Blue Cross, Jefferson Health announce new contracts

The contracts include Thomas Jefferson University Hospital, above, and Main Line Health. They include an incentive payment system.
The contracts include Thomas Jefferson University Hospital, above, and Main Line Health. They include an incentive payment system. (File Photograph)
Posted: October 19, 2013

Independence Blue Cross and the Jefferson Health System on Thursday announced new two-year contracts for Thomas Jefferson University Hospitals and Main Line Health that include the potential for millions in incentive payments.

The agreement with Jefferson means that IBC has 23 of 38 general adult hospitals in its network operating under incentive-laden contracts. Nearly $100 million in bonus payments from IBC are at stake for the hospitals and health systems next year.

The incentive payment system covers doctors and hospitals, and is based on quality measures, such as the number of infections acquired in the hospital, and cost reductions through improved coordination of patient care and other measures.

"Our agreement with Jefferson Health System responds to the critical need for more collaboration in health care among physicians, hospitals, and health plans to help transform the delivery of health care," said IBC chief executive Daniel J. Hilferty.

Major area systems previously in the program included the University of Pennsylvania Health System, Einstein Health Network, Crozer Keystone Health System, and Mercy Health System.

In the calendar year ended June 30, 2012, general acute-care hospitals for adults now participating in IBC's incentive program had $9.74 billion in operating revenue, or 74 percent of the total for Southeastern Pennsylvania, according to data from the Pennsylvania Health Care Cost Containment Council.

Temple University Health System is the biggest system not yet participating in the incentive plan, but it intends to under its next contract, a Temple official said.

Main Line Health had a two-year pilot incentive program with IBC that ended June 1, said David Simon, a Jefferson executive vice president.

Simon is also president of the Accountable Care Organization of Pennsylvania Inc., a Jefferson legal entity that enters shared-savings contracts - another way of describing the IBC incentive plan - with insurers.

A valuable feature of the Main Line Health pilot was data-sharing, Simon said.

"For the first time we were able to get a 360-degree view of the care provided to our patients," Simon said. "If there was a readmission at Penn of a patient who had been at Lankenau, that's exactly the kind of information we were able and are able to access on a daily basis for the first time," Simon said.

Without that information, it's hard to make changes designed to prevent such readmissions.

The new contracts took effect June 1, but "it took until now, as we had to finalize the specific primary-care physicians who were going to participate in the first year," Simon said.

For Jefferson, the IBC contracts are part of an effort to derive the majority of its revenue under contracts that enable it to benefit from improving care and being more efficient.

Jefferson recently announced a shared-savings deal with Keystone First, the region's biggest Medicaid-managed care company, and applied for a shared-savings program with Medicare that would start Jan. 1.

"We are in discussion with other payers as well," Simon said.