Payors love clinical integration, as long as it’s free

Everyone wants better coordinated care – it’s the ultimate benefit of clinical integration and the cause of so much of the transformation in today’s healthcare system. We are barraged almost daily with the latest news of merger, affiliation, acquisition, and other business arrangement to make clinical integration possible.

In the midst of this trend, there was some little-noticed news out of Illinois a few weeks ago. Blue Cross Blue Shield of Illinois, the tip of the spear that is Health Care Service Corporation (HCSC) – the largest and most profitable collection of five Blue Cross plans in America – announced it will not negotiate payment rates with affiliations created by separate health systems that clinically integrate rather than those under common ownership. Essentially, Blue Cross of Illinois is forcing certain kinds of transactions, regardless of if it’s what’s best for the organizations or the people they serve, if those groups want to have the resources available to clinically integrate. How does Blue Cross justify this position? In a recent Crain’s Chicago Business article, they say,

While we support clinical integration arrangements to better coordinate patient care, optimize the sharing of clinical information, and working toward the industry’s triple aim — improving patient satisfaction, increasing quality and lowering costs — we do not believe joint fee negotiation by hospitals is necessary to achieve these results,” Mr. Deering said in the statement.

In short, Blue Cross is fine with providers creating enormous benefits for its members and employers who purchase insurance – as long as it’s free. They will only negotiate with integrated groups jointly if one of those groups buys the other, which just means it will happen a lot less. Clinical integration will slow as a result of this Blue Cross action.

You may be asking yourself, what do I care what happens in Illinois? I don’t do business there. Well, first of all, it’s important to note that HCSC includes Blue Cross of Illinois, Texas, New Mexico, Oklahoma, and Montana. So providers in five states should expect this at a minimum. And it’s also clear that Blue Cross strategies in one market quickly spread to others through the Blue Cross Blue Shield Association, AHIP, and other channels. That means providers everywhere should expect this strategy soon.

Provider organizations have a responsibility to clearly communicate the value of coordinated care and clinical integration strategies. They have to deliver the promised benefits. And they have to explain why they are pursuing the approach they’ve chosen, rather than acquisition, if they want payors to support the idea. They also have a right to dig-in and fight for fair treatment from payors, not take-it-or-leave-it demands that may not be the best thing for the provider organizations involved.

Beyond the contracting implications, clinical integration and the changing relationships between physician groups and health systems presents an interesting communication challenge. One that your organization must be prepared to tackle in order to stay competitive.

November 5, 2014
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