Minnesota's Largest Health Plan Signs 'Total Cost of Care' Agreement With Park Nicollet Health Services

News provided by

Blue Cross and Blue Shield of Minnesota

Feb 24, 2011, 12:27 ET

Blue Cross and Blue Shield of Minnesota Launches New Payment Model with Leading Health Provider

EAGAN, Minn., Feb. 24, 2011 /PRNewswire-USNewswire/ -- Blue Cross and Blue Shield of Minnesota (Blue Cross) today announced it has entered into a "shared incentive" payment model with Park Nicollet Health Services (Park Nicollet), a leading Minnesota integrated care system. This makes the fifth such agreement announced by the health plan in recent weeks. In November, Blue Cross announced it had reached similar agreements with Allina Hospitals & Clinics, Essentia Health, Fairview Health Services, and HealthEast Care System.

Under the terms of the shared incentive model, Park Nicollet providers will continue to receive a base payment rate, as in the traditional "fee for service" arrangement. However, over the length of the new three-year agreement, the focus shifts from guaranteed payments based on volume of care to financial incentives earned for measurable improvements in health care quality and efficiency. Blue Cross and Park Nicollet medical leaders worked together to identify and address quality gaps and opportunities for increased efficiency in care by sharing data and trends that can inform care system practices. Some of the quality measures where Park Nicollet will focus include improvements in care for chronic illnesses, including diabetes, heart disease and hypertension.

"Blue Cross believes this new model represents a significant change in the way we partner with providers," says Patrick Geraghty, Blue Cross president and CEO. "The shared-incentive approach allows Blue Cross to acknowledge and reward Park Nicollet and other health systems when they deliver the best health outcomes in the most effective and efficient way possible. Ultimately, we both want to generate better value and experiences for the health care consumer."

"Our new contract with Blue Cross enables us to focus on our key strategies of improving the patient and family centered experience and developing an integrated care model that improves quality and reduces cost," said David Abelson, M.D., CEO, Park Nicollet Health Services. "Our normal contracting cycle has been every two years. In developing a three year agreement that shifts payment from volume incentives to quality and value incentives, more time will be spent partnering on improvement rather than negotiating payment rates."

The "shared incentive" approach is designed to create even more collaborative relationships between Blue Cross and Minnesota health care providers. Over time, the resulting quality improvements and cost-savings will benefit Blue Cross members and clients and the overall community in the form of measurable improvements in clinical and health outcomes, lower medical cost trends, and reduced premium increases.

"Moving forward, Blue Cross will focus on including incentive-based components in all of our provider agreements," says Jim Eppel, senior vice president of health management and commercial markets, Blue Cross. "The response from Park Nicollet and other systems has been extremely positive. Physician leaders on both sides are actively involved in these negotiations, keeping the emphasis on patient outcome goals. This new approach takes a longer-range view of our relationships, allowing us to work much more collaboratively and effectively to deliver the best possible health outcomes."

Blue Cross and Blue Shield of Minnesota, with headquarters in the St. Paul suburb of Eagan, was chartered in 1933 as Minnesota's first health plan and continues to carry out its charter mission today as a health company: to promote a wider, more economical and timely availability of health services for the people of Minnesota. Blue Cross is a not-for-profit, taxable organization. Blue Cross and Blue Shield of Minnesota is an independent licensee of the Blue Cross and Blue Shield Association, headquartered in Chicago. Go to bluecrossmn.com to learn more about Blue Cross and Blue Shield of Minnesota.

SOURCE Blue Cross and Blue Shield of Minnesota