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Bucking The Merger Trend, Atrius And Blue Cross Sign A Novel Payment Deal

Amid a steady drumbeat of Massachusetts health care mergers and acquisitions, the future of the state's largest independent group of physicians has been fueling the rumor mill. But Atrius Health, with 825 doctors and 32 medical practices, will remain independent.

Atrius and the insurer Blue Cross Blue Shield of Massachusetts announced Thursday they have signed a seven-year deal that Atrius says will give it the funds to grow, improve patient care, and lower health care costs.

The agreement will put Atrius in control of all of the money Blue Cross would expect to spend on 65,000 members covered by a PPO plan. Atrius already manages all the health care spending — what's known as taking the full risk — for 65,000 patients in a Blue Cross HMO plan. There, a primary care provider tracks patient visits to a specialist, MRIs or other tests, surgeries and hospital admissions. But figuring out how to manage the budget for PPO patients, who don't have to check in with their primary care doctor, has been challenging.

This is the first such contract for Atrius and for Blue Cross in Massachusetts.

The key will be keeping patients out of the most expensive setting: a hospital. That's a common goal for patients, doctors and insurers, but not so easy to do for the estimated 5 percent of patients who represent 50 percent of health care spending. With this contract, Atrius will have a large pot of money to spend on preventing illness and injuries that land patients in a hospital.

Take, for example, a patient with diabetes. Atrius might use an in-house pharmacist to manage the sometimes-complicated array of medications and avoid complications that trigger a hospital admission. In pediatrics, Atrius will expand a program for children with complicated conditions, where a care manager makes sure they get into appropriate programs or make appointments with the right range of specialists. In mental health and addiction treatment, Atrius plans to hire more providers and subsidize the standard payments. Atrius says underlying behavioral health conditions increase a patient's health care costs two- to seven-fold.

The details of the contract were not available Thursday, but Blue Cross Blue Shield CEO Andrew Dreyfus says it will make care more accessible and affordable for patients.

"To the extent that Atrius Health can better manage the patients' care, better coordinate it, keep people out of the hospitals when they don't need to, keep them out of the emergency departments, there's an opportunity to save millions of dollars, which then can be reinvested in caring better for patients," Dreyfus said.

It's been difficult for many hospitals and physicians groups to work in two places: one where they manage a budget for a group of patients, and the other in which they are still paid based for each patient visit, test or procedure. With this deal, Atrius will shift the balance toward that first position, the budget.

Atrius President and CEO Dr. Steven Strongwater says this partnership will model the change for other health care groups.

"People who are pursuing value-based care can really make the commitment to the investments in population health, behavioral health, analytics, the kinds of infrastructure that are necessary," he said. "And it will also activate the broader community to understand that we're all trying to lower total cost of care."

Atrius — which includes Harvard Vanguard, Dedham Medical, Granite Medical and PMG Physician Associates — had been one of the most expensive places to receive care in Massachusetts. But that's changed as Atrius has transitioned to global budget contracts. Between 2015 and 2017, Atrius was one of two among the 10 largest physician groups in the state to actually reduce its total medical expense (page 62), a common way to measure health care spending.

Strongwater says patients can expect to save money on their out-of-pocket costs through this deal. But many patients are still waiting to see the state's efforts to curb health care spending lower consumer costs.

"I know that one of the goals of this collaboration is to deliver high-quality care at more affordable costs," said Rick Lord, president and CEO of Associated Industries of Massachusetts. "If we can demonstrate that there is a savings and that can be translated to lower premium for employees then that would be a success."

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Martha Bebinger Twitter Reporter
Martha Bebinger covers health care and other general assignments for WBUR.

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