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AIS's Health Business Daily
Featured Story April 29, 2008 Blues Plan Executives Push for Changes in Fee-for-Service Provider Pay System to Achieve Higher Quality, Lower CostReprinted from The AIS Report on Blue Cross and Blue Shield Plans, a hard-hitting independent monthly newsletter on business strategies, products and markets, mergers and alliances, and financing of BC/BS plans. By Bruce Goldfarb, Contributing Editor, (bgoldfarb@aispub.com) The current fee-for-service system for medical care is untenable and must be reformed, according to a panel of Blue Cross and Blue Shield executives who conducted a presentation on April 15 about innovative provider payment incentives to a group of congressional staffers and journalists on Capitol Hill. "The fee-for-service system rewards providers for doing more," says Alissa Fox, vice president of legislative and regulatory policy for the Blue Cross and Blue Shield Association (BCBSA), based in Washington, D.C. "We must do more to change the system." As the nation balances the need to expand access to health care coverage with the imperative to keep a lid on ever-rising medical costs, solutions must include strategies that reorient incentives toward improved quality and controlled costs, Fox says. Simply expanding a system that is inefficient or ineffective will make it unaffordable, she says, adding that 30% of today's health care spending is for care that is inappropriate. Costs and quality are inextricably linked, Fox asserts. BCBSA Plan Lists Components of Reform Earlier this year, BCBSA unveiled its proposal for expanding access to health coverage, "The Pathway to Covering America." The 44-page report outlines the organization's plan to foster reform of the health care system by changing incentives to promote better care, empowering providers and consumers, promoting health and wellness, fostering public-private coverage solutions, and encouraging research into what works. On April 15, a Capitol Hill audience of several dozen people listened as physicians from three Blues plans described innovative programs addressing one piece of the reform plan - changing payment incentives to reward the delivery of high-quality care. "Our plans are doing some really creative things to improve quality and rein in costs, and we wanted to educate people about the kinds of things we're doing around the country," Fox tells The AIS Report in an interview. In 2001, Highmark Blue Cross Blue Shield launched the QualityBLUE program, in which providers are paid a bonus for complying with a set of performance indicators and metrics, including 16 clinical quality indicators, electronic health records, electronic prescribing, generic substitution, and following "best practice" clinical treatment guidelines. More than 1,200 medical practices have signed up for the QualityBLUE program so far, Don Fischer, M.D., Highmark's senior vice president and chief medical officer, said at the briefing. Those medical practices able to maintain a score of 100 or more out of a possible 115 points in performance indicators earn an additional $9 per filed claim, he explained. Hospitals can earn an additional 3% in their payments through the QualityBLUE program. "Hospitals are running at 1% to 2% margins, so it really gets their attention," Fischer said. To demonstrate the results of the program, Fischer presented data showing that in 2007 the hospital-based program prevented more than 900 central-line infections that saved $52 million and the lives of 375 patients. Six hospitals signed up for the QualityBLUE program when it began in 2001. Today 30 medical centers participate in the program, according to Fischer. The program has more than paid for itself. To date, more than $40 million in bonuses has been paid to hospitals and more than $10 million to physicians, Fischer said. "The costs of rewarding physicians have been recouped simply by generic prescribing alone," he says. Plan Links Reimbursement to Quality Blue Cross Blue Shield of Massachusetts is testing a new method of structuring service reimbursement that links payments to improved clinical performance. The "Alternative Quality Contract" (ATC) is intended to ensure that the patient received the right treatment, at the right time, from the right provider, explains Robert Mandel, M.D, the plan's vice president of health care services. The ATC is a combination of a fixed, risk-adjusted payment with annual increases in line with inflation, and performance-based incentives using nationally recognized measures of quality, efficiency and patient satisfaction. Physicians who meet ATC benchmarks can earn up to 10% in bonus compensation as an incentive. The payment structure also encourages physicians and hospitals to increase their profit margins by using new and innovative approaches to patient care, such as e-mail consultations, group visits and house calls following hospitalization. Although the program is still being introduced and has not yet produced data, Mandel expressed confidence that ATC will put the brakes on rising health care costs. "The goal is to keep expenditures down, with growth closer to the CPI [consumer price index]," he said. In 2005, Blue Cross Blue Shield of North Dakota (BCBSND) partnered with physicians to address one of the country's most pressing public health problems — diabetes. Jon Rice, M.D., the plan's senior vice president and chief medical officer, explained that North Dakota is much different than the markets of the other Blues plans represented in the Capitol Hill meeting room. In the rural and sparsely populated region, about 80% of the state's primary care physicians work for six large multispecialty group practices. Working with Fargo-based MeritCare Health System, BCBSND launched a pilot program using the "medical home" model of care. The medical home model, Rice explained, is a medical practice that "provides evidence-based care to patients in a longitudinal fashion," a process relying on "accurate, actionable data at the point of care," he says. MeritCare was an ideal partner for the pilot project, according to Rice. The state's largest group practice, with 429 physicians and 182 midlevel practitioners, MeritCare is a fully integrated network with 37 clinics and two hospitals in southeastern North Dakota. BCBSND gave MeritCare a $20,000 grant to support the one-year pilot project and sweetened the deal with an additional incentive: The health plan offered to share savings 50-50 with providers. Within a year, clear trends were evident, said Rice. Emergency department utilization and inpatient claims were down, and patient satisfaction was up. More patients met treatment standards established by the American Diabetes Association, and the program produced savings of $500 in medical costs per member per year (PMPY). Rice says that the program was renewed in 2006, and in its second year produced more than $1,200 PMPY in savings. Now BCBSND is applying the approach for patients with heart disease and hypertension, and is expanding the program to other providers in the state. Aside from improving
the health of people with diabetes, Rice said that the medical-home
model has been received with positive reviews. "The patients like
it, the doctors like it, and the nurses especially like it because their
role in patient care is expanded," he said.
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