Improving Partnerships Between Health Plans and Medical Groups

The American Journal of Managed CareSeptember 2015
Volume 21
Issue 9

To provide guidance for successful partnerships, the authors identify common themes from their experience with successful health plan/medical group partnerships programs.

The past 25 years have witnessed numerous unsuccessful attempts to control spiraling healthcare costs. The current resurgence of efforts to control the rising cost of care while improving quality outcomes is occurring for compelling reasons. First, it has become clear that although our nation has the highest level of health spending among developed nations, our outcomes are well below average.1 Second, the rise of healthcare premiums without improvement in health outcomes is diverting employer dollars away from employee raises,2 resulting in real wages in the United States that are either flat or decreasing for the majority of workers.2 Third, more individuals are purchasing health insurance and healthcare services directly—both due to trends in employment-based coverage and to the Accountable Care Act—creating increasing public interest in healthcare costs and rising premiums.

These realities are giving rise to a powerful imperative for payers to demand improved value from healthcare providers. While payers continue to experiment with new benefit designs to address the “demand side” of healthcare (consumers/patients), they are also exploring new payment models to address the “supply side” (providers). Inside these new payment models, the focus has become sharing accountability with providers to manage total cost while improving quality outcomes. In the managed care era of the 1990s, sufficient data to effectively manage populations were not available. Now, big data is creating the ability to merge electronic medical record (EMR) and claims (cost and utilization) data as well as to generate the tools to create actionable improvement programs. With that information, valuable comparisons are being made across and within systems, states, and regions to identify and promote low-cost, high-quality best practices.

Given the improvement in available data and the ongoing need to increase the value of care, payers are exploring contracts that engage providers in sharing accountability for the costs and quality of care delivered to the populations they serve. Increasingly, the current vehicles for these contracts are accountable care organizations (ACOs),3 with providers’ financial success depending on effectively managing chronic illness while identifying and eliminating unnecessary expense (ie, overuse). Whereas some medical groups, or ACOs, have sufficient information to achieve these goals, most physician organizations rely, at least in part, on insurers to share medical and pharmacy claims data, identify high-risk patients, and measure variation in practice behaviors that drive reductions in overuse.3 Reducing unwarranted variation is critically important to the fiscal success of ACOs, as up to 30% of current healthcare costs do not contribute to improved health outcomes and ultimately drain limited resources away from improving the management of chronic disease.4

Historically, relationships between medical groups and health plans have often been adversarial, making the task of forming this next generation of contracts between health plans and ACO groups challenging. Specifically, payer—provider relationships are often complicated by distrust, conflicting objectives, and a lack of data transparency. In contrast, a shared-accountability model requires a more collaborative partnership. Below, we share lessons learned from our work with health plans and medical groups, informed by interviews in 2013 with medical group and health plan leaders from 4 successful partnerships: Blue Cross of Michigan Physician Group Incentive Program, the Colorado Multi-Payer Patient Centered Medical Home Pilot, Excellus Health Plan’s Upstate New York Non-Invasive Cardiology Project, and Blue Cross Blue Shield of Massachusetts (BCBSMA) Alternative Quality Contract.

From this iterative process, we have identified 3 common themes to creating successful collaborations between health plans and ACOs/medical groups. They are: 1) building an explicit relational infrastructure, 2) engaging practitioners as full partners, and 3) collecting and using data to improve mutually agreed upon outcomes.

Theme 1: Building Infrastructure

Traditionally, risk contracts between provider and payer organizations have been designed in a competitive framework, with each side negotiating for its own interests and financial goals. However, in more successful partnerships, both the provider and insurer’s leadership recognize that the costs of redesigning care require new payment mechanisms: to successfully negotiate collaborative outcomes, both health plans and ACO/medical groups have had to be transparent in defining and sharing their goals for the collaboration. By making each side’s financial goals and objectives transparent, the partnership can focus on successfully achieving both organizations’ goals. To that end, some health plans have acknowledged and incorporated the capitalization of practice transformation into their more recent contracts with organized medical groups. In exchange, these ACOs or medical groups accepted accountability for reaching mutually negotiated outcomes.

