open classroom health policy - session 10.16 - iselin and young

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1 The Myra Kraft Open Classroom Series Fall 2013: Policy for a Healthy America Every Wednesday, 6pm – 8pm September 4, 2013 through December 4, 2013 West Village F, Room 20 Northeastern University School of Public Policy and Urban Affairs

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Page 1: Open classroom   health policy - session 10.16 - iselin and young

1

The Myra Kraft Open Classroom Series Fall 2013: Policy for a Healthy America

Every Wednesday, 6pm – 8pmSeptember 4, 2013 through December 4, 2013

West Village F, Room 20

Northeastern UniversitySchool of Public Policy and Urban Affairs

Page 2: Open classroom   health policy - session 10.16 - iselin and young

This Week (October 16, 2013)

School of Public Policy & Urban Affairs | Northeastern University

“Why Paying Physicians and Hospitals for their Performance Scares Everyone”

Gary Young, JD, PhDDirector of The Center for Health Policy

and Healthcare Research and Professor of Strategic Management and Healthcare

Systems, Northeastern University

Sarah Iselin, MSSenior Vice President of Strategy, Policy and Community Partnerships and Chief Strategy Officer, Blue Cross Blue Shield

of Massachusetts

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School of Public Policy & Urban Affairs | Northeastern University

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4

US Health Care Reform: Paying for Value Not Volume

Gary Young, J.D., Ph.D.

Center for Health Policy and Healthcare Research,

School of Business and College of Health Sciences,

Northeastern University

Health Policy Open ClassroomOctober 16, 2013

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5

Paying for Health Care Services in the US

• Fee-for-Service

• Diagnostic Related Groups

• Capitation

• Pay-for-Performance (P4P)

• Value-based purchasing through global payment

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6

6

Why P4P in Health Care?

Quality problems

Escalating costs – business case for quality

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7

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What is P4P? Financial incentive

Assigned performance targets – (quality, efficiency)– e.g., annual blood sugar test for patients with

diabetes

Target recipient/Unit of accountability – individuals, teams, organizations

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11

P4P: Centerpiece of US Health Policy

Over 200 P4P programs in private sector

Over half of state Medicaid programs have adopted P4P

ACA – Medicare value-based purchasing– Provider-specific P4P programs

– Accountable care organization (ACO) shared savings program

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ACA – Provider-Specific Programs

• Law requires implementation of VBP:

-- for most hospitals in 2012,

-- physicians in 2015, and

-- the planning of P4P for nursing homes, home health agencies, and other types of organizations

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ACA – Outline of Medicare P4P for Hospitals

• Funding: Budget neutral as funded from reduction in DRG payments -- initially 1% reduction in DRG payments transitioning to a 2% reduction in 2017. • Performance measures: clinical process measures; patient experience, patient outcome measures (2014); efficiency (2014).

• Performance standards for both achievement and improvement.

• Incentive payments: A hospital’s performance score determines the percentage of the DRG payments it earns as an incentive payment.

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Medicare Hospital P4P: Examples of Measures

Clinical process– Prophylactic antibiotics for surgical patients within one

hour of surgery– Discharge instructions for patients w/ heart failure

Clinical outcome– Mortality for heart attack, heart failure

Patient experience– Pain management– Communication about medicines

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ACA -- ACO Shared Savings

ACO bears financial risk for spending in excess of a budget.

ACO gains for reducing spending below budget.

ACO receives bonuses for meeting designated performance targets on quality measures including measures to promote population health (e.g., influenza immunization, colorectal cancer screening.

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16Global Payment/ACO

Private-Sector Initiatives

Blue Cross Blue Shield of Massachusetts Alternative Quality Contract

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17

17

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Are Providers Scared?

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Physicians should be rewarded financially when they provide higher quality care.

4.9%

5.1%

5.7%

10.4%

13.5%

6.7%

54.2%

40.5%

43.3%

26.0%

35.6%

42.1%

5.3%

4.5%

2.2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Rochester

Mass

California

Percent of Respondents

Strongly Disagree Disagree Neutral Agree Strongly Agree

General Attitudes Toward VBP

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20

Financial incentives are an effective way to improve the quality of health care.

