Blue Cross & Blue Shield of R.I., Lifespan sign cost-sharing agreement

June 26--PROVIDENCE, R.I. -- More than 35,000 Blue Cross and Blue Shield of Rhode Island cardholders will be part of a "risk-sharing" agreement announced this week between their insurer and Lifespan hospital group designed to cut costs by better managing their health care.

The three-year agreement between Blue Cross and Lifespan, the state's largest health-care organization, aims to reduce expenses for duplicative laboratory tests, unnecessary emergency room visits and preventable hospital readmissions, among other things, by putting Lifespan on the hook for costs that run over budget. Any savings also would be shared with Lifespan.

Participants include more than 110 primary care providers serving the roughly 35,000 patients, or 10 percent of all Blue Cross cardholders, including those in group plans, individual plans and Medicare Advantage, a managed care plan for Medicare-eligible seniors that includes pharmacy benefits, said Stacy Paterno, a Blue Cross spokeswoman.

Blue Cross customers won't necessarily know whether they're part of the new arrangement, but Blue Cross and Lifespan officials say that patients should notice better communication and coordination between providers that will improve their care.

The latest agreement follows similar cost-sharing arrangements, including one involving more than 10,000 Medicare Advantage members that Blue Cross embarked on this spring with Care New England Health System, among others.

But it differs from previous arrangements in one important respect. The hospital network (in this case, Lifespan) has agreed to share not only in potential savings but also in any cost overruns, or "downside risks," said Peter Andruszkiewicz, president and chief executive officer of Blue Cross & Blue Shield of Rhode Island.

"When the insurance company has all of the risk, then the providers don't, and that's been [part] of the problem in the past," Andruszkiewicz said. "Now, we're working as partners and we have aligned incentives.... Lifespan is putting their skin in the game on both ends."

Instead of physicians getting "rewarded" financially for ordering extra procedures and additional tests, he said, the agreement includes a new payment model that rewards physicians for meeting quality performance and outcome goals.

Performance will be measured based on how closely the physicians followed the protocols for, say, screenings of diabetics or aspirin regimens for cardiac patient.

"The degree to which you stay within the lines and practice towards those evidenced-based protocols," Andruszkiewicz said, "you get rewarded."

Dr. Timothy J. Babineau, president and chief executive officer of Lifespan, said in a statement that the agreement is aimed at "recognizing and rewarding quality care for our patients."

(The contract, which is retroactive to Jan. 1, 2014, does not spell out the arrangement with physicians; that presumably will be negotiated between Lifespan and its doctors.)

"There's great frustration with the current system, so testing out new models is very welcome," said Steven R. DeToy, a spokesman for Rhode Island Medical Society. Though he said he hasn't seen the contract yet, he is hopeful about Blue Cross's efforts.

"Hospital likes it. Insurance company likes it. Doctors like it," DeToy said. "The only party I haven't heard from is the patients. And I bet they're going to like it, too."

Dr. Nick Tsiongas, a former state legislator, past president of the Rhode Island Medical Society and founder of the nonprofit advocacy group HealthRIght, said that the agreement is "an important step forward" but expressed doubts whether it will be able to curb the rise in health-care costs.

"Even if it works the way they hope it will work," Tsiongas said, "you're really only working with like 3.5 percent of the state population. The most optimistic perspective you can take on this is that it works wonderfully, they're able to contain costs and maintain quality and roll it out with all the insurers and their patients within three to five years."

Similar risk-sharing arrangements with providers have typically succeeded in large hospital networks in parts of the nation with well-developed infrastructures not found in Rhode Island.

Blue Cross and Lifespan say they plan to "jointly invest" in programs that support this new model of coordinated patient care, though they did not provide any specifics.

Blue Cross has set a target for reducing its rate increases to be in line with the increases in the Consumer Price Index, Andruszkiewicz said.

Prior to this latest agreement with Lifespan, Blue Cross has developed shared-savings plans in Rhode Island that cover about 55,000 patients, including about 40,000 with Coastal Medical and another 15,000 with University Medicine, Paterno, the Blue Cross spokeswoman, said.

UnitedHealthcare has a similar cost-sharing arrangement that includes more than 7,000 patients with private insurance, said Gail Leech Carvelli, a Lifespan spokeswoman.

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