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“Value purchasing by payer organizations is more critical than ever,” said Rideout, senior vice president and chief medical officer at TriZetto. “VBID helps manage consumer health and demand for services. Physician engagement is critical, and both clinicians and health plans should be encouraged that Washington’s recent medical-loss ratio definitions of qualifying medical expenses treat value-based solutions quite favorably.”
VBID, explained Rideout, financially incents patients and clinicians to encourage the use of high-value medical services and medications. The model is a response to evidence of declining patient health as a result of increased cost-sharing in insurance plan designs such as health savings accounts and other consumer-driven health plans. It responds, as well, to U.S. healthcare costs, which continued to climb in 2010 and early 2011, despite passage of the reform law.
“VBID addresses directly the $600 billion to $800 billion spent each year on care that does nothing to improve our health1 and more than $100 billion in additional costs due to patients who don’t take their medications as prescribed2,” Rideout said. “More importantly, it improves clinical outcomes. Among the many success stories, QuadMed reduced medical cost trend 4.9 percent; the city of Asheville, N.C., reduced ER visits and hospitalizations; and Blue Cross and Blue Shield of North Carolina posted a three-to-one return using VBID.”3
Rideout noted that TriZetto value-based applications can automate and streamline the adjudication of claims based on an individual member’s health profile and the clinical efficacy of medical services and medications for particular conditions.
Important elements of value-based models, he said, can include patient-centered medical home (PCMH), clinical analytics and payment bundling. Though emerging and still under evaluation, PCMH programs across the country number around 100 and, according to one study, typically save several hundred dollars per patient, said Rideout.4 Analytics employ clinical-risk modeling, identification and stratification, patient-compliance monitoring, provider cost and utilization analysis and comparison and cohort analysis to maximize the use and benefits of VBID and care management programs.
“Payment bundling is when a group of healthcare providers agrees to accept a single prospective payment for a well-defined episode of care,” explained Sultan, TriZetto’s associate vice president of systematic health management and applied analytics. “The industry is moving toward payment bundling. By 2012, 80 percent of payers will adopt it, as will 74 percent of large hospitals and 52 percent of providers overall.”5
Reasons for its uptake are numerous. Sultan pointed to Centers for Medicare & Medicaid Services (CMS) projects in which payment bundling demonstrated 5 to 6 percent top-line reductions in medical costs, 6, 7 and a Rand Corporation study of numerous approaches that concluded that payment bundling had the greatest proven ability to reduce costs.8 Additionally, said Sultan, the vast majority of physicians, hospitals and healthcare payers believe payment bundling is a stepping stone to accountable care organizations, a highly touted and promising model of post-reform care. Further, TriZetto and other technology vendors are developing technology that will enable health plans and providers to administer payment bundling on a large scale.
“Perhaps the biggest reason for adoption, though, is that this value-based model can benefit all constituents,” Sultan said. “Two CMS projects showed that payment bundling saved costs for payers and hospitals, increased revenues for physicians and improved satisfaction and reduced morbidity among patients.”9
TriZetto’s Rideout and Sultan are available for reporter interviews through Schwartz Communications at trizetto@schwartzcomm.com or 781-684-0770.
About TriZetto
TriZetto provides world-class healthcare IT software and service solutions, including patented and patent-pending innovations, that drive administrative efficiency, improve the cost and quality of care, and increase payer and provider collaboration and connectivity. TriZetto’s solutions touch half of the U.S. insured population and reach more than 21,000 physician practices representing more than 75,000 practitioners. The company’s payer offerings include enterprise and component software, application hosting and management, business process outsourcing services and consulting that help transform and optimize operations. TriZetto’s provider offerings through Gateway EDI, a wholly owned subsidiary, include advanced tools and proactive services to monitor, catch and fix claims issues before they can impact a practice. TriZetto’s integrated payer-provider platform will enable the deployment of promising new models of post-reform healthcare. TriZetto is committed to the integration and convergence of technology systems that enable its vision of Integrated Healthcare Management, the coordination of benefits and healthcare to drive more value from every healthcare dollar spent. For more information, visit www.trizetto.com.
