Partners in Improvement

Jay Moore, for HealthLeaders Media, March 26, 2009

The term collaborative isn't often used to describe the provider-payer relationship, and the quality and patient safety arena traditionally has been no exception. But if some fledgling initiatives deliver results on the quality improvement front, that dynamic could be changing.

Blue Cross Blue Shield of Massachusetts has signed four provider organizations to its "Alternative Quality Contract," a five-year pact that offers significant payment incentives tied to a long list of quality measures. The providers include two hospitals—Mount Auburn Hospital in Cambridge, MA, and Tufts Medical Center in Boston—and two physician groups—Mount Auburn's affiliated physician group Mount Auburn Cambridge Independent Practice Association, and Hampden County Physician Associates in Springfield, MA.

"We view the contract as one more step in the direction of aligning payers and providers in a way that helps the patient," says Susan Abookire, MD, MPH, chair of the department of quality and patient safety at Mount Auburn, a 203-staffed-bed teaching hospital affiliated with Harvard University Medical School. "Traditionally we've seen some pay-for-performance arrangements that added small quality bonuses, but this is a dramatic shift to align the bulk of payment with quality."

The AQC marks a new twist on an old reimbursement model: capitation. Under the contract, providers receive a fixed per-patient payment adjusted for health status and inflation, rather than a fee-for-service arrangement. Additionally, providers can increase their total payment by up to 10% by hitting inpatient and ambulatory performance targets tied to a set of process, outcomes, and patient experience measures.

But does the contract genuinely differ from capitation? A November 2008 BCBSMA white paper offers three reasons why it does:

  • Coupling the fixed payment with performance measures helps safe-guard against undertreatment.
  • The fixed payment budget is both based on actual costs that consider the relative morbidity of patients and adjusted for inflation annually.
  • Because the AQC includes a global payment for all services received by a BCBSMA member, costs are lowered and care is improved when a physician spends extra time with a patient that helps avoid unnecessary hospitalization.

"For organizations that choose the AQC, the global budgets are built on historical claims trends and costs, including any existing patterns of patients receiving care from outside specialists," says John Fallon, MD, chief physician executive at BCBSMA.

Abookire says the AQC is actually "inclusive of the capitation model," but the amount of reimbursement tied to quality makes it unique. "If you were in a fully capitated model, in theory you could be incentivized to give less care. With fee for service, you're incentivized to give more care. But what you really want to do is give the right amount of care."

School days

Beyond the notion of offering caregivers increased payment incentives, BCBSMA and provider organizations have also been addressing the issue of quality and patient safety through another avenue: hospital board education. At the end of 2007, BCBSMA launched a trustee education program aimed at encouraging trustees to embrace their roles as quality champions.

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