Hospitals participating in Independence Blue Cross’ accountable care contracts are reducing costs, improving care and earning incentives, according to the Philadelphia-based insurer.

In the first full year of the program, with 90 percent of the region’s delivery systems participating, half of all the hospitals reduced their healthcare costs for IBC members, as determined by targets based on historical spending.

Almost 90 percent of the hospitals were able to lower their readmission rates, with the average reduction being 16 percent, and every facility either improved in at least one area of hospital-acquired infections or earned top honors from state regulators for infection control. Almost all of the participants also improved their scores on measurements of patient experience during hospital stays.

[See also: ACO success key to value-based care.]

“We’re very encouraged by these results,” IBC president and CEO Daniel Hilferty said in a media release. “They demonstrate the power of partnering with healthcare systems in our region to deliver higher quality, lower cost care with higher patient satisfaction.”

In IBC’s accountable care model, hospitals and physicians create ACO entities that “share responsibility with the insurer for improving clinical performance and cost efficiency,” the company said.

Model defined
Half of hospitals and physicians’ potential earnings are based on their performance improvement in hospital-acquired infections, patient experience, readmissions, surgical care, and treatment for heart attacks, heart failure and pneumonia. The other half of the earnings are based on the providers’ ability to manage costs across inpatient care, outpatient care, ancillary care, home health services and prescription drugs.

IBC covers some 2.5 million greater Philadelphia residents in commercial, Medicare and Medicaid plans, and its performance-based incentives for doctors and hospitals could exceed $150 million this year.

“It’s extraordinary to have such a high rate of engagement in our innovative ACO payment model, which reflects the true partnership we’ve built with hospitals and health systems,” said Doug Chaet, senior vice president of IBC’s contracting and provider networks. “Here in one of the nation’s most expensive regions for medical care, organized groups of health professionals are showing that more coordinated care can improve health outcomes for people and actually begin to control costs.”

Greater Philadelphia has two main commercial payers, Independence Blue Cross, the largest, followed by Aetna, and dozens of hospitals and health systems with varying levels of organizational integration.

While not all of the region’s hospitals are participating in IBC’s accountable care program, those who are represent a range of organizations, including the University of Pennsylvania Health System, Tenet Healthcare’s Hahnemann University Hospital and Aria Health System.

“The financial incentives Aria receives through Independence's accountable care payment model have helped us foster greater alignment and collaboration among patients, physicians and hospitals,” said Sandra Gomberg, COO of Aria Health.

[See also: The bumpy road to an ACO yields value.]

Along with accountable care contracts in hospital care, as part of moving away from fee-for-service broadly, IBC has been bullish on the patient-centered medical home model in primary care, with more than 40 percent of primary care physicians in its network participating in a PCMH.

Even more broadly, IBC is trying to tackle the chronic disease epidemic with new models of primary care in a joint venture with DaVita HealthCare Partners, the parent company of the large dialysis network and a budding healthcare management business.

The new jointly-owned company, called Tandigm Health, will partner with primary care physicians in greater Philadelphia and offer them payment incentives, as well as coordination and data analytics technologies, to focus on high-risk patients with chronic conditions like diabetes, heart failure and pulmonary disease.

This story is based on a report appearing on Healthcare Payer News.