7.0%

8.4%

19.5%

21.2%

18.8%

45.6%

39.8%

44.6%

11.2%

13.6%

23.0%4.8% 8.8%

16.7%

17.1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Rochester

Mass

California

Percent of Respondents

Strongly Disagree Disagree Neutral Agree Strongly Agree

General Attitudes Toward VBP

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Should You be Scared? P4P may not work

Unintended consequences

– Patient selection

– Teach to the test

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22

Limited Evidence that P4P WorksSelected Findings:

– Rosenthal et al. (2006) Relative increase of 3.6 percentage points for cervical cancer screening.

– Young et al. (2007) Absolute increase of 7 percentage points for diabetes measure (e.g., eye exam).

_ Lindenauer et al. (2007) Relative increase of 2.6 percentage points for AMI measures; 3.4 points for pneumonia measures; 4.1 points for heart failure measures.

-- Petersen et al. (2013) Relative increase of 8.3 percentage points.

--Jha et al. (2012) No improvement in hospital mortality rates for cardiac care or pneumonia.

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23Pre-Post Study of Diabetes Quality

IndicatorsDiabetes Measures (Annual) n = 334 1999 2004

Change in %

Points

HbA1c measurement – 2 tests annually

56% 63% +7%

Microalbumin or urinalysis 61% 70% +9%

LDL cholesterol level 58% 79% +21%

Retinal exam – 1 test annually 40% 54% +14%

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24

Overview: Six-Year Trends in RIPA Diabetes Care(n=334)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1999 2000 2001 2002 2003 2004

Mea

n A

dh

eren

ce R

ate

(pat

ien

ts p

er p

hys

icia

n)

HbA1c Check Urinalysis LDL Check Retinal Exam

Pre-Incentive Post-Incentive

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25

What are the Barriers ? Money may not be an effective motivator in the long

run. -- Some providers may perceive significant tradeoffs between money and autonomy. -- Monetizing quality may not be sustainable and even counter productive.

Infrastructure and training may be inadequate.

Our knowledge for designing programs may be insufficient.– Who should be incentivized and by how much?– How should we structure incentives and performance

measures?

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26

Overview: Six-Year Trends in RIPA Diabetes Care(n=334)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1999 2000 2001 2002 2003 2004

Mea

n A

dh

eren

ce R

ate

(pat

ien

ts p

er p

hys

icia

n)

HbA1c Check Urinalysis LDL Check Retinal Exam

Pre-Incentive Post-Incentive

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Table 2. Overall change in performance measures from initial to final measurement among VA

facilities.

Measure

Adoption of Performance-based

Incentives

Removal of Performance-based

Incentives

First

Quarter

Last

Quarter

Absolute

Difference P Value

First

Quarter

Last

Quarter

Absolute

Difference P Value

Cardiology Involvement 74 94 20 <.001 90 91 1 0.93

Troponin Returned 74 96 22 <.001 94 92 -2 0.35

Diagnostic

Catheterization84 95 11 <.001

9493

-10.26

ACEI or ARB 89 92 3 0.26 90 89 -1 0.50

Weight Monitoring 80 92 12 <.001 91 93 -2 0.11

Timely Antibiotic 53 82 29 <.001 81 84 3 0.06

Pneumococcal

Immunization85 92 7 <.001

8992

30.05

Are Any Improvements Sustainable in the Long Run?

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30

2004 2005 2006 2007 2008 2009 20100.4

0.5

0.6

0.7

0.8

0.9

1 Figure 1C. Pneumonia

Pneumococcal Immunization

Fiscal Year (Oct-Sep)

Per

form

ance

(%)

2004 2005 2006 2007 2008 2009 2010 20110.600000000000001

0.650000000000001

0.700000000000001

0.750000000000001

0.800000000000001

0.850000000000001

0.900000000000001

0.950000000000001

1 Figure 1B. Heart Failure

Weight Monitor-ing

Fiscal Year (Oct-Sept)

Per

form

ance

(%)

2004 2005 2006 2007 2008 2009 2010 20110.4

0.5

0.6

0.7

0.8

0.9

1 Figure 1A. Acute Coronary Syndrome

Diagnostic CatheterizationLinear (Diagnostic Catheter-ization)

Fiscal Year (Oct-Sep)

Per

form

ance

(%)

Page 31: Open classroom   health policy - session 10.16 - iselin and young

31What About Unintended

Consequences?

