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June 25, 2018 Health Insurance

Cigna's top doc: Value-based care best hope for lowering healthcare costs

HBJ Photo | Matt Pilon Dr. Alan Muney, Cigna's chief medical officer, spoke about healthcare costs at a conference in Hartford earlier this month.
Matt Pilon

Insurers and medical providers continue their slow, steady march toward a reimbursement system that financially rewards doctors for keeping people healthy rather than the traditional fee-for-service model.

While “value-based” or “accountable” care is still a ways off from toppling fee for service as the industry norm, the top medical doctor at Cigna says the Bloomfield health insurer's decade-long experience with such contracts (which it brands as “Collaborative Care”) has shown promise, though there's still work to do.

Cigna inked its first Collaborative Care deal in 2008 in New Hampshire. A year later, it began testing the model in its home state with Middletown-based ProHealth Physicians.

Today, Cigna says it has 10 such arrangements in Connecticut, with provider locations dotted across every part of the state, and between 250 and 500 contracts nationwide.

During a recent appearance at a Connecticut Partners for Health conference in Hartford, Cigna Chief Medical Officer Dr. Alan Muney told a crowd that Collaborative Care is showing results.

Cigna's annual medical-cost growth rate, across all types of contracts, has been hovering around 3 percent, he said. Nationally, employers have seen medical costs grow between 6 and 7 percent per year, according to PwC's Health Research Institute. While that's a big improvement over the 8.9 to 11.9 percent growth rate observed between 2007 and 2011, Muney says it's still too high.

“That is not a sustainable path,” he said. “In a perfect world we don't only get to zero growth,” but to declining medical costs.

In Connecticut, Cigna says its Collaborative Care contracts are producing about $33 million in annual savings compared to its overall population of contracted doctors (that's about a 4 percent savings). Care quality is also 15 percent better than the national average in such metrics as diabetes care and breast cancer screenings, he said.

“We're starting to see those results, that's good,” Muney said. “Scaling this, getting more patients in these relationships, getting more doctors with these types of incentives, is really the way to go.”

But there are plenty of hurdles. For one, not every provider group is ready, Muney said, adding that Cigna must be selective when choosing new partners, otherwise results might be subpar, and its employer customers won't be happy.

Second, there's the impact of industry consolidation.

Muney said he goes to his cardiologist every few years for a checkup because his father died of heart disease at age 49. As someone with deep knowledge of the insurance industry, Muney always checks his bill. Each visit typically cost about $700. But on one of his more recent visits, Muney said the bill ended up being about $1,800.

The reason? The physician group he visits — Muney didn't name it — had been acquired by a health system.

“All of the sudden, the office becomes an outpatient hospital facility,” Muney said.

Patients are having similar experiences “day in and day out,” he added.

Even still, he understands the motives for consolidation. Inadequate Medicaid reimbursements are causing hospitals financial strain. And the recent repeal of Obamacare's individual health insurance mandate could start to send uncompensated care costs creeping upwards, after a decline, he said.

“The pressure that delivery systems are under is pretty incredible,” Muney said. “One of the only outlets is to cost shift onto the commercial insurance population.”

That population is Cigna's customer base, so the stakes remain high.

Correction: An earlier version of this article gave an incorrect state where Cigna forged its first Collaborative Care partnership. It was in New Hampshire.

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