Blue Cross incentives save $50M in health care costs

Karen Bouffard
The Detroit News

A Blue Cross Blue Shield of Michigan program that rewards hospitals for keeping patients healthier lowered health care costs by $50 million in 2013, according to the state’s largest health insurer.

The program is part of a behind-the-scenes revolution in how health care is paid, and it’s transforming health care delivery across the U.S. The hospitals improved on quality measures such as holding down hospital readmissions, and received incentive payments based on the savings they achieved.

Doctors and hospitals are moving away from a simple fee-for-service payment model — in which providers are paid for each blood test, doctor visit or cardiac catheterization, regardless of need or outcome — to a “fee for value” system that rewards health care providers for keeping patients healthier and out of the hospital.

Consumers may notice signs of the shift. Hospitals have begun calling patients after discharge to ask about the quality of their care, or to remind patients to follow up with their primary care doctor.

Parents will be notified when it’s time for a vaccination or well-child visit. Diabetics are being reminded to check their blood sugar. Practices are arranging transportation, in some cases, to help patients get to their appointments.

A study published Monday in Health Affairs, a national health care journal, found another Blue Cross Blue Shield of Michigan program, the Physician Group Incentive Program, lowered health care costs 1.1 percent for adults, and 5.1 percent for children, from 2008-11. At the same time, medical practices enrolled in the program maintained or improved performance on 11 of 14 quality measures, such as breast and cervical cancer screenings and well-child visits.

Christy Harris Lemak of the University of Alabama at Birmingham, and co-authors, concluded “it is possible to transform reimbursement to ... incentivize physicians to provide high-quality care, while also reducing costs.”

Marianne Udow-Phillips, director of the Center for Health Care Research and Transformation at the University of Michigan, said: “What payers are trying to do is move away from a payment system that rewarded providers for doing more ... like surgeries, to rewarding them for providing care that is providing quality and safety, that is the goal.”

“It’s a developing area,” Udow-Phillips said. “It’s not that we’re going to see fee-for-service go away, but we will see more fee-for-service that is tied to quality and outcomes and safety.”

The federal Affordable Care Act has accelerated transition to value-based compensation, which includes incentives to encourage quality health care and penalties to discourage waste. Hospitals, for example, are penalized if too many patients are readmitted within 30 days of discharge.

The U.S. Department of Health and Human Services is propelling the transition by changing how the federal Medicare program pays doctors and hospitals. By 2018, Medicare aims to tie half of all payments to the quality or value of care provided rather than the quantity of services rendered.

Michigan a front-runner

The transformation has just begun nationwide. But Michigan is a front-runner among the states for changing how doctors and hospitals are paid. Blue Cross Blue Shield of Michigan’s Physician Group Incentive Program is one of the nation’s largest fee-for-value initiatives including 68 percent of all active Michigan primary care physicians and 49 percent of specialists. In addition, the Michigan Department of Community Health is shifting toward value-based reimbursement for Medicaid services.

“Depending on the specialty, a physician’s compensation may be up to 30 percent based on value, as opposed to fees — so that’s a pretty big transition,” said Steve Anderson, Blue Cross vice president of provider contracting and network administration.

Doctors who are enrolled can earn financial or non-financial rewards by improving how they manage care, or improve on quality measures such as health screenings and vaccination rates. Primary care physicians can receive up to 20 percent more for office visits by managing and coordinating all of their patients’ health care needs. Rewards also are tied to collaboration with hospitals and specialists, technology enhancements, electronic record keeping and other improvements that aid efficiency.

“We want the right level of care at the right times,” Anderson said. “All of this work is around population health management, trying to cast a wide net, a preventative net, so the registries are trying to track specific diseases within a population — making sure the diabetics are getting routine checks, and eye exams as necessary.

“Staying on top of the preventative aspects of a disease so that patients don’t crash and end up in a hospital, that’s a big difference from 10 years ago.”

Incentives in new contracts

The state of Michigan plans to incorporate fee-for-value incentives when it renegotiates contracts later this year with each of the 13 Health Maintenance Organizations that provide health care to Medicaid patients. Some Medicaid HMOs already are finding creative ways to improve quality of care measures.

“You’ll notice that the physician’s office or the HMO will be reaching out to you in various ways, (even with) gift cards for bringing your infant in for their regular checkups,” said Michigan Medicaid director Steve Fitton. “We’re transforming how health care works to make sure (patients) are taking preventive measures.”

For physicians, the shift to value-based payment is fraught with uncertainty, said Colin Ford, senior director of state and federal government relations for the Michigan State Medical Society.

Many physicians have withheld judgment until more is known about the details — such as which quality measures will be linked to payment, and how quality will be judged.

“The system we’ve had, we know it’s shortcoming and advantages; we don’t know that with this new system,” Ford said.

“I don’t think doctors are necessarily fearful of change, but there’s a healthy skepticism to see that this new payment system will result in better care for less cost. A lot of this is going to depend on what the system looks like, and that’s an emerging area.”