Unintended Consequences

--Patient selection

--Teaching to the test

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32

What Does the Future Hold?

No turning back (why be scared of stepping into the dark when you are already wearing a blindfold)

More experimentation -- payment incentives to keep people healthy!

Strong cooperation needed between purchasers and providers

– Dollars per quality adjusted life years

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School of Public Policy & Urban Affairs | Northeastern University

Page 34: Open classroom   health policy - session 10.16 - iselin and young

Sarah IselinOctober 16, 2013Northeastern University Open Classroom Series

HEALTH REFORM IN MASSACHUSETTS: THE ROAD TO PAYMENT REFORM

Page 35: Open classroom   health policy - session 10.16 - iselin and young

35Blue Cross Blue Shield of Massachusetts

Massachusetts Now Has the Lowest Rate of Uninsurance in the Country

Series1

5.9%6.7%

7.4%6.4%

5.7%

2.6% 2.7%2.0%

3.1%

13.1%13.9% 14.3%

15.2% 14.7% 14.9%16.1% 16.3% 15.7%

2011

PERCENT UNINSURED, ALL AGES

2000 2002 2004 2006 2007 2008 2009 2010

U.S.AVERAGE

NOTE: The Massachusetts specific results are from a state-funded survey — the Massachusetts Health Insurance Survey (MHIS). Using a different methodology, researchers at the Urban Institute estimated that 507,000 Massachusetts residents were uninsured in 2005, or approximately 8.1 percent of the total population. Starting in 2008, the MHIS sampling methodology and survey questionnaire were enhanced. These changes may affect comparability of the 2008 and later results to prior years. The national comparison presented here utilizes a different survey methodology, the Current Population Survey, which is known to undercount Medicaid enrollment in some states.

SOURCES: Urban Institute, Health Insurance Coverage and the Uninsured in Massachusetts: An Update Based on 2005 Current Population Survey Data In Massachusetts , 2007; Massachusetts Center for Health Information and Analysis (formerly the Division of Health Care Finance and Policy), Massachusetts Health Insurance Survey 2000, 2002, 2004, 2006, 2007, 2008, 2009, 2010, 2011; U.S. Census Bureau, Current Population Survey, Health Insurance Historical Tables (HIB Series).

MASS.

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36Blue Cross Blue Shield of Massachusetts

But the Highest Per PersonHealth Care Spending…PER CAPITA PERSONAL HEALTH CARE EXPENDITURES, 2009

NOTE: District of Columbia is not included.SOURCE: Centers for Medicare & Medicaid Services, Health Expenditures by State of Residence, CMS, 2011.

UT AZ GA ID NV TX CO AR CA AL VA SC TN NC OK MS OR KY MI MT NM IN IL KS WA LA HI IA MO WY NE SD OH FL WI MN MD NJ VT WV PA ND NH RI NY DE ME CT AK MA$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

State

NATIONAL AVERAGE

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37Blue Cross Blue Shield of Massachusetts

…In the World

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

Massachusetts

United States

Germany

Canada

France

Australia

United Kingdom

NOTE: U.S. dollars are current-year values. Other currencies are converted based on purchasing power parity.SOURCE: OECD Health Data; National Health Expenditures by State of Residence, CMS Office of the Actuary, 2011.