When mutual goals are not explicitly reconciled and the capitalization of practice transformation is ignored, efforts often fail to achieve either organization’s goals—especially in the brief contractual time frames negotiated.5 For example, in their alternative quality contract (AQC), BCBSMA established the twin goals of significantly improving quality outcomes while reducing medical spending growth to approximately match general economic growth.6 At the same time, contracting AQC groups were committed to improving quality while creating a positive margin with which to fund innovation and support the incomes of their organization’s practitioners and staff.

To succeed, BCBSMA committed to working with groups throughout their 5-year AQCs to continuously identify opportunities to improve quality and patient outcomes while attempting to lower costs. To accomplish these goals, the medical groups initially achieved cost savings by moving patient tests and procedures to safe lower cost settings6; later, they began to identify redundant, avoidable, or unnecessary services.7 To help the groups accomplish this task, BCBSMA provides the groups with accurate, clinically relevant data and offers training in practice pattern variation and engaging physicians in change. The result has been that both the medical groups and the health plan are meeting their goals—one of the most important components to creating a successful partnership.6-8

In addition to organizing projects around explicit, shared goals, buy-in from the highest levels of management is essential. Leadership must champion the program and convince others of its value. When the work team is led by middle managers without direct accountability to senior managers for results, they lack sufficient authority to change policy or deliver needed incremental resources in a predictable, timely fashion. As a result, energy and commitment to the partnership diminishes.

Having mutually generated and explicitly articulated core values is another critical component. We have found trust, transparency, respect, honesty, and autonomy to be critical core values to effectively engaging practitioners. Trust continually dominates conversations about effective partnering, and because transparency promotes trust, it was repeatedly voiced as an essential core value. Partners also had to acknowledge and confront prior unsatisfying experiences, as failing to address prior “baggage” carries the seeds of distrust into new projects. Acknowledging past problems, teams can openly and proactively work through them.

Theme 2: Successfully Engaging Physicians as Partners

Effectively engaging physicians requires that proposed practice improvements are viewed as consistent with each practitioner’s professional values and goals. In addition, practitioners require a degree of autonomy in operationalizing recommended changes. These attributes of successful programs—autonomy, relatedness, and competence—form the basis of internal motivation.9,10 When internally motivated, physicians require less reliance on external, and typically financial, rewards; essentially, when dollars are used as the primary incentive and then removed, there is a predictable return to the pre-reward behavior. On the other hand, when the behavior is internalized, such as by ensuring that patients receive the most effective, least costly medication, the behavior is maintained with or without an external incentive. Physicians, like others, want to spend time doing things that are meaningful and appropriate.

Another key to promoting internal motivation is the early, meaningful involvement of clinicians in the conceptualization and evaluation of improvement projects. Engaged early on, practitioners experience both the energy of working collaboratively with others (relatedness) and feeling ownership in the project (autonomy).

Finally, plan and physician leaders focusing on appropriateness of services, rather than cost alone, increases practitioners’ buy-in. One of the authors (HB) found that talking to frontline practitioners primarily about cost reduced enthusiasm for quality improvement initiatives.11 Alternatively, providing peer comparison data in the context of clinical appropriateness of care resulted in narrowing of unwarranted and costly practice variation.12

Finally, establishing and supporting learning groups—where practitioners focus on improvement by sharing challenges and successes with peers—has been characteristic of successful partnerships. Using tools such as patient registries, reporting variations in care and outcomes across participating plans and/or practices, and providing real-time dashboards are examples of the support clinicians need to focus on improving and tracking progress.

Theme 3: Collecting and Using Data to Improve Outcomes

A successful payer—provider partnership requires accurate meaningful data and the creation of meaningful measures of success. Projects often struggle because of unrealistic timelines for organizing initial data collection, aggregation, and actionable report generation. The consequence of unrealistic expectations is frustration and disappointment leading to withdrawal by both insurers and practitioners. Realistically, improving outcomes often takes longer than either the payers or insurers are willing to acknowledge13; with time and experience, however, these timelines shorten.

