Alternative Quality Contract:Improving Health Care Quality While Reducing Spending Growth

Alliance for Health ReformDeborah DevauxMonday, August 10, 2009

2Blue Cross Blue Shield of Massachusetts

Transformation Vision: 2016

A health care system that provides safe, timely, effective, affordable, patient-centered care for everyone in Massachusetts.

3Blue Cross Blue Shield of Massachusetts

Cornerstones of the Alternative QUALITY Contract

• The Alternative QUALITY Contract model is composed of key components that are standard across provider entities

Integration across the continuum of care

Accountability for performance measures (ambulatory and inpatient)

Global payment for all medical services (health status adjusted)

Sustained partnerships (5 year contract)

This will lead to …

New products differentiating Alternative QUALITY Contract providers

Member incentives to encourage healthy behaviors

4Blue Cross Blue Shield of Massachusetts

Year 1 Year 2 Year 3 Year 4 Year 5

Key components of the alternative contract model

Expanded Margin Opportunity

INITIAL GLOBAL PAYMENT LEVEL

Efficiency OpportunityInflationPerformance

Unique contract model:• Physicians & hospital contracted together

as a “system” – accountable for cost & quality across full care continuum

• Long-term (5-years)

Controls cost growth:• Global payment for care across the

continuum• Annual inflation tied to CPI• Incentive to eliminate clinically wasteful

care (“overuse”)

Improved quality, safety and outcomes:• Robust performance measure set creates

accountability for quality, safety and outcomes across continuum

• Substantial financial incentives for high performance (up to 10% upside)

5Blue Cross Blue Shield of Massachusetts

Includes a significant upside potential based on a sophisticated set of measures that address patient safety, appropriateness of care and patient satisfaction

Initial payment level is derived from the historical experience of the provider group.

Payment is adjusted annually in line with inflation• Global payment is not reset annually• Providers can retain margins derived from reduction of inefficiencies

Payment is health status adjusted to adequately consider changes in patient morbidity

How Is this Different from Capitation?

6Blue Cross Blue Shield of Massachusetts

Performance Measures For The AQC

Clinical process measureso Acute MIo Heart Failure careo Pneumonia careo Surgical care

Clinical outcomes measureso Hospital-acquired infectionso Complications after major surgery (AMI, PE/DVT,

Pneumonia)o Obstetric trauma

Patient Care Experienceso Communication quality: physicianso Communication quality: nurseso Responsivenesso Discharge support/planning

Developmental Measureso Measure # 1o Measure # 2

Hospital Quality and Safety Hospital Quality and Safety Ambulatory Care Quality Ambulatory Care Quality

Clinical process measureso Depressiono Diabeteso Cardiovascular Diseaseo Cancer Screeningo Pediatric: Appropriate Testing / Treatmento Pediatric: Well Child Visits

Clinical outcomes measures (triple-weighted)o Diabetes (HbA1c, LDL-c and BP control)o Hypertension (blood pressure control)o Cardiovascular Disease (BP control, LDL-c control)

Patient Care Experienceso Quality of clinical interactionso Integration of careo Access to care

Developmental Measureso Measure # 1

7Blue Cross Blue Shield of Massachusetts

Performance Achievement Model

Performance Payment Model

2.0%

3.0%

5.0%

9.0%

10.0%

0%

2%

4%

6%

8%

10%

1.0 2.0 3.0 4.0 5.0

Performance Score

% P

ayo

ut

8Blue Cross Blue Shield of Massachusetts

Provider Feedback

Transition and management support

Risk accountability

Member communications alignment

PCP responsibility

9Blue Cross Blue Shield of Massachusetts

Massachusetts Payment Reform Commission

Global payment as predominant form of payment

Transition not to exceed five years

Careful transition with infrastructure

Create new independent Board to implement

Complementary strategies

− health plan design− evidence based coverage− consumer engagement (lifestyle; self-management)− administrative simplification− medical malpractice reform− end of life care− primary care workforce development