Page 38: Open classroom   health policy - session 10.16 - iselin and young

38Blue Cross Blue Shield of Massachusetts

Though Health Reform Helped, Costs Are Still a Problem for Many Massachusetts Residents

SOURCES: Massachusetts Health Reform Survey, 2010

Had Out-of-Pocket Spending at or Above 10% Family Income

Had Problems Paying Medical Bills Had Medical Debt

10%

19% 19%

6%

18%

20%

2006 2010

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39Blue Cross Blue Shield of Massachusetts

With Wages Stagnant, Increasing Health Care CostsConsume a Greater Portion of Household Budgets

MASSACHUSETTS PER CAPITA PERSONAL HEALTH EXPENDITURES AND MEDIAN INCOME, 1999-2009

NOTE: Health care expenditures and household income reported in current year (unadjusted) dollars.SOURCES: Data for health care expenditures from CMS, Health Expenditures by State of Residence, 1991-2009. Data for median income from U.S. Census Bureau, State Median Income.

Year1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

$4,865$5,149

$5,590$6,094

$6,556$6,988

$7,436

$8,002

$8,568$8,926

$9,277

$44,005 $46,753

$52,253 $49,855 $50,955 $52,019

$56,017 $55,330 $58,463 $60,320 $59,375

MA PER CAPITA PERSONAL HEALTH CARE EXPENDITURES MA MEDIAN HOUSEHOLD INCOME

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40Blue Cross Blue Shield of Massachusetts

The Increasing Costs of Health Care Squeeze Out Other Public Spending Priorities, Too

STATE BUDGET, FY2001 VS. FY2011 (BILLIONS OF DOLLARS)

NOTE: Dollar figures are inflation adjusted using a measure specific to government spending as developed by the U.S. Bureau of Labor and Statistics.SOURCE: Massachusetts Budget and Policy Center Budget Browser.

Series1$0

$2

$4

$6

$8

$10

$12

$14

$16FY2011FY2001

+$5.1 B(+59%)

-38% -33%

-15%

-23%

-13%

-50%

-11%

-$4.0 B(-20%)

Health Coverage(State Employees/GIC;

Medicaid/Health Reform)

PublicHealth

MentalHealth

Education Infrastructure/Housing

HumanServices

LocalAid

PublicSafety

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41Blue Cross Blue Shield of Massachusetts

Costs Are the Most Important Health Care Issue for Massachusetts Residents

PLEASE TELL ME IF YOU CONSIDER IT TO BE A CRISIS, A MAJOR PROBLEM, A MINOR PROBLEM, OR NOT A PROBLEM IN THE STATE OF MASSACHUSETTS.

5%

11%

14%

25%

26%

22%

32%

53%

High cost of health care

Limited ability to get needed health care

Low quality of health care services

Long wait time for medical appointments

Crisis Major problem

78%

46%

33%

31%

QA

SOURCE: Blendon, R.J et al., “Public Perceptions of Health Care Costs in Massachusetts,” October 2011

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42Blue Cross Blue Shield of Massachusetts

Key Affordability/Cost-Related Developments in Massachusetts

Health reform passes (Ch. 58)– Begins path

to near universal coverage

Much of Chapter 58 enacted, e.g.:– MassHealth

expansion– Commonwealth

Care– Consumer

affordability schedule

– New health plan options for young adults

– Employer Fair Share

Cost Containment Part 1 (Ch. 305) passes– Increased

transparency about cost drivers

– Reports on health insurer and hospital “reserves”

Special Commission on Payment Reform– Recommends

move to global payment

Government reports and hearings on cost drivers

Governor rejects small group premiums

Cost Containment Part 2 (Ch. 288) passes– Aims to control

premiums for small businesses, individuals

Governor Patrick files payment reform legislation

Special Commission on Provider Price Reform

Cost Containment Part 3 (Ch. 224) passes– Statewide cost

growth targets and payment reforms

– Continued focus on data transparency

2006 2007 2008 2009 2010 2011 2012

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43Blue Cross Blue Shield of Massachusetts

“How Effective Do You Think Each of the Following Policy Strategies Would Be In Improving U.S. Health System Performance (Improving Quality and/or Reducing Costs)?”