Involving practitioners early in the selection of clinically important measures from available well-validated national measure sets helps to develop trust and promote collaboration. Involvement in such data elements as: 1) practitioners’ practice locations, 2) accounting for moving between practices, 3) assigning specialty for those practicing primary care and specialty medicine, and 4) co-creating the rules for attributing patients to practitioners (to whom claims utilization, EMR data, and costs are assigned) builds data credibility.

Data pushback from practitioners is predictable, but can be potentially useful in that the feedback helps to improve data accuracy and practitioner acceptance. To that end, provider reports need involved practitioners to provide that feedback. Incorporating clinical data from EMRs with claims data will soon become the standard; this will allow practitioners to focus on the relationship between cost and quality, not just on cost alone.11 Collaboration on merging these sources of data will require transparency and trust. Continuous evolution of interoperability among the diverse health information systems used by providers—even providers within the same system—is 1 critical step to allow the timely access to data affording a 360-degree view of patients. Payers and providers must continue to push for and develop solutions that will meet the need for data that are foundational to the successful management of cost, quality, and outcomes for both individual patients and populations.

A major goal of presenting data is to offer practitioners actionable information about how their decisions compare with those of their peers and to vetted guidelines. Unfocused or poorly designed reports that do not help practitioners identify ways to improve cost or quality outcomes waste valuable time. Successful practitioner reports have a clearly presented purpose for presenting the data, results that are discernable as actionable, and where possible, offer suggestions on how to achieve the recommended actionable changes.

Having accurate peer comparison data is a powerful, if not the most powerful, motivator of practitioner behavior change. Linking peer comparison data to practitioners’ ability to question community standards and evaluate other approaches to care increases trust, promotes a sense of relatedness, and helps reinforce the importance of the data reporting and data-sharing methodology. As part of creating actionability, reports should describe the appeal process so that practitioners can be reassured of the partnership’s commitment to data accuracy.


Improving care in this next decade depends to a large degree on medical groups and health plans partnering effectively. Effective partnership components include building a solid infrastructure, engaging practitioners as full partners, and collecting and using data to improve mutually agreed upon outcomes. The core elements of these principles include transparently defining and articulating each organization’s goals, leadership commitment to establishing and working toward those mutually acceptable goals, creating relationships rooted in improving quality and controlling healthcare spending growth, and delivering highly actionable data to practitioners. Working within communities to measure and improve outcomes is 1 way to provide a culture of improvement that can support these efforts, and identifying barriers to creating these relationships will be an essential first step in the process.


The authors would like to thank Ellen Leopold for her valuable assistance with editing.

Author Affiliations: EagleDream Health (HB, PH), Rochester, NY; Departments of Medicine, Family Medicine and Public Health Sciences, University of Rochester School of Medicine and Dentistry (HB), Rochester, NY; Integrative Pain Center of Arizona (PH), Tucson, AZ; BlueCross BlueShield Massachusetts (DGS), Boston, MA; and Department of Medicine, Tufts University School of Medicine (DGS), Boston, MA.

Source of Funding: Supported in part by a grant from the Commonwealth Fund.

Author Disclosures: Dr Beckman is a consultant for Blue Cross of Massachusetts and is an employee and board member of EagleDream Health, which offers programs in Engaging Physicians in Change. EagleDream Health owns a patent to identify overuse/underuse of services and also materially benefits from improved relationships between health plans and medical groups. Dr Beckman received a grant to support the writing of this manuscript from the Commonwealth Fund (who did not direct or influence the work). Ms Healey reports no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article. Dr Safran is a full-time employee of a health plan (Blue Cross Blue Shield Massachusetts), which is interested in the content without any financial interest.

Authorship Information: Concept and design (HB, DGS); acquisition of data (PH); analysis and interpretation of data (PH, DGS); drafting of the manuscript (HB, DGS); critical revision of the manuscript for important intellectual content (HB, PH, DGS); obtaining funding (HB, DGS); administrative, technical, or logistic support (HB).

Address correspondence to: Howard Beckman, MD, FACP, FAACH, EagleDream Health, 300 Trolley Blvd, Rochester, NY 14606. E-mail:


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