Skip to content
Link copied to clipboard

Caron Treatment Centers cuts readmissions under unusual contract with Independence Blue Cross

IBC's contract with Caron is the only one it has that puts an addiction-treatment center on the hook for readmissions. It paid off.

The Carole & Ray Neag Medical Center at Caron Treatment Centers in Wernersville, Pa., opened about four years ago as Caron expanded its treatment of medically compromised patients and older adults.
The Carole & Ray Neag Medical Center at Caron Treatment Centers in Wernersville, Pa., opened about four years ago as Caron expanded its treatment of medically compromised patients and older adults.Read moreCaron Foundation

Caron Treatment Centers, a Berks County-based addiction-treatment provider with a national reputation, took a financial chance in 2017 under a contract with Independence Blue Cross.

IBC would pay the nonprofit, which for about 20 years had not accepted insurance, a single upfront fee for its members and then get out of the way, avoiding the usual policing of such care. But then IBC wouldn’t have to pay if the patient was readmitted during the three months after discharge.

The risk that Caron took paid off.

Data released Thursday at the Rx Drug Abuse & Heroin Summit by Caron and IBC showed that a relatively small 5.6% of the 71 IBC members treated at Caron in 2019 were readmitted within 90 days. The readmission rate for six other unidentified providers IBC had in its network ranged from 11.6% to 25.7%. The total number of patients treated was 645.

“The outcomes speak for themselves. They’ve done a really nice job,” said Richard Snyder, IBC’s chief medical officer.

Snyder said that even though IBC pays Caron more upfront, the total cost is about the same because Caron’s patients are less likely to land back in the hospital. “If you look at it from a quality of life perspective, it’s better,” he said.

Details on how much IBC pays Caron were not disclosed.

After years of not taking insurance, which under managed-care contracts pays far less than Caron charges, management of the Wernersville, Pa., decided it wanted to make its services accessible to a broader population.

Joseph Garbely, Caron’s chief medical officer, acknowledged that increased competition from private-equity-backed providers of treatment for substance-use disorders amid a national opioid-addiction epidemic was a factor. Among the private-equity-backed providers is Recovery Centers of America, based in King of Prussia.

The IBC contract was a new concept in the treatment of substance use disorders. “No one knew if this would be mutually beneficial or not,” Garbely said.

Under traditional contracts, an insurer might approve seven days of inpatient treatment and then reevaluate the patient’s progress, possibly deciding the patient should move to a less intensive type of care. Under that model there’s a 50-50 chance that the patient relapses, Garbely said.

That approach does not work for addiction, which is a chronic brain disease and requires a long-term approach, effectively a lifetime of treatment, Garbely said.

Caron has added similar contracts with many other insurers, including Aetna, Highmark, Quest Behavioral Health, and UPMC Health Plan. Since adopting the insurance contracts that put it at risk, Caron’s average daily census at its Pennsylvania facility has increased to 148 from 100, according to Bradley F. Sorte, Caron’s chief strategy and growth officer. He will become president and CEO in July.

During a question-and-answer session after the presentation at Thursday’s Rx Summit, Snyder put other providers on notice that IBC wants them to match Caron’s results.

“My long-term strategy is to build a network of providers that think and act and deliver like Caron and when we get an adequate network we’ll get rid of the ones that don’t.”