Before the term Value Based Care existed, Blue Cross Blue Shield of Massachusetts (BCBSMA) unveiled one of the nation’s first risk-based payment models – its Alternative Quality Contract (AQC). Patrick Gilligan joined BCBSMA in 2007 to oversee the AQC’s rollout after spending nearly 14 years negotiating contracts on the provider side at Partners Healthcare (now Mass General Brigham). He left BCBSMA for a three year stint at CVS, where he led health system alliances, and is now back at Massachusetts’ largest private insurer as chief commercial officer where he is responsible for all market-facing functions for the health plan and its 2.8 million members.

This episode of Healthcare is Hard taps into Pat’s unique view of the healthcare market that spans payer, provider, and pharmacy/PBM. He talks to Keith Figlioli about the market factors influencing the cost and quality of healthcare, and shares a payer’s perspective on current challenges and the path ahead. They dive into a number of topics including:

The downstream impact of deferred care: While the COVID-19 economy translated into nationwide job losses – and therefore a reduction in BCBSMA’s membership – the slowdown in elective services is the more challenging, complex, and long-term issue for payers. Like many other payers, BCBSMA issued rebates to its customers and members in 2020 as a result of lower than anticipated health care costs during the COVID-19 public health emergency. Pat talks about the necessity of managing risk over the long term and the expectation for higher future costs that all payers will have to navigate.
Elements of VBC success: When Pat first joined BCBSMA to introduce the Alternative Quality Contract (AQC) to providers, he insisted on sharing both upside and downside risk from the outset. Pat credits the universal approach to risk sharing as an element of AQC’s success. He also points to the long-term nature of the contracts BCBSMA offers to providers. A traditional one- or two-year contract can make it difficult for providers to fundamentally change their business – particularly as government rules change – so BSBSMA has entered into three-, five-, and even seven-year AQC agreements. Lastly, he talks about the importance of sharing data, identifying gaps in care, and truly working together once payer and provider interests are aligned.
Unintended consequences of integrated models: As the lines blur between payer and provider, Pat warns of the potential for losing sight of the mission to improve affordability and quality. He uses pharmacy benefits managers (PBMs) as an example, and how a company like CVS which is traditionally a pharmacy that now operates an integrated model, will make more money prescribing than managing care. He talks about being careful to not deviate too far from what the expertise of a health plan should be and always focusing on the best interest of employers and customers.
The end goal of experience: Throughout the conversation, Pat returns frequently to the theme of patient/member experience. He talks about driving better experiences through deeper partnerships and how every player in the market offers something important. This includes payers and providers recognizing each other’s core competencies, but also considering where consumer-savvy and digital-first managed care providers are trying new approaches that everyone can learn from.

To hear Patrick and Keith talk about these topics and more, listen to this episode of Healthcare is Hard: A Podcast for Insiders.

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