California Governor Gavin Newsom recently signed legislation expanding a pilot program that allows California school districts to partner directly with medical groups to purchase health care for their workforce. The pilot will now be in effect for four full years, as anticipated in the original California state legislation that created the pilot, AB 1124.
The pilot, an agreement between the California Voluntary School Employees Benefits Association (VEBA) and members of America’s Physician Groups (APG), aims to introduce a value-based payment model designed to reduce overall healthcare costs while improving the quality of patient outcomes. VEBA administers health care programs and benefits for more than 153,000 members from more than 73 employers and school districts.
In the first eight months of the pilot, which launched Jan. 1, 2024, VEBA has already reported $1 million in savings for nearly 5,000 enrollees, demonstrating the potential for even greater cost savings and improved care with this extension, it says APG.
Both APG and VEBA applauded the extension of the pilot. “America’s Physician Groups applauds the Governor for signing AB 2063, which will allow California to continue exploring innovative payment models that reduce health care costs and improve patient outcomes,” said Bill Barcellona, executive vice president of government affairs. of America’s Physician Groups, in a statement. “VEBA has partnered with top-tier providers in the western United States, including Sharp Healthcare, Rady Children’s Hospital and UC San Diego Medical Group and Hospitals. “These providers are leaders in healthcare delivery and their participation in this pilot further enhances their potential for success.”
“Direct hiring is innovative,” said Laura Josh, CEO of VEBA for California Schools, in a statement. “For the first time, California can evaluate how integrated care and risk-based payments can reduce health care costs and improve performance. This extension is an important milestone in our legislative efforts, and VEBA is proud to lead this first-of-its-kind program, made possible through the leadership of Assemblymember Brian Maienschein. VEBA is confident that the program will generate even greater savings and improve patient care for Californians,” he said.
Data from the Integrated Healthcare Partnership at a recent Office of Healthcare Affordability board meeting provided details about the pilot. Between the two major coverage models (HMO with capitated delegated networks and PPO with standalone fee-for-service networks) the rate of cost increase was 3.12% versus 9.93%, respectively, over a five-year period before the pandemic. This triple difference highlights the critical need for innovative payment models like those tested in this pilot.
The program is overseen by the Department of Managed Health Care (DMHC).
