Much of the national debate on health care reform has focused on expanding coverage and controlling health care costs. There has been little discussion, however, about the need to improve health care quality. Much more than an afterthought, quality is an essential part of reform, the third leg of the stool to accompany access and cost. Possibly because the meaning of “health care quality” is not commonly understood, the important ideas behind that phrase are lost in the discussion.

To the health care consumer, “quality” may mean several different things, including wait times, the reputation of a doctor or institution, or whether equipment is modern and cutting-edge. All of these elements may be meaningful to an individual patient encounter, but they do not add up to characteristics of a high quality, reliable health care system.

Organizations committed to improving our health care system use a very different definition of health care quality. That definition focuses on care that is grounded in the available scientific evidence; that includes recommended preventive care; that achieves the best possible health outcomes; that takes into account the individual needs and preferences of each patient; that is delivered in the most appropriate setting; that includes no unnecessary or harmful services; that can be relied on to provide the right care in a technically proficient and caring manner.

Defining and measuring that kind of quality is not easy, but is essential to understanding what works in our current system, and improving what does not. It takes rigorous scientific thinking, and constructive collaboration among all stakeholders in healthcare. Payers and providers, for example, are already working together to improve some aspects of quality, through programs that pay clinicians a bonus for regularly delivering recommended care such as preventive screenings or providing care instructions when a patient is discharged from the hospital.

We need to find other ways to improve quality – under this definition – as well. One example is by addressing something known as practice pattern variation, the well-documented phenomenon that different physicians treat the same condition differently. While differences of this sort have long been seen when comparing different areas of the country, recent work shows that even in the same city, even in the same office suite, doctors in the same medical specialty often vary substantially in the way they approach caring for a given condition. Which is the right way? Which is the best way? Which way achieves the best results?

In most cases, clinicians have never seen information that calls these types of differences to their attention or creates the opportunity to talk with their peers about the different approaches in hopes of arriving at a common best approach – or two, or three. Sharing information about these practice pattern variations in a collaborative and positive way provides an opportunity to both improve health care quality and reduce health care costs by identifying and reducing the use of expensive procedures which have no clinical advantage over less costly alternatives.

At BCBSMA, we are working with physicians in our alternative quality contract to provide detailed, specific analyses of our claims data that will help these caregivers ask important questions about how much of what kind of care is needed, and then begin to make changes in the way they care for their patients.

Doctors and health plans working together to help patients get the care they need. Now that’s a definition of quality upon which we can all agree.

(For more on the topic of payment reform and its relation to quality of care, see this New York Times piece on physicians’ pay.)

Our current fee-for-service system imposes an artificial, anarchistic structure on the relationship between doctors and patients. In that artificial structure, care must happen in the office. Coordinating treatment among multiple clinicians does not count as care. E-mail, in most cases, does not count as care. Specialty care is worth more than primary care. Treating disease is worth more than preventing it. Intensive procedures and high-tech care are worth more than a conversation between a doctor and a patient. And on and on until good care often is being delivered in spite of, rather than because of, the health care system.

Under global payment, this artificial structure is gone. We are hearing from the physicians and hospitals in our new Alternative Quality Contract that the global payment has liberated them from the fee schedule and all its unintended consequences. Under global payment, they are free to deliver care in the ways that work best for patients and their doctors.

Dr. Barbara Spivak, president of the physician group affiliated with Mt. Auburn Hospital, says “our community case managers monitor whether patients are getting recommended care such as colonoscopies for patients over 50, and whether their asthma or diabetes is under control. Very frail patients may have home visits from a nurse practitioner or receive regular phone calls. Fee-for-service would not reimburse us for any of this.”

Atrius Health CEO Dr. Gene Lindsey notes that “much of what is most important to patient health occurs in the home, the workplace, the community, the restaurants where people eat – all the places where we make decisions that protect us from, or put us at risk for, chronic conditions, injury, and infectious disease. With global payment, we can fund the Web portals, text messaging, phone calls, and ancillary personnel necessary to ‘be with’ the patient where life is actually being lived, in the ‘space between the visits.’”

Meeting patients where they live, with the care they need. And a payment system that supports, rather than impedes, that goal. Imagine that.

Andrew Dreyfus is Executive Vice President for Health Care Services at Blue Cross Blue Shield of Massachusetts and former President of the Blue Cross Blue Shield of Massachusetts Foundation.

