Connecticut’s launch of a bundled payment program for its employee health plan is part of an effort to save the state $185 million | HFMA

• Connecticut has started a bundled payment program for its state employees in an effort to reduce healthcare costs, according to a recent Modern Healthcare article.
• The new program, along with other efforts related to the state health plan, is proposed to save $185 million through FY21, according to the article.
• Some state governments, like Connecticut, have high enough volumes that COVID-19 may accelerate their adoption of value-based payment models, according to Chad Mulvany.

A recent Modern Healthcare article states, “Connecticut has started a bundled-payment program for its state employees to help save healthcare costs. The new program, along with other efforts related to the health plan, are proposed to save the state $185 million through fiscal year 2021, according to the state.

“The program currently involves more than 20 procedures and conditions including knee replacements, pregnancy care and cataract surgery,” the article continued.

The article goes on to state:

“So far, 180 providers in Connecticut have agreed to participate and more are expected to join before the end of the year, said Joshua Wojcik, assistant comptroller for the state. Commercial insurers in Connecticut haven’t been as eager to offer alternative payment models, Wojcik said, so ‘we are hearing from the provider groups that they are excited the state is going down this route.’”

Takeaway

In my opinion, without getting employers to adopt alternative payment models (APMs), it’s going to be hard to make additional progress in the transition to value. Providers will not have enough revenue at risk to justify the necessary investments in people and analytics, make changes in care delivery and ultimately establish a sustainable revenue stream that supports operations by providing a reasonable margin.

We frequently hear that employers face a similar scaling problem, which limits health plans’ interest in developing APMs for use in ERISA contracts. Walmart, while one of the largest employers in the country, doesn’t have enough employees receiving healthcare benefits in most of the markets where it has a presence to justify the cost of closely collaborating with providers on APMs. However, state governments (and in some markets the federal government) have a sufficiently high enough volume, relative to other employers, that COVID-19 may accelerate adoption of value-based payment models.

During the spring, tax revenues for states were down 29% on average compared to the prior year. Connecticut, for example, is facing a $2 billion deficit, which may have influenced its thinking. If COVID-19 pushes more states to adopt this type of approach, more plans may be driven to develop bundles and other APMs that could be incorporated into ERISA contracts, which will further accelerate the value transition.

Resources to help providers succeed under APMs

HFMA’s Value Project can help providers develop the key capabilities necessary to succeed under bundled payments and other APMs.