Blue Shield ACO keeps premiums low, could be model for others

Blue Shield of California and the hospitals and physicians it partners with say their arrangement, which has successfully kept premiums flat, could be an example for federal officials and other healthcare businesses looking to create accountable care organizations (ACOs).

Blue Shield, the Catholic Healthcare West nonprofit hospital system, and Hill Physicians Medical Group have worked together and broken down barriers to keep premiums flat for 40,000 consumers, which saved the California Public Employees' Retirement System $15.5 million last year, according to The Hill’s Healthwatch.

The California ACO was born of necessity as Blue Shield's family premiums rose by 11 percent annually in recent years and were on track to reach $39,000 by 2020, which Blue Shield Executive Vice President Paul Markovich called a "social and political tipping point."

The first step was finding the right partners and creating a legal framework they could all tolerate since each organization was taking a huge risk by guaranteeing low premiums upfront. "We have to make it affordable," Markovich said, "or the business simply won't be there."

Other health insurers and providers can duplicate the California ACO's success by pooling their resources and stop working at cross-purposes. For example, other ACOs could eliminate the inefficient concurrent review process that has three teams of nurses separately checking up on the same hospital patient, notes Healthwatch.

Blue Shield of California is seeking to expand its ACO model to other markets, and Markovich hopes half or more of Blue Shield's patients are in such arrangements within five years.

To learn more:
- read The Hill's Healthwatch story

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