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Insurers, Hospitals Coming Up With New Ways To Cut Costs From Buying Services In Bulk Under ‘Obamacare’

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File photo of President Barack Obama. (credit: SAUL LOEB/AFP/Getty Images)

File photo of President Barack Obama. (credit: SAUL LOEB/AFP/Getty Images)

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MIAMI (AP) — As health care costs rise in Florida, insurers and hospitals vested in the success of the Affordable Care Act, are coming up with new ways to cut costs from buying services in bulk and piloting programs to lowering hospital readmission rates and limiting the number of doctors within a plan’s network.

Florida’s health care costs rose an average of 6.9 percent in the past 18 years, higher than the national average of 6.5 percent. Health care expenditures per capita in the state are $7,156 compared to the national average of $6,815 during that same time period, according to the nonpartisan Kaiser Family Foundation. Reining in health care costs, which have been growing far faster than inflation and wages, will be crucial to the long-term success of the Affordable Care Act.

President Barack Obama has repeatedly stressed that health care reforms will give more people access to affordable coverage no matter their age, income or medical history. Insurers will have to offer more benefits in some cases and are restricted in how much they can charge older, sicker people. Insurers are also banned from turning away those with pre-existing conditions. But if the federal health law is successful, it will mean more customers for insurers and more paying patients for hospitals, giving them more incentive to experiment with different ways of paying doctors and delivering care in an industry with already shrinking profit margins.

Experts anticipate many insurers will narrow the number of doctors in a certain network to curb costs.

“In some of these plans on the exchange they will go with very skinny networks because it’s an easy way to control where individuals are headed in terms of visitation,” said Ray Smithberger, general manager in charge of Cigna Individual and Family Plans. Cigna will offer several plans through Florida’s federally-run health exchange.

Starting in October, consumers shopping on the new exchange will be able to choose from bronze, silver, gold, platinum and catastrophic plans that offer a range of premiums, deductibles and co-pays depending on variables such as how many doctors you want included in your network.

That’s why Smithberger says it’s important that consumers look at more than the bottom line when choosing plans. It may be the lowest priced plan, but it may have a very high deductible or only offer a limited number of doctors.

Insurers are also increasingly relying on patient-centered medical homes where doctors try to care more for all of a patient’s health needs instead of just treating whatever condition led to a doctor’s visit that day. They frequently communicate with patients between visits and often do things like work out exercise plans with the patient or follow-up to make sure they are complying with prescriptions. The primary care doctor also acts as the central point of communication between specialists, nutritionists and others. In the past, poor reimbursement usually forced primary care doctors to see as many patients as they can each day to stay afloat financially. But advocates say the model improves patient health and cuts down on expensive hospital stays or emergency room visits.

Roughly 2,600 doctors across the state are participating in Florida Blue’s program. The total costs of caring for the nearly 700,000 patients is 4 to 5 percent lower, or about $16 a month less per person, compared to those not in the program. And doctors in the program reported a 12 percent reduction in ER visits and 9 percent drop in hospital admissions, said CEO Pat Geraghty.

“We’re paying primary care physicians more to do a more comprehensive job of managing care, including longer hours, so that an event that happens in the evening doesn’t end up in the emergency room. And we’re coordinating test results so we don’t have as much duplication,” Geraghty said of the program which started in 2011. “It’s resulting in better quality and higher patient satisfaction.”

Florida Blue also partnered with hospitals around the state to create seven accountable care organizations, where providers are rewarded for cutting costs and maintaining the health of patients, based on things like readmission rates.

Insurers are also bundling services to get cheaper prices. For example, insurers used to pay the doctor, hospital and rehab facility separately for a patient getting a joint replacement, but now insurers are purchasing services in bulk, allowing them to negotiate a better price and hassling patients with fewer bills.

Florida hospital officials say it’s more challenging to cut costs because of the state’s massive population of seniors and uninsured residents. Five years ago, state hospitals ranked among the worst in the nation for poor health outcomes and high costs.

Since then, more than 160 hospitals participated in various efforts and shared best practices on everything from how to reduce blood and urinary tract infections to improving communication with rehabilitation centers.

Readmission rates dropped 15 percent, saving $25 million in two years. Surgical complications were reduced by 14.5 percent, saving more than $6 million during a 15-month period at 67 hospitals. Blood stream infections and urinary tract infections also dipped significantly, according to a recent report by the Florida Hospital Association.

In Miami, Mount Sinai Medical Center started a coaching program to follow-up with patients with congestive heart failure, chronic obstructive pulmonary disorder and others at high risk for being readmitted by connecting individually with patients through home visits or phone calls.

(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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