Value-Based Reimbursement: The Banner Health Network Experience

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Abstract

Many organizations in healthcare are moving rapidly to adopt value-based reimbursement (VBR) models that reward value instead of volume. By shifting a significant percentage of clinical and financial risk from payers to providers, VBR programs can help reduce costs significantly, improve the quality of care, and increase efficiency. The experience of Banner Health Network (BHN) with VBR in commercial and government plans indicates that a large health system can transition to VBR with renewed focus on quality, cost efficiencies, population health management tactics, and member engagement.

In December 2011, BHN was selected in a competitive bid process as one of 32 organizations to participate in a Centers for Medicare & Medicaid Services (CMS) value-based demonstration initiative called the Pioneer accountable care organization (ACO). As a Pioneer ACO with consistent and positive results, BHN, based in Phoenix, Arizona, has demonstrated that VBR can lead to results that are beneficial to the member, the healthcare organization, and the community. BHN has been a top performer in returning shared savings to Medicare while improving appropriate service utilization and performance on quality metrics.

The development of simultaneous commercial ACO products was a requirement of the Pioneer agreement with CMS, as well as a clear goal for BHN. The initial period of ACO partnership formation revealed an uncomfortable reality: Payers and providers would need to collaborate and share information as never before. Further, many payers were uncertain about working closely with providers who were working simultaneously with other payers on similar partnerships. Before long, however, there were enough successful VBR arrangements to allay these initial payer anxieties. Today, BHN has high-value network arrangements with nearly every major payer in Arizona.

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