Fundamental provider payment reform with broader incentives to provide high-quality and efficient care over time

Increased competition among health care providers

Public reporting of information on provider quality and efficiency

Bonus payments for high-quality providers and/or efficient providers

Incentives for patients to choose high-quality, efficient providers

Increased government regulation of providers

More consumer cost-sharing 5%

9%

10%

15%

18%

14%

45%

14%

16%

18%

27%

35%

41%

40%

VERY EFFECTIVE EFFECTIVE

55%

85%

53%

42%

28%

25%

19%

SOURCE: Commonwealth Fund Health Care Opinion Leaders Survey, September/October 2008.

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44Blue Cross Blue Shield of Massachusetts

Special Commission on the Health Care Payment System’s Recommendation

PATIENT-CENTERED GLOBALPAYMENT SYSTEM

THE SOLUTIONGlobal payments made to a group of providers for all care. Providers are not rewarded for delivering more care, but for delivering the right care to meet patient’s needs.

PRIMARY CARE

HOSPITAL

SPECIALIST

HOME HEALTH

$

CURRENT FEE-FOR-SERVICE PAYMENT SYSTEM

THE PROBLEMCare is fragmented instead of coordinated. Each provider is paid for doing work in isolation, and no one is responsible for coordinating care. Quality can suffer, costs rise and there is little accountability for either.

SPECIALIST PRIMARYCARE

HOMEHEALTH

HOSPITAL

GOVERNMENT, PAYERS AND PROVIDERS WILL SHARE RESPONSIBILITY FOR PROVIDINGINFRASTRUCTURE, LEGAL AND TECHNICAL SUPPORT TO PROVIDERS IN MAKING THIS TRANSITION.

$ $ $ $$

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45Blue Cross Blue Shield of Massachusetts

2006

AQC TIMELINE

2007 2008 2009 2010 2011 2012 2013

LEGISLATIVE/GOV’T TIMELINE

Model developed

Jan 2009 First full contracts begin

Sept 2011 Year 1 results published

July 2012 Year 2 results published

~85% of network physicians participating in AQC

Health reform passes (Ch. 58)– Begins path to

near universal coverage

Cost Containment Part 1 (Ch. 305) passes– Increased

transparency about cost drivers

Special Commission on Payment Reform– Recommends

move to global payment

Government reports and hearings on cost drivers

Governor rejects small group premiums

Cost Containment Part 2 (Ch. 288) passes– Aims to control

premiums for small business, individuals

Governor Patrick files payment reform legislation

Payment Reform (Ch. 224) passes– Sets health

care cost growth target at state GDP

Ahead of the Curve – The Alternative Quality Contract

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46Blue Cross Blue Shield of Massachusetts

The AQC Model

1. Global Budget• Based on historical total medical expenses• Annual inflation for each year of the five-year

contract period is defined up front and designed to continually moderate spending growth

2. Efficiency Opportunity• Budget constraint creates incentive to

carefully steward resource use• Provider organizations share in budget

savings and share risk for budget deficits

3. Quality Performance Incentive• Based on a broad set of nationally accepted,

validated measures of ambulatory and hospital care• Range of performance targets on each measure

reward “good to great” performanceYear 1 Year 2 Year 3 Year 4 Year 5

Provider Organization's Total Spending

Quality Performance Incentive (Illustrative)

Efficiency Opportunity (Illustrative)

Initial GlobalBudget Level

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47Blue Cross Blue Shield of Massachusetts

The 60+ measures include:

Ambulatory Hospital

Process •Preventive screenings•Acute care management•Chronic care management

– Depression– Diabetes– Cardiovascular disease

Evidence-based care elements for: • Heart attack (AMI)• Heart failure (CHF)• Pneumonia• Surgical infection prevention

Outcome • Control of chronic conditions– Diabetes – Cardiovascular disease – Hypertension

***Triple weighted***

•Post-operative complications•Hospital-acquired infections•Obstetrical injury•Mortality (condition –specific)

Patient Experience

•Access, Integration•Communication, Whole-person care

•Discharge quality, Staff responsiveness•Communication (MDs, RNs)

