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Insurer says new pay plan working

Blue Cross cites improved care

By Liz Kowalczyk
Globe Staff / January 21, 2011

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Blue Cross Blue Shield of Massachusetts says its new system of paying doctors a fixed amount per patient improved care during the first year, contrary to critics’ fears that patients would be harmed.

The state’s largest health insurer said that during 2009, the 6,300 doctors paid under the new method improved care for their patients faster than the 14,200 other doctors in the Blue Cross HMO network. Quality was assessed using dozens of criteria, such as the percentage of diabetics whose glucose, blood pressure, and cholesterol levels were regularly measured and under control.

Company executives said they believe the contract is also helping to control medical costs, its primary purpose, but the growth of health care spending is slowing overall, making it difficult to draw firm conclusions about the reasons. They did not release comparisons of costs among the different doctors groups.

Doctors who have agreed to the “alternative quality contract’’ are paid a set monthly fee per patient, adjusted for how healthy the patient is, regardless of how many tests, appointments, and procedures the patient gets. Physicians can earn bonuses for improving care, up to 10 percent of their budget.

Both state and federal officials are pushing for ways to control medical spending, and “global payment’’ models such as the one being used by Blue Cross are considered the most promising.

Dr. JudyAnn Bigby, Massachusetts secretary of health and human services, said yesterday that she plans to hand the Legislature a specific proposal within the next several weeks to switch providers to a global payment system.

“The incentives we have now are all in the wrong way,’’ she said.

Most doctors and hospitals are paid separately for each test, procedure, and office visit, which many believe encourages unnecessary, poorly coordinated care and is driving up costs.

“We should be examining [the Blue Cross system] very closely as we think about implementing payment reform in a more broad way,’’ Bigby said.

But other doctors and health care executives cautioned against drawing definitive conclusions from the insurer’s early results. They have not been independently reviewed and may not be easily reproduced statewide.

Doctors in the Blue Cross network paid under the new system treat 405,000 of the company’s 2.9 million members, making it one of the largest pilot projects in the state testing ways to control health care costs while making sure patients get the care they need.

Blue Cross chief executive Andrew Dreyfus said doctors with the contract are on track to cut increases in health care spending in half within five years. Medical spending among Blue Cross providers grew an average 10 to 12 percent between 2008 and 2009; the goal of the five-year alternative contract is to reduce the increase to 5 to 6 percent for groups that signed the contract in 2009.

Since doctors generally must pay for a patient’s hospital care out of the budgeted fee, groups in the alternative contract are starting to refer patients to less-expensive hospitals, Dreyfus said.

Doctors at Signature Healthcare in Brockton reduced avoidable emergency room visits 25 percent, from 2,249 in 2008 to 1,685 in 2009, saving $300,000 in payments to hospitals, Blue Cross calculates.

Dr. Mitchell Selinger, senior medical director for managed care, said the group did this by expanding its weekend and evening office hours for patients.

Doctors in the alternative contract also reduced hospital readmissions, saving $1.8 million, while readmissions among patients of other doctors grew, Blue Cross executives said.

“We’ve got enough critical mass and early results that we think this is a good model for payment reform,’’ said Patrick Gilligan, Blue Cross senior vice president for health care services.

But Dr. Alice Coombs, president of the Massachusetts Medical Society, said Blue Cross members may not be representative of the most difficult patients to manage, including the urban poor with complex medical problems. And, she pointed out, physician groups that sign on to the alternative contract, particularly those that did so early on, are those with sophisticated computer systems that allow them to track patients’ care and know they can be successful under budgeted payments.

But she said that doctors recognize that days are numbered for the current payment system.

In addition to the Patrick administration’s impending legislation, the federal government has made it clear that changing how providers are paid is a priority. This year Medicare will give out $10 billion to 100 to 300 sites in the United States to test new payment models, and many Massachusetts providers plan to vie for this seed money.

Blue Cross did not release specific performance results for doctors groups. It said it evaluates doctors on dozens of measures, including whether they screen patients for cancer, provide regular preventive checkups for children, and manage chronically ill patients so their diseases do not get serious enough to require hospital care.

The insurer scores doctors on a scale of one to five, with five earning doctors the largest bonus.

To earn a five, a doctors’ group has to show, for example, that at least 97 percent of its diabetic patients have their blood sugar, cholesterol, and blood pressure under control.

Blue Cross executives said they have not seen a change in patient satisfaction scores. The insurer has hired a customer service staff specifically to handle calls from patients whose doctors have the alternative contract, but executives said they have not seen an increase in complaints.

Selinger said that his group is referring fewer patients to expensive Boston teaching hospitals and that patients sometimes do not like that.

“We have had some pushback,’’ he said. In that case, it is up to the individual doctor whether to relent and make the referral to Boston or not, he said.

Liz Kowalczyk can be reached at kowalczyk@globe.com.