Health Insurers Are Trying New Payment Models, Study Shows

Health insurers are experimenting with new formulas for reimbursing doctors and hospitals, slowly moving away from the traditional approach of basing payments on the numbers of tests and procedures performed, according to a survey of Blue Cross insurers, among the most dominant plans in the country. The survey, released on Wednesday by the plans’ trade association, estimates that $1 out of every $5 in reimbursements is being paid under an arrangement in which providers are rewarded for improving care and lowering costs.

The insurers say they are spending more than $65 billion a year in new “value-based” payment models, according to the Blue Cross Blue Shield Association, which looked at 350 programs in nearly every state. The programs range from medical homes, where doctors may receive an additional fee to better coordinate patient care, to so-called accountable care organizations, or A.C.O.s, where a larger health system shares some of the savings if it can manage patients’ health for less money. They may also include a flat fee for a specific procedure like a hip replacement.

The insurers say the early results of these experiments are promising in being able to improve the care for diabetic patients, for example, or keep someone out of the emergency room who does not need to be there. But insurers and policy specialists cautioned that a major change in the way providers are paid was likely to take many years.

Health insurers have long talked about changing the way they pay for care, but there have been few tangible signs of just how enthusiastically they are embracing alternatives. Many of these programs represent just a few small steps from the way the companies have always paid doctors and hospitals. What is more, no one knows yet which of these experiments are likely to succeed over time. “The models are going to have to evolve,” said Paul Ginsburg, a health economist at the University of Southern California.

But the Blue Cross executives say there is no choice but to move away from a system that rewarded high-cost care over high-quality and efficient treatments. “This is the beginning of a journey,” said J. Bradley Wilson, the chief executive of Blue Cross and Blue Shield of North Carolina, which estimates that as much as 40 percent of its payments are now through one of the new arrangements. “The fee-for-service model is changing and is going to continue to change,” he said.