Reducing Costs with Value Based Payments Models

“These new models are about quality of care and the patient experience. That’s where we want to keep the focus.”

-  Lili Brillstein,
led the development and creation of the Horizon BCBSNJ EOC program


Horizon Blue Cross Blue Shield of New Jersey (Horizon BCBSNJ)


Traditional payment models led to disjointed care and escalating costs


Episodes of Care (EOC)


  • $90 million in savings between 2014-2018
  • 30% decrease in costs for EOC-covered procedures
  • Lower infection and readmission rates
  • Providers participating in the EOC program shared in the savings with no reduction in payments
  • 94% overall member satisfaction rate

The Customer:

Horizon Blue Cross Blue Shield of New Jersey (Horizon BCBSNJ).

The Challenge: How to Improve Care Experience and Outcomes While Controlling Costs

Traditional healthcare payment approaches focus on volume of services rather than quality of treatment–leading to waste and inefficiency.

Health plans need to structure payments to reward value and help providers innovate and become more efficient. This addresses the high cost of healthcare and the uneven quality that affect patients in the U.S. These findings and more are detailed in the article published by Horizon Health News.

The Solution: Episodes of Care (EOC) Value- Based Program to Minimize Complications and Improve Patient Outcomes.

The Horizon BCBSNJ EOC program is an approach in which providers and insurance companies work together to improve the quality of care to give patients a better healthcare experience and lower overall costs. In this program, one provider oversees all aspects of care for an episode (a specific medical condition or procedure) rather than just the care that he or she provides. By taking on this role, the provider is responsible for making sure the patient receives the best care possible. If the provider is successful in meeting certain quality and cost targets, he or she shares in the savings achieved. Most importantly, the patient gets care—from diagnosis to recovery—that is coordinated, efficient, and effective.

Focus on the Upside

Horizon designed the program to be “after-the-fact” and “upside only” because EOC is a relatively new model and it takes time for meaningful changes to be implemented. This means providers continue to be paid based on their fee-forservice contracts. Once the savings tied to the episode have been identified, the provider can share in any savings that are achieved. It is an opportunity for providers and payers to work together as partners to figure out how to improve patient outcomes and experiences.

The Results: Improved Quality, Lowered Costs, and High Satisfaction Rates

BCBSNJ analysis showed that patients who had orthopedic procedures covered under an EOC program had lower infection and readmission rates than patients under standard programs. Additionally, costs for EOC-covered procedures were 30% less.

While the EOC program began as a small pilot project with just two episodes—hip replacement and knee replacement—Horizon BCBSNJ has added to it every year and today, the program has 26 episodes. Between 2014-2018 alone there were more than 38,000 episodes and savings of $43.8 million, making it one of the largest programs of its kind in the country.

Expanding Coverage to Complex Conditions

Lili Brillstein led the development and creation of the Horizon BCBSNJ EOC program. “We recognized early on that the traditional payment model led to discounted care and can’t be maintained over the long term,” Brillstein said. “We began asking questions like ‘How do we improve quality of care?

How do we make sure that patient care is better coordinated while eliminating unnecessary spending that adds no benefit?’ That ultimately led to the EOC program. Following the successful pilot, my task was to grow the program to include new conditions where we could have a large impact and continue to learn.”

Brillstein has done just that. In addition to clearly delinated procedures, she added more complex and chronic conditions, such as lung cancer and substance abuse disorders.

New Spirit of Collaboration

The EOC program also includes another important outcome: improving the relationship between providers and insurers. “The historical relationship between insurers and providers has been adversarial—which stems from the traditional way we make payments with no connection as to whether a patient ever gets better or has a good experience,” said Brillstein. “But the EOC model creates communication and coordination. We co-design the model with our physician partners. We come up with the quality measures together. And we’re engaged in a constant stream of communication.”


Importance of Data and Analytics

One of the keys to the EOC program’s success is data to measure the way you are practicing so that you can improve. Measuring outcomes allows you to continue to learn and improve the care model and practice guidelines, and deliver better results for the patient.

As Horizon BSBCNJ’s technology partner on the EOC program, Change Healthcare is responsible for collecting the data that goes into the EOC analysis. They review all the claims data looking for “triggering claims.” An example of a triggering claim is knee surgery. Once the system identifies such a claim, it automatically looks back 30 days to find other claims that might be related to the surgery such as preliminary lab work or x-rays.

The system then knows to look forward 90 days to check for related claims–such as follow-up doctor visits or physical therapy.

Instead of just tracking each of the claims individually, the system bundles all related claims into one episode. It can then compare the total cost of the episode against the historical cost. Any savings are shared, so the healthcare provider, who is still paid a traditional fee, has an incentive to operate as efficiently as possible.

Ongoing Pursuit of Quality

The EOC program is focused on improving the quality of care and the patient experience. Change Healthcare turns the data into insights and identifies opportunities for Horizon to work with providers to improve care quality. In 2017, EOC members rated their overall satisfaction with communication and support at 94%–the same rating given for satisfaction with the coordination of their care.

If you’d like information on how Change Healthcare can help you develop and manage an EOC program, please contact your Account Manager or visit

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