Massachusetts Blues Plans Sign Up Providers for a New Alternative Quality Contract

Blue Cross and Blue Shield

Massachusetts Blues Plans Sign Up Providers for a New Alternative Quality Contract

Reprinted 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.

Nearly a year after Blue Cross and Blue Shield of Massachusetts (BCBSMA) introduced its Alternative Quality Contract (AQC) for providers, the plan has had the first organizations agree to its terms. Among those that have agreed are Tufts Medical Center and the affiliated New England Quality Care Alliance (NEQCA). Last month, Tufts had said it would no longer offer covered services to Massachusetts Blues members as of Feb. 1, but it reached an agreement just shy of two weeks before it was to cease network participation. The insurer said that as it moves forward with other contract negotiations, it will offer the AQC as a means to help control costs while offering providers more incentives and control over the care they provide to Massachusetts Blues members.

On Jan. 14, the plan said that the provider groups that agreed to sign onto the five-year AQC contract are Mount Auburn Hospital, its affiliated Mount Auburn Cambridge Independent Practice Association and Hampden County Physician Associates, LLC. And Caritas Christi, a six-hospital chain "with a significant number of provider groups," is close to signing the AQC, says Deb Devaux, BCBSMA's senior vice president of the Community Transformation unit. While the group has not signed the AQC, its CEO, Ralph de la Torre, told The Boston Globe that it has signed a letter of intent and was close to finalizing negotiations. She adds that other groups, which she did not identify, have expressed interest in the AQC, but have yet to agree to it.

First offered in 2008, the AQC pays doctors and hospitals based on the quality and outcome of the care they provide to patients. The AQC, according to BCBSMA, is a change from fee-for-service contracts and is comprised of two payments to providers. First is a fixed global payment per patient "adjusted for age, sex, and health status with inflation-based annual increases." The other payment "includes substantial performance incentives," including nationally accepted measures of quality and efficiency and patient experience. The global payment covers all patient services received, including primary, specialty and hospital care, the plan explained.

Devaux tells The AIS Report that under the contract, the provider can earn more if it improves quality. "We do pay them for high-quality care, not just improvement. There is an incentive for absolute performance, and one for moving along the curve if there's additional opportunities for improvement available," according to Devaux.

BCBSMA implemented the AQC to address the annual cost increases in health care coverage, which average about 10% under normal contracts, says Devaux. "Part of that 10% comes from paying more for the service. Part of the increase is that more services are being provided. Many services have great benefit, but some are unnecessary," she argues. "We believe that increase needs to come down to a 3% to 4% [annual increase] in general." She says that is in line with the annual general inflation increase of 3% to 4%.

BCBSMA Says Providers Will See Benefits

Devaux says, "We think that over time, providers will see that taking on AQC will benefit them." The contract and its additional provider incentives, she asserts, will empower providers to make decisions in care that previously were decided by the plan. For instance, there is a decision on whether a patient should be admitted to a hospital or if other options for treatment or evaluation are available, she says. She adds, "We're very eager to work with the providers to help support them in being successful on these contracts."

Going forward, the plan will offer the AQC to all of its provider groups. As of now, "I would say that 20% to 25% of the network is looking at it very seriously or is already in the contract. Some of these are organizations that aren't up for renewal until 2010."

Regarding the Tufts Medical Center agreement, Tufts CEO Ellen Zane said in a prepared statement on Jan. 17 that "we welcome this opportunity to partner with Blue Cross Blue Shield of Massachusetts to be leaders in making world-class health care more cost-effective." She added that the plan is "pleased that there will be no interruption in care for our patients and that our physicians can continue to focus on their patients' needs."

In a joint statement, the entities said, "We have agreed to not discuss the specific terms of the agreement." However, The Boston Globe reported that Tufts won a significant, but undisclosed increase in payment.