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Apr 11, 2019   |   Press Releases
New Results Show Better Health Care Quality and Lower Costs when Providers Share Financial Risk with Insurers
Press Release

Clinical quality was higher and total cost of care was lower for patient populations cared for by providers who share financial risk.

OAKLAND, Calif., April 11, 2019 /PRNewswire/ — The Integrated Healthcare Association (IHA) today released the third edition of its California Regional Health Care Cost & Quality Atlas, a key statewide source for comparative health care performance information. In its third release, the Atlas now includes over two dozen standardized measures of clinical quality, utilization and total cost of care such as preventive screenings, care for chronic conditions, member cost sharing, and hospital readmissions. Purchasers, providers, health plans and policymakers can access the online, publicly-available tool to compare the quality and cost of care provided to nearly 30 million Californians, or 75% of the state.

“There has been much discussion regarding value-based care and shifting the payment model from ‘volume to value.’ However, until the Atlas 3 release, limited data existed on the prevalence of financial risk sharing among provider organizations and the association between risk sharing and value,” said Jeffrey Rideout, President and CEO of IHA. “Atlas is a unique tool that provides a valuable roadmap to reduce unwarranted cost and quality variation in health care services, ultimately advancing high-quality, affordable, patient-centered care for all Californians.”

The results released in the 2019 report show that when providers share in the risk through a capitation payment model, better value and health outcomes are achieved than with a fee-for-service model.

  • Capitation associated with better quality performance: Clinical quality was higher on average in 2017 for commercially insured members cared for by providers sharing financial risk (paid capitation), as compared to providers not sharing financial risk (paid fee-for-service).
    • Preventive screening rates for providers with full financial risk was 11 percentage points higher than providers not sharing risk.
    • If all patients in California were cared for by providers sharing risk, 60,000 more women would have been screened for breast cancer and hundreds of cases might have been found earlier when cancer is more treatable.
    • 1500 fewer patients would have received a dangerous combination of drugs opioids and benzodiazepines – when cared for by providers sharing risk.
  • Capitation associated with lower costs to the health care system and patients: Financial risk sharing was associated with up to 3.5% lower total cost of care, a trend that also held true for pharmacy costs and patient cost sharing.
    • Pharmacy costs were up to 13% lower for providers sharing risk.
    • On average, patients cared for by risk-sharing providers paid $268 per year out of pocket for medical services as compared to $672 per year for those who were not. This difference was even higher for patients with chronic conditions.
  • Geographic variation across the state: The prevalence of financial risk sharing varies across the state, with much more risk sharing in Southern California.
    • 45% of the commercially insured population in Southern California were cared for by providers sharing risk, compared to only 18% in Central California and 24% in Northern California.

“The Atlas validates Sharp Rees-Stealy Medical Group’s approach to comprehensive, coordinated care for the whole patient. We’ve been pursuing full risk contracts with health plans for decades, because we know that providing care coordination, population health and focusing on prevention results in healthier patients who avoid using expensive health resources such as hospitalizations. The Atlas provides the evidence for health plans, employers and legislators to support the growth of HMO and MA plans for the best value and a healthier population,” said Stacey Hrountas, Chief Executive Officer, Sharp Rees-Stealy Medical Centers.

“The Atlas is an essential tool for measuring the performance of the health care delivery system, enabling us to align our efforts and target areas for improvement,” said Doug McKeever, Chief Deputy Executive Director, Covered California. “The insights help us identify the best value for our consumers, ensuring that we are providing Californians with affordable and quality health care options they deserve.”

“For many years, the industry has explored new models for funding care in order to both improve quality and decrease costs. IHA’s Atlas gives us the type of information we need to make sound decisions and their recent findings support the notion that creating a system of care through models like capitation can drive high-quality, affordable health care services to improve the lives of our members,” said Bill Caswell, Senior Vice President, Kaiser Permanente.

The Atlas emerged out of initial planning done by IHA and the California Health and Human Services (CHHS) Agency, and is supported by the California Health Care Foundation (CHCF), which works to improve the health care system so it works for all Californians. Learn more about IHA’s Atlas by viewing our Atlas fact sheet. Additional insights and results can be reviewed and explored by visiting atlas.iha.org.

For press inquiries, please email Akhila Nanduri at akhila.nanduri@ogilvy.com.

SOURCE Integrated Healthcare Association