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For decades now, employers have been at the forefront of health care transformation, continuously pushing for greater price and quality transparency, demanding better value from the delivery system, and encouraging plan members to be better consumers. Despite their efforts, progress has been slow. Employers continue to see health care prices increase, crowding out other investments and stifling pay raises. Quality improvements have been modest and, in some cases (like maternity), have worsened. Pricing transparency remains elusive.

But as with most endeavors, it is persistence and consistency that end up making a difference and the State of Connecticut’s employee benefits plan leaders have exhibited both for more than a decade. Their years of work have culminated in a program that promises to transform the state’s health care system into one in which physician groups, hospitals and health systems compete for value.

To a large extent the State of Connecticut’s recently launched program brings together and amps up ingredients that had already been in place—degrees of price and quality transparency, plan member engagement, and tiered networks—and adding a few new ones. In particular, they have introduced episode of care contracting for a large number of conditions and procedures. These episode contracts have fixed prices, include warranties against preventable complications, and make physician groups, hospitals and health systems fully accountable for the outcomes of the plan members they manage. 

Viewed from the top, the State of Connecticut’s approach is fairly simple and straightforward. Healthcare providers are contracted for procedures and conditions that they manage. The quality of their care is measured. And, for each managed condition or procedure, these providers fall into one of the following categories:

1. Better than average quality and lower than average price—Best Value
2. Better than average quality and higher than average price—Moderate Value
3. Lower than average quality and lower than average price—Mediocre Value
4. Lower than average quality and higher than average price—Worst Value

Unsurprisingly, no single provider is in category 1 for all conditions or procedures, and that makes sense because no entity is good at everything, but any entity can be really good at some things. And some physician groups, hospitals and health systems are really good at managing certain conditions or procedures and not others. That’s why for any condition or procedure for which that provider delivers better than average quality at a lower than average price, that provider is in the State of Connecticut Network of Distinction for that condition or procedure.

The big deal about being in the Network of Distinction is that state employee plan members receive a significant cash incentive (up to several hundred dollars) if they select someone in that network to manage their condition or perform their procedure. Importantly, this program isn’t about restricting access to a small number of providers, but rather to highlight the best in a broad network and encourage plan members to get care from them. 

And that is how markets work. When consumers know who provides the greatest value and have an incentive (at the very least self-interest) to “vote with their feet.”  

There is strong evidence that when you put the right ingredients together, the healthcare system can be converted into a dynamic market in which providers compete for value. And now, in Connecticut, these ingredients are in place. In a market in which there has been limited competition and drive for value and little to no transparency, we have already seen the early effects of this new dynamism with provider organizations in category 2 willing to make price concessions in order to make it into category 1. And it is only just the start. There are more chapters that are yet to be written that we all can learn from thanks to the progressive leadership of the Connecticut state employee health plan.

Read the full story about our partnership with the State of Connecticut and watch a video below with comments from Signify Health CEO Kyle Armbrester.