By Tara Bannow | June 26, 2018
Two Minnesota healthcare
giants have agreed to what will be a first on both sides: a unique, five-year
contract that will include downside risk and the elimination of some prior
authorizations.
Rochester-based Mayo Clinic and Eagan-based Blue Cross and Blue Shield of Minnesota's new agreement, effective in 2019 and running through 2023, is designed in part to lift restrictions on care for Mayo's patients with serious or complex illnesses and make coverage for that care more seamless under Blue Cross policies.
"Both sides are tired of aiming administrative artillery at each other," Mayo Chief Financial Officer Dennis Dahlen told Modern Healthcare at HFMA's annual conference in Las Vegas on Tuesday. "We can simplify that and work together on, 'When is it appropriate and when is it not?' "
Mayo patients with eye tumors and certain pediatric cancers, for example, won't need prior authorization before receiving proton beam therapy, an expensive treatment that has always required prior authorization. Garrett Black, senior vice president of health services and enterprise solutions for the Minnesota Blues, told Modern Healthcare that more conditions and treatments will be added to the list of services that don't need prior authorization under the new contract.
The agreement also expands the amount of value-based care that will take place between the companies, which has not been extensive to date. Under the contract, both parties will agree on a target for lowering the total cost of care. Mayo will receive annual rate increases, but that growth will be limited to a specific amount.
"If they don't meet the total cost-of-care target, they're not going to be getting that reimbursement," Black said.
That excludes accountable care organization products—also part of the contract—for which costs will be expected to decrease, he said.
The agreement also calls for the creation of a collaborative governing board that will consider coverage for emerging technologies and pharmaceuticals. Both sides said that could potentially result in the Blues covering some services solely at Mayo. Moving forward, the board could consider coverage for emerging oncology treatments that integrate genomic testing, for example, Black said.
The agreement will also expand on the existing concept of guided care, which refers to insurer helping its members with complex and serious illnesses navigate care delivery at Mayo. One example that's already been happening: Blue Cross identifies members within its large group plans that are approaching end-stage renal disease and works with their employers to potentially facilitate a kidney donation through Mayo's living donor program. Earlier diagnosis for those patients results in better prospects for survival, Black said.
The new contract will increase the number of conditions that receive guided care, he said.
Dahlen said the new contract provides stability for both sides. "They don't have to worry about network disruption, we don't have to worry about rates," he said.
Both Black and Dahlen said the length of most contracts between providers and payers has shrunk in recent years, with most in the one- to two-year range.
Rebecca Owen, a fellow with the Society of Actuaries who focuses on cost and utilization of care among insured populations, said five years seems like a good time frame because it gives both parties a chance to figure out what works and what doesn't. For example, if a specific treatment is recommended by Mayo and then approved for coverage, the parties will have time to learn its effect on claims and admissions.
Owen agreed contract terms have shortened in recent years, but said the annual renewal process doesn't fit with how patients work.
"Everybody left these evergreen contracts behind and started going to shorter contracts," she said. "But treatment and the human body, it doesn't go on a calendar year basis."
Robin Damschroder, interim CFO with Detroit-based Henry Ford Health System, said she was excited to hear about the contract and wondered whether her health system could strike a similar agreement. Having the Blues as a partner will allow Mayo to tap into emerging procedures and ultimately work toward the all-important goal of lowering the cost of care.
"As CFOs, we have to care about that," she said.
Rochester-based Mayo Clinic and Eagan-based Blue Cross and Blue Shield of Minnesota's new agreement, effective in 2019 and running through 2023, is designed in part to lift restrictions on care for Mayo's patients with serious or complex illnesses and make coverage for that care more seamless under Blue Cross policies.
"Both sides are tired of aiming administrative artillery at each other," Mayo Chief Financial Officer Dennis Dahlen told Modern Healthcare at HFMA's annual conference in Las Vegas on Tuesday. "We can simplify that and work together on, 'When is it appropriate and when is it not?' "
Mayo patients with eye tumors and certain pediatric cancers, for example, won't need prior authorization before receiving proton beam therapy, an expensive treatment that has always required prior authorization. Garrett Black, senior vice president of health services and enterprise solutions for the Minnesota Blues, told Modern Healthcare that more conditions and treatments will be added to the list of services that don't need prior authorization under the new contract.
The agreement also expands the amount of value-based care that will take place between the companies, which has not been extensive to date. Under the contract, both parties will agree on a target for lowering the total cost of care. Mayo will receive annual rate increases, but that growth will be limited to a specific amount.
"If they don't meet the total cost-of-care target, they're not going to be getting that reimbursement," Black said.
That excludes accountable care organization products—also part of the contract—for which costs will be expected to decrease, he said.
The agreement also calls for the creation of a collaborative governing board that will consider coverage for emerging technologies and pharmaceuticals. Both sides said that could potentially result in the Blues covering some services solely at Mayo. Moving forward, the board could consider coverage for emerging oncology treatments that integrate genomic testing, for example, Black said.
The agreement will also expand on the existing concept of guided care, which refers to insurer helping its members with complex and serious illnesses navigate care delivery at Mayo. One example that's already been happening: Blue Cross identifies members within its large group plans that are approaching end-stage renal disease and works with their employers to potentially facilitate a kidney donation through Mayo's living donor program. Earlier diagnosis for those patients results in better prospects for survival, Black said.
The new contract will increase the number of conditions that receive guided care, he said.
Dahlen said the new contract provides stability for both sides. "They don't have to worry about network disruption, we don't have to worry about rates," he said.
Both Black and Dahlen said the length of most contracts between providers and payers has shrunk in recent years, with most in the one- to two-year range.
Rebecca Owen, a fellow with the Society of Actuaries who focuses on cost and utilization of care among insured populations, said five years seems like a good time frame because it gives both parties a chance to figure out what works and what doesn't. For example, if a specific treatment is recommended by Mayo and then approved for coverage, the parties will have time to learn its effect on claims and admissions.
Owen agreed contract terms have shortened in recent years, but said the annual renewal process doesn't fit with how patients work.
"Everybody left these evergreen contracts behind and started going to shorter contracts," she said. "But treatment and the human body, it doesn't go on a calendar year basis."
Robin Damschroder, interim CFO with Detroit-based Henry Ford Health System, said she was excited to hear about the contract and wondered whether her health system could strike a similar agreement. Having the Blues as a partner will allow Mayo to tap into emerging procedures and ultimately work toward the all-important goal of lowering the cost of care.
"As CFOs, we have to care about that," she said.
Tara Bannow covers hospital finance
for Modern Healthcare in Chicago. She previously covered all aspects of
healthcare for the Bulletin, a daily newspaper in Bend, Ore. Prior to that, she
covered higher education for the Iowa City Press-Citizen. She earned a
bachelor’s degree in journalism in 2010 from the University of Minnesota.
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