Earlier this month, the Boston Globe ran a story on the state Payment Reform Commission’s recommendation that we begin to move away from our fee-for-service payment system to one that rewards quality and efficiency through “global payments” for providers. By the end of the day, there were more than 150 comments posted online; most criticized the Commission’s recommendations, some asserting that it would lead to “Soviet-style” health care.

Similarly, when a proposal was made to include $1.1 billion in comparative effectiveness research (CER) in the federal stimulus bill, some groups in Washington quickly derided it as an unwarranted infringement of the doctor-patient relationship and the beginning of the rationing of health care. These criticisms continue and are intensifying. A recent New York Times article referred to CER as a “medical minefield.”

What these two proposals have in common is the speed and intensity in which critics reduced them into simple and incendiary arguments. Another common element? Both have the potential to improve the quality of care and slow the growth of health care costs: CER by telling us which treatments will help people the most and global payments by providing incentives for using those treatments that will result in better outcomes.

Listen to some local experts on these issues. In a recent article in the New England Journal of Medicine, Dr. Jerry Avorn, Professor of Medicine at Harvard Medical School, writes that CER “represents one of the best investments we can make to edge the health care system away from the fiscal catastrophe it faces, since such studies will help to reduce spending on poorer clinical decisions and to spare resources for expenditures that will help patients most (and most affordably).” Dr. Avorn writes that our current regulatory structure offers little investigation into the efficacy of many new medical treatments.

Similarly, upon signing our Alternative Quality Contract that features global payment paired with quality incentives, Dr. Barbara Spivak, President of Mount Auburn Cambridge Independent Physician Association, said, “This contract aligns well with our mission to provide the highest quality care to our patients. Our quality improvement department supports our physician practices in caring for their sickest patients and ensuring that more patients have the preventive tests and appointments that will keep them healthy.” Dr. Spivak understands that global payment has the potential to move us away from a fee for service system that pays for – and encourages – volume and complexity rather than quality and outcomes.

Let’s resist the urge to dismiss the value of ideas by simplifying important issues. Instead, let’s have a full conversation on these important proposals guided by our shared goals; to improve the quality and affordability of health care in Massachusetts and across the nation.

Andrew Dreyfus is Executive Vice President for Health Care Services at Blue Cross Blue Shield of Massachusetts and former President of the Blue Cross Blue Shield of Massachusetts Foundation

As contributors to this blog have written, there is little debate that the cost problem is urgent and threatens the sustainability of our pioneering coverage law. And most experts point to the same root causes of our rising spending: the growing incidence of chronic disease, the rapid introduction and spread of new medical technology, and the explicit incentives and expectations in our system that more care equates to better care – which can lead to unnecessary and even harmful treatment.

Conventional wisdom suggests that the consensus then breaks down: we might agree on the sources of the cost problem, but we will never agree on solutions. Some argue that it just too complicated and that competing interest groups are unwilling to compromise. We forget however, that this same skepticism plagued our early debate on coverage. We couldn’t agree on how best to finance expansion. We were unsure how to balance employer and individual responsibility. We questioned the proper role of government in a private insurance market and health delivery system. Yet we found common ground and created what the New York Times article called “perhaps the boldest health care experiment in American history.”

And there are early signs of a consensus emerging again. I serve on the state’s Special Commission on the Health Care Payment System which is charged with developing new payment models to address the rising cost of health care in the state. At its first meeting, the group developed a set of guiding principles. I expected that arriving at a consensus would be difficult, but we reached agreement fairly quickly – that we must fundamentally change the current fee-for-service reimbursement system.

At Blue Cross Blue Shield of Massachusetts, we believe that paying for quality and patient outcomes is the best way to move forward. To accomplish this, we are offering physicians and hospitals a new approach to payment – the Alternative Quality Contract (AQC). The AQC is a new model that combines a global payment with performance-based incentives to reward physicians based on nationally accepted measures of quality, effectiveness, and patient experience. In fact, my colleagues from Blue Cross Blue Shield of Massachusetts, Patrick Gilligan and Dana Safran, presented the framework of the Alternative Quality Contract (AQC) last week to the Health Care Payment Commission.

The momentum for participation in the AQC is growing quickly. Several physician groups have signed the AQC over the past three months, and health leaders who have been skeptical in the past are now asking to participate. Last week, I received a call from a CEO of a Massachusetts hospital who had expressed skepticism of the AQC last year. When we spoke, he told me he now sees the value of the AQC – in part because it is the only comprehensive alternative in the state to the fee-for-service system of today.

He and other leaders tell me they see both public and private payers moving toward some form of bundled payment– and those provider organizations that participate early and learn from it today will be in a better position tomorrow.