Emerging Up to 3 measures on priority topics for which measures are lacking

AQC Measure Set for Performance Incentives

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48Blue Cross Blue Shield of Massachusetts

Insurance Risk Versus Incentive Risk

• AQC aims to hold providers responsible for incentive risk—but not insurance risk

• BCBSMA employs several strategies to insulate providers from insurance risk in the AQC:– Health status adjustment– Use of network-wide trend as

benchmark for budget-setting– Prescription drug benefit

adjustment– Reinsurance requirements/

contract terms– Caps on provider liability for

budget deficits– Upside risk-only in payment for

quality performance

Insurance Risk• Variation in costs and outcomes due to

factors beyond providers’ control• Example: Flu pandemic

Incentive Risk• Variation in costs and outcomes due

to factors within providers’ control—care processes, unnecessary utilization, etc.

• Examples: HbA1c control among diabetics, ED use for ambulatory-care sensitive visits

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49Blue Cross Blue Shield of Massachusetts

AQC Physician Participation

1,373 1,420

2,303

4,592

82%

2009 2010 2011 2012

2,577 2,618

5,065

11,731

86%

2009 2010 2011 2012

Primary Care Physicians

5,136

2013 2013

12,986

Specialty Care Physicians

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50Blue Cross Blue Shield of Massachusetts

AQC Groups

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51Blue Cross Blue Shield of Massachusetts

AQC Results: Lower Costs and Higher Quality

•AQC groups showed dramatic increases in quality, especially around measures of preventive care and chronic care management•Evaluations by researchers at Harvard Medical School found that spending in AQC groups was 1.9% lower in year one and 3.3% lower in year two when compared to non-AQC providers •There is evidence that these benefits largely extend to all practice members cared for by AQC physicians, regardless of whether they are BCBSMA members

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52Blue Cross Blue Shield of Massachusetts

The AQC is Driving Changes in How Careis Delivered

Staffing ModelsApproaches to

Patient Engagement

Data Systems

Referral Relationships &

Integration Across Settings

There are four domains in which we see AQC Groups innovating to improve quality and outcomes while reducing overall spending

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53Blue Cross Blue Shield of Massachusetts

AQC Provider Innovations

Select AQC Group Improvement Initiatives

Reducing Readmissions

•Enhanced care transitions program ensuring f/u visit w/i 14 days for members with chronic conditions. Embedding case managers in practices.

•Formal multifaceted aftercare program implemented; includes case manager outreach calls. Reduced readmit rate from 11.2% to 9.6% (2010 to 2011).

•Staff on call for members at home hospital’s ED: MD/NP responds to ED and manages patient’s care (most appropriate setting)

•Case managers making outreach calls to members who’ve had an ED visit

•Creating ED registry to notify PCP daily of patients using the ED providing opportunity to educate patient about proper use of ED and available alternatives

•Opening an urgent care center near hospital to reduce ED visits

•Creating physician ED profiles, focusing on improving same-day appointment access

•Practices increasingly offering w/e and evening hours.

Reducing ED Use

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54Blue Cross Blue Shield of Massachusetts

Provider Experience

“This has allowed me to be a better doctor. And it's better for my patients."

Damian Folch, MDPrimary Care Physician

Lowell General PHO

“The contract is a way to support us as a physician group to help provide better care for our patients and care at a lower medical expense.”

Richard Lopez, MDChief Medical Officer, Atrius Health

Hear for yourself! Go to www.bluecrossma.com, select Visitor, and then click on: About Us>Making Quality Health Care Affordable.

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55Blue Cross Blue Shield of Massachusetts

Member Experience

“We’re doing a lot of outreach to our members about the things they need to do for preventative care. We’re developing a rapport with these patients and they seem to like receiving that sort of ‘concierge service’ where they are actually the focus of the conversation when you call.”

-Stacey Neudeck, Lowell General Hospital

“The majority of the Blue Cross members know that something’s a little different, a little better – more of a personal touch. A few members with chronic diseases seem to be themost appreciative. They notice the extra time that the physician spends with them, and the extra phone calls, and they see the biggest difference in their health care experience.”

