BlueCross BlueShield of Western New York, Kaleida Health and a physicians group announced Wednesday they will partner to offer medical care in new, more affordable health insurance plans marketed to employers.
How much cheaper the plans will be is unclear. Officials said they anticipate interest from eligible businesses if premiums are only a few percentage points lower.
Other partners will include Erie County Medical Center, Roswell Park Cancer Institute, Olean General Hospital and Hospice Buffalo, officials said.
This is the first exclusive network to form in the region in which hospitals, doctors and a health insurance company integrate to care for privately insured patients.
Although it will limit choice of doctors and hospitals, officials said they foresee acceptance by patients because of the breadth and depth of services available, as well as the urgency to rein in health costs.
What's happening represents an emerging trend across the country.
Hospitals, doctors, insurers and the government are moving forward with new models for delivering care.
Each looks a little different, depending on who is involved. But they share many of the same goals, such as basing medical decisions on what science says is best, avoiding unnecessary tests and procedures, tracking patients as they navigate through the system, using data to evaluate performance, and stressing preventive care.
"We are spending a lot of money in the U.S. on health care but not as wisely as we should. We need new ways of organizing that care," said Dr. Thomas Rosenthal, chairman of the University at Buffalo Family Medicine Department and a leader in the new initiative.
He cited studies that show the U.S. spends far more per person on health care than any other nation, yet ranks significantly below many other nations on such indicators of quality as preventive care, hospital readmissions, coordinated care and patient safety.
"Costs are spiraling out of control, and the only way to address this is as a team, with hospitals and insurers, to align the incentives and focus on patient care. We need to move from volume-based to value-based care," said Dr. Robert Gatewood, a cardiologist also playing a lead role in the endeavor.
>Factors driving changes
The changes have come partly in response to provisions in the new health reform law, the Affordable Care Act. But market forces and advances in medical information technology also are driving it.
"The old model is not working," said Alphonso O'Neil-White, president and chief executive officer of BlueCross BlueShield of Western New York. "Our purchasers [employers] keep asking us what we're going to do about costs."
Aspects of the integrated network include:
*The parties plan to form a joint venture that will begin marketing health plans to employers this June for enrollment at the start of 2013.
*The new health plans will target companies that self-insure, meaning the businesses manage their own health insurance. The concept eventually could be offered for commercial health insurance, which represents 60 percent of the market, said O'Neil-White.
*There are about 150,000 employees in the region in self-insured health plans, including thousands of workers at Kaleida Health and BlueCross BlueShield.
*Officials say they also will be well positioned to offer a more affordable health plan for patients in the individual insurance market if health reform moves forward and millions of uninsured Americans obtain coverage.
*BlueCross BlueShield will continue to offer health plans that include other hospitals and physicians, and Kaleida Health will continue to provide care for patients with other health insurance plans.
*Nothing will change for current BlueCross BlueShield members unless their employer chooses one of these new plans.
"The partnership will allow us to offer Western New York a new approach to health care that creates significant value for physicians, their patients and the region's employers," said James Kaskie, president and chief executive officer of Kaleida Health.
How physicians will be paid is still being worked out, as are details of the health plans.
Critics say the current fee-for-service system in health care contributes to fragmented care, and too many unnecessary hospitalizations, procedures and tests. New networks emerging in the U.S. generally rely on alternative arrangements, such as paying hospitals and doctors a fixed amount per patient, as well as bonuses for meeting quality targets.
Lead doctors in the initiative have formed a group that is looking to enroll about 500 other physicians.
The new network should appeal to physicians because it promises to reduce the amount of administrative work typically required by an insurer, according to Gatewood and Rosenthal.
O'Neil-White said the health plans will vary in design, depending on what employers want. For instance, some could be structured to make Kaleida Health the exclusive provider of services, and employees would pay extra to go elsewhere. Others could be so-called "tiered" plans that feature levels of employee cost-sharing.
Similar networks have formed in cities elsewhere in hopes of controlling health costs and improving quality.
"Nationally, there is a growing consensus that fee for service gets you what you pay for -- piecemeal, fragmented health care. The movement now is toward broader payment agreements to integrated organizations that can offer all the services a patient might need," said Alwyn Cassil, a director at the Center for Studying Health System Change, a nonprofit focused on medical care.
>Networks face challenges
David Williams, a consultant with MedPharma Partners in Boston, Mass., said it was a positive sign that physicians had taken a lead role in the initiative here.
But he noted that such integrated networks still constitute an experiment and face challenges, such as just how much they can manage costs and move away from paying for the amount of care provided rather than the quality of the care.
"We still value procedures more highly than primary care in this country," he said. "We still need to tackle that issue."
This month, federal officials named Catholic Medical Partners, which represents about 900 doctors affiliated with the Catholic Health system, one of the first participants in a Medicare initiative to create so-called "accountable care organizations."
The Affordable Care Act encourages doctors and hospitals to form organizations to coordinate care and measure performance for patients in traditional Medicare, the federal health plan for those 65 and older. Accountable care is also a phrase used generally to describe similar efforts with other patients.
"You can't improve health care unless you improve the delivery system," said Dennis Horrigan, chief executive officer of Catholic Medical Partners. "That means evidence-based medicine, team-based care, active follow-up and accountability."