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Independence Blue Cross strikes deal with Penn Medicine

Deal advances collaborative accountable care payment design to improve care and lower costs

Philadelphia, PA – Independence Blue Cross (IBC) announced it has renewed a four-year agreement with the University of Pennsylvania Health System (Penn Medicine) to provide covered benefits for all of IBC’s members at Penn Medicine’s hospitals. The agreement includes IBC’s industry-leading pay for performance and accountable care payment model that will reward Penn Medicine’s hospitals and their staff physicians for improving the quality of care and lowering costs for consumers.

“We are pleased that Penn Medicine has renewed its agreement with us and we can continue to partner with such a high caliber health care system to transform the delivery and quality of health care for consumers,” says Daniel J. Hilferty, president and CEO of IBC. “Independence Blue Cross is proud to be a leader in the new era of accountable care. Our progressive incentive program and accountable care payment model helps doctors and hospitals create a more connected patient-centered, efficient health care system, ultimately improving quality and making health care more affordable.”

For the last two years, IBC has worked diligently to include its accountable care payment model as a core component in all of its contract renewal agreements with health systems. To date, more than 80 percent of the eligible health systems in the Philadelphia area have agreed to participate in IBC’s accountable care payment model. IBC expects more than 90 percent participation by the end of 2013.

Penn Medicine — among the largest and most highly-regarded health systems in the Philadelphia area — is the latest hospital to sign a contract with IBC that rewards hospitals and their staff primary care physicians and specialists for building a payment framework to share accountability for their patients’ health care and health outcomes.

IBC pioneered its industry-leading accountable care payment model, formerly titled (Integrated Provider Performance Incentive Plan), in 2010, several months before the Affordable Care Act brought national attention to the new approach to health care and well before the government-established Medicare Accountable Care Organizations began taking root in 2012. In the accountable care model, groups of primary care physicians, specialists, and hospitals work together to coordinate care for the patients they serve; share responsibility for providing efficient, high-quality care; set performance measurements; and track and analyze costs — leading to higher quality, lower-cost care.

IBC’s accountable care payment model gives significant financial incentives to hospitals and health systems organized in an accountable care model for delivering better health outcomes and lowering medical costs. For example, fifty percent of a health system’s potential earnings are based on the doctors’ and hospitals’ ability to improve performance related to reducing hospital-acquired infections and readmissions and ensure evidence-based guidelines are followed for surgical care and the treatment of heart attacks, heart failure, and pneumonia. The other fifty percent of the potential incentive payment is based on their ability to manage costs through greater collaboration and coordination of inpatient, outpatient, ancillary care, home health, prescriptions, and other health services.

“IBC’s accountable care payment model promotes an integrated, team-based approach that helps make health care more personal for consumers through better care coordination and engagement among the patient and doctor, physicians and specialists, and doctors and hospitals,” says Doug Chaet, IBC senior vice president of Contracting and Provider Networks. “This shared savings arrangement rewards high-performing hospitals and physicians on their degree of improvement compared to their historical baseline. The amount of shared savings based on performance is significant, ranging from 30 to 50 percent.”

IBC CEO Hilferty adds, “We are committed to assisting doctors and hospitals improve patients care by continuing to enhance our analytic capabilities and exchange real-time health information, while also offering health and wellness programs that guide members towards getting the right care at the right time with a shared goal to improve care and lower costs.”

“We are excited to collaborate with Independence Blue Cross on these innovative payment designs that complement our laser focus on quality and patient safety while delivering more cost-effective care,” said Ralph W. Muller, chief executive officer of Penn Medicine. “We are pleased to be able to continue our longstanding relationship to care for IBC members and provide them access to the most advanced medical care in the region.”

The agreement between IBC and Penn Medicine includes the following patient care facilities:

  • The Hospital of the University of Pennsylvania — the nation’s first teaching hospital, recognized as one of the nation’s top 10 hospitals by U.S. News & World Report.
  • Penn Presbyterian Medical Center — named one of the top 100 hospitals for cardiovascular care by Thomson Reuters for six years.
  • Pennsylvania Hospital — the nation’s first hospital, founded in 1751, nationally recognized for excellence in orthopedics, obstetrics and gynecology, and behavioral health.

Additional patient care and services include Penn Medicine at Rittenhouse, a Philadelphia campus offering inpatient rehabilitation and outpatient care in many specialties; a primary care provider network; a faculty practice plan; home care and hospice services; and several multi-specialty outpatient facilities across the Philadelphia region.

About the University of Pennsylvania Health System
The University of Pennsylvania Health System includes three hospitals (the Hospital of the University of Pennsylvania; Pennsylvania Hospital, the nation’s first hospital; and Penn Presbyterian Medical Center); a faculty practice plan; a primary-care provider network; two multi-specialty satellite facilities; and home care and hospice.

Media contact:
Karen Godlewski