NEW BLUES CONTRACTS REWARD QUALITY
February 9, 2009
We all continue to watch for the opportunity to negotiate the first payer contract that will reward anesthesiologists for “quality.” As we know so well, anesthesiology is already a 5.5 sigma specialty, and it accounts for only around 3% of spending on physician services. Payers do not yet perceive the same business case for incentivizing performance improvement in anesthesiology or even in perioperative care that they see in primary care.
Several new contracts between Blue Cross Blue Shield of Massachusetts (BCBSMA) and providers reflect concepts that could well be the basis for pay-for-performance negotiations with anesthesiologists down the road. (We acknowledge that the Massachusetts healthcare environment is not typical.) On January 14, 2009, BCBSMA announced that it had signed 5-year AQCs with (1) Mount Auburn Hospital, a Harvard affiliate, in Cambridge along with the 300-plus physician Mount Auburn Hospital Independent Practice Association and (2) Hampden County Physician Associates, LLC and its 45 physicians in western Massachusetts. The agreements incorporate an “Alternative Quality Contract (AQC),” a model for which BCBSMA has been seeking willing providers since early 2008.
The AQC combines two forms of payment: a global, or fixed, payment per patient adjusted for health status, which increases annually in line with inflation; and “substantial performance incentives tied to the latest nationally accepted measures of quality, effectiveness, and patient experience of care,” according to BCBSMA. The contract’s global payment covers all services received by a patient including primary, specialty, and hospital care.
The first form of payments is a capitated rate that purports to be based on actual health care costs and to be adjusted for health status with an annual escalator derived from inflationary changes to the Consumer Price Index (as opposed to the much higher medical inflation rate). Capitated payments shift the insurance risk to the provider and are accordingly less popular with providers than with payers. The BCBSMA white paper on ACQs emphasizes primary care and even the “medical home.” Capitation has had some success in primary care but it is almost unknown as a means of third-party payment for anesthesia services. The details of the services covered by the Mount Auburn Hospital and IPA global payment are not available but it seems likely that anesthesia continues to be paid on a fee-for-service basis, either by the hospital or by BCBSMA.
The innovation offered by the AQC is additional payments or “incentives” of up to 10% of the global rate for meeting a number of process, outcome and patient satisfaction goals. The pre-operative administration of antibiotics to prevent surgical wound infections is among the AQC process measures; avoiding post-operative wound infection, pulmonary embolism and deep vein thrombosis, as well as preventing pneumonia after major surgery are several of the hospital outcomes measures. If Mount Auburn Hospital’s anesthesiologists are responsible for ensuring the timely administration of prophylactic antibiotics, or for minimizing the incidence of catheter-related bloodstream infections, pulmonary embolisms or deep vein thromboses, they may have been able to negotiate their own performance incentives with the hospital, even without being covered by the AQC.
This is why the BCBSMA-Mount Auburn Hospital contract matters to our readers. We (and others) have been encouraging you to show your hospitals your contributions to patient safety, to the hospitals’ satisfaction of their own performance targets and to the bottom line by reducing complication rates. Obtaining anesthesiology’s fair share of the quality bonus is more easily described than accomplished, of course. Solid data on satisfying the relevant quality measures are just the starting point. The Quantum Clinical Navigation System™ that we have discussed in various articles (and of which you may even have seen demonstrations at various conferences and most recently in Pheonix at the ASA Conference on Practice Management) is a tool that can help you provide such performance data to your hospital administration.
Four days after BCBSMA announced that it had entered into the Mount Auburn Hospital and the Hampden County Physician Associates contracts, it settled a major and very public battle with Tufts Medical Center over rate increases by signing Tufts to an AQC. Tufts had notified patients with Blue Cross coverage that it would not be accepting their insurance effective February 1st, engaging in a high-stakes game of chicken, given BCBSMA’s powerful market position. BCBSMA was in the process of negotiating contracts with business across Massachusetts, however, and it chose to end the controversy by agreeing to raise payments by as much as 20% over three years, in the estimation of one hospital expert (Tufts and BCBSMA did not disclose the terms of the settlement). In exchange, Tufts agreed to the AQC caps on per-patient spending and provider incentives to find ways to cut costs while increasing quality and safety.
Asked to raise their hands if they believed that there will be major health system reform legislation in 2009, a large majority of attendees at last month’s ASA Practice Management Conference indicated that they expect such legislation.
Several presentations included references to the PROMETHEUS Payment® model, which creates risk-adjusted “Evidence-informed Case Rates” (ECRs) for given diagnoses or conditions. Physicians and/or the hospitals where they practice declare which portions of the ECR they agree to deliver, and at what price. A portion of the agreed-upon payment is withheld and later paid out to each provider in an amount corresponding to the provider’s performance scorecard. Thirty percent of the individual providers’ scores would depend on the collaborative performance of all the providers treating the patient.
The references to PROMETHEUS were made in passing only. Specialty leaders do not feel that anesthesiologists will choose -- or be forced-- to subject their compensation to the PROMETHEUS system any time soon. They are likely right.
Nevertheless, new payment models that reward physicians, hospitals and other providers for preventing avoidable medical errors and systemic inefficiencies have caught the attention of health policy makers and of payers. As David Hamilton wrote in his BNET Insights blog entry “Tufts Medical-Blue Cross Ceasefire: A Grand Bargain on Quality and Cost?” on January 21st, “Whether the gussied-up Blue Cross alternative can avoid [creating incentives to withhold expensive care] may emerge as one of the next big issues for health-insurance companies and hospitals — particularly if Medicare and a potential federal health program for non-seniors grab the ball and run with it.”
Most safety and quality improvement measures require physician action. Some important perioperative measures are under the control of anesthesiologists. Let us keep an ear to the ground. We at ABC would welcome your insights on this subject.
PLEASE PARTICIPATE IN THE 2009 ASA SURVEY OF COMMERCIAL PAYMENTS FOR ANESTHESIA SERVICES
The American Society of Anesthesiologists has conducted a survey of commercial payment rates, or contracted conversion factors, every two years since the mid-1990s. The results of the survey – national and state or regional average, high , median and low conversion factors used by nongovernmental payers – have traditionally been published in a summer issue of the ASA Newsletter. You may review the 2007 report here. These payment benchmarks are valuable to many groups in their contract negotiations. The larger the number of respondents, the more credible the data are. We encourage you to go to the survey site listed in the email ASA members recently received and add your own data.