-Philip Gaziano, M.D., Accountable Care Associates

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56Blue Cross Blue Shield of Massachusetts

Success Through Support: Components of the AQC support model

Data and Actionable

Reports

Consultative Support

Best Practice Sharing/

Collaboration Opportunities

Communication & Training

Our four-pronged support model is designed to help provider groups succeed in the AQC.

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57Blue Cross Blue Shield of Massachusetts

How Much We Pay – Prices – Is Just as Important as the Way We Pay for Care

NOTES: 1) Reflects fully-insured commercial trend.2) “Utilization” reflects the number of services provided. “Provider Mix and Service Mix” reflect changes in providers and location of care (shift to more or less expensive providers) and the intensity of services provided. “Price” reflects increases in provider rates. SOURCE: Office of Attorney General Martha Coakley, March 2010, “Investigation of Health Care Cost Trends and Drivers.”

COST DRIVERS 2004-2008 FOR BCBSMAPERCENT INCREASE IN SPENDING DUE TO CHANGES IN UTILIZATION, PROVIDER/SERVICE MIX, AND PRICE

2004 2005 2006 2007 20080%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PRICE(amount providers get paid)

PROVIDER MIX AND SERVICE MIX

UTILIZATION(number of visits)

33.1%

53.3%58.0%

54.8% 53.8%

Page 58: Open classroom   health policy - session 10.16 - iselin and young

58Blue Cross Blue Shield of Massachusetts

Current Wave of Hospital Mergers and Consolidation May Increase Prices More

Lahey, Northeast Health finalize mergerBoston Business JournalDate: Monday, May 7, 2012, 6:51am EDT

Cooley Dickinson Trustees Choose Massachusetts General Hospital02/28/2012 10:07 AM

Steward Continues Buying Spree; Globe Reports Deal for Lowell HospitalApril 4, 2011 | 12:37 PM | By Carey Goldberg

Partners Looks to add hospitals in Medford, MelroseBY ROBERT WEISMANOCTOBER 9, 2013

Mass Health Watchdog Says Partners Merger Raises Red FlagsMay 22, 2013 | 3:41 PM | By Carey Goldberg

Beth Israel Deaconess acquires JordanBY TARYN LUNAAUGUST 01, 2013

Page 59: Open classroom   health policy - session 10.16 - iselin and young

59Blue Cross Blue Shield of Massachusetts

Striking the Right Balance?

Page 60: Open classroom   health policy - session 10.16 - iselin and young

School of Public Policy & Urban Affairs | Northeastern University

Any Questions?

Gary Young, JD, PhDDirector of The Center for Health Policy

and Healthcare Research and Professor of Strategic Management and Healthcare

Systems, Northeastern University

Sarah Iselin, MSSenior Vice President of Strategy, Policy and Community Partnerships and Chief Strategy Officer, Blue Cross Blue Shield

of Massachusetts

The Myra Kraft Open Classroom Series, Fall 2013: Policy for a Healthy AmericaOctober 16 – “Why Paying Physicians and Hospitals for their Performance Scares Everyone”

Page 61: Open classroom   health policy - session 10.16 - iselin and young

Next Week (October 23, 2013)

School of Public Policy & Urban Affairs | Northeastern University

Harry Chen, MDCommissioner, Vermont State

Department of Health; former practicing emergency physician and Medical

Director, Rutland Regional Medical Center (Rutland, VT)

Jim Hester, PhDDirector of Health Care Reform

Commission, Vermont State Legislature; former Director of Population Health Models Group, Centers for Medicare

and Medicaid Services

A Single Payer System: Closer Than You Think?

Page 62: Open classroom   health policy - session 10.16 - iselin and young

62

The Myra Kraft Open Classroom Series Fall 2013: Policy for a Healthy America

Every Wednesday, 6pm – 8pmSeptember 4, 2013 through December 4, 2013

West Village F, Room 20

Northeastern UniversitySchool of Public Policy and Urban Affairs