horizon looked at what the clinically integrated networks looked like. How diverse it was and the scope of services offered.
The larger health systems are naturally more ready than smaller ones to begin the shift to shared risk, Karp said, especially since costs are based on ZIP codes under the movement to population health management.
“We look at the medical costs of ZIP codes and attribute that,” he said. “It could be $500 million to $1 billion that we are asking them to co-spend.”
Which is why the end goal of each health system is not necessarily owning 100 percent of the medical risk.
Currently, in the shift to value-based care, Horizon is paying underlying fee for service, but the partners are responsible for half of the savings. So, it is an upside-only shift, Karp said.
Another upside is the health systems that are partners benefit from getting better rates with Horizon.
As they work to evolve their systems, along with using the combined power of data and analytics from Horizon, they will progress to underwriting their own risk, shifting to both a savings and risk relationship.
“But we don’t want them to take on risk until they are ready,” Karp said.
“For us to move volume into outpatient settings, we need market-based pricing. They are working on that and rebalancing their portfolio. It forces them to think about cost structure.”
The hospital cost structure is one of the most debated issues, and plays a role in the out-of-network and charity care debates.
Which is why Horizon is ramping up its interest in back-end data and research, following a partnership with COTA, with a yet-to-launch information exchange called Horizon Health Sphere.
“We are not a research company, but what comes out of the research impacts our cost and our bottom line,” Karp said. “It used to be you sit across the table and have a couple contracts beat the hell out of each other. If you look at charges related to cost, there really is no relationship at all. It really is such a huge markup, which is why we don’t pay them.”
Now, both sides are figuring out how to lower cost and improve quality.
Date:April 24, 2017