One thing is certain, as Kevin Sack’s article notes, if we’re able to solve the cost problem, “…health policy experts argue that it would be as audacious an achievement as universal coverage.”

It’s time for us to be audacious again – this time in addressing the way we pay for care.

Andrew Dreyfus is Executive Vice President for Health Care Services at Blue Cross Blue Shield of Massachusetts and former President of the Blue Cross Blue Shield of Massachusetts Foundation

At a conference on the health care quality movement last month, Don Berwick equated the dilemma of our current health care system to “the tragedy of the commons.” He suggested that as long as individuals work to maximize their own benefit — which is how our system impels people to operate — the public good is left unprotected, and ultimately depleted. (Thank you Elmer Freeman for such a clear summary of the full conference.)

Opening one of a series of Senate Finance Committee hearings on health care that same day in Washington D.C., Committee Chairman Max Baucus made a stunningly similar point. He noted that “John Donne wrote that ‘no man is an island entire of itself; every man is a piece of the Continent, a part of the main,’ but the way American pays for health care is driving healthcare providers to become islands unto themselves.”

In their remarks, both influential leaders pointed to similar solutions: changing the way we pay for care to end the fragmentation in the health delivery system, and reverse the incentives that promote volume of high intensity services over quality of care and population health.

If only we could reach a similar consensus here in Massachusetts. There is some good news on health costs. Most health leaders concur, for example, that slowing the growth of health care spending will require lowering administrative costs, preventing and managing chronic illness, and reviewing the cost-effectiveness of new medical interventions. But as a community we still resist the notion that these and other solutions require a foundational change in how we reimburse physicians, hospitals and other care providers.

Fortunately, our legislative leaders anticipated the need for payment reform, and included a commission charged with looking at this very question in the cost containment legislation passed over the summer. The Payment Reform Commission is slated to convene shortly, and not a moment too soon. With a clear mandate, strong leadership from co-Chairs Secretary Leslie Kirwan and Commissioner Sarah Iselin, and an aggressive timeline by which to report their recommendations, the Commission has a great opportunity to spur action on payment reform and solve the systemic problems presented by Don Berwick and Max Baucus.

Andrew Dreyfus is Executive Vice President for Health Care Services at Blue Cross Blue Shield of Massachusetts and former President of the Blue Cross Blue Shield of Massachusetts Foundation.

• The Boston Globe editorialized that day that “the root of the problem afflicting medicine throughout the United States [is] a piecemeal approach to reimbursement that elevates individual procedures by specialists over care coordinated by a primary-care doctor” .

• The same day in Washington DC, RAND researcher Beth McGlynn told the Senate Finance Committee that “our methods of paying for health services are not aligned with the objectives of delivering high quality.”

While the consensus on payment reform has developed primarily because of rising costs, it’s important to note that payment reform does not seek solely to address affordability; it is also a route to improved quality of care, and improved overall health.

A central goal of payment reform is to liberate physicians to provide the most appropriate service for each patient, regardless of reimbursement level. The most appropriate service could be surgery, ongoing monitoring of a chronic condition, or talking with a patient to devise prevention or treatment plans that work with the patient’s lifestyle. That decision should be made by the physician and the patient, not the fee schedule.

As Beth McGlynn told the Senate Finance Committee: “We pay more for interventions than we do for thinking and talking to a patient. We may effectively pay less if a doctor keeps a patient healthy.”

The problem with not reforming our payment system is personified by Dr. Annie Brewster, a physician at MGH who was so frustrated by the current state of primary care that she left the field after just three years. She wrote recently that “doctors should be rewarded for keeping patients well. Incentives should be based on quality outcomes and efficient resource use, not on patient volume… Patients and doctors need to come together to support healthcare reform aimed at revitalizing primary care.”

The good news, Dr. Brewster, is that doctors and patients are starting to come together, along with health plans, employers, government, and other healthcare stakeholders. Together, we can do more than just support payment reform, we can create it. The time to start is now.

Andrew Dreyfus is Executive Vice President for Health Care Services at Blue Cross Blue Shield of Massachusetts and former President of the Blue Cross Blue Shield of Massachusetts Foundation.

Readers of this blog are likely familiar with the tragic series of errors that led to chemotherapy overdoses at Dana Farber in 1994. What you may be less familiar with is Dana Farber’s exceptional commitment to patient and family-centered care, a commitment which grew even stronger as they worked to ensure those tragedies would never be repeated.

For their focus on empowering patients and their families to be active participants in their own care and in decision-making across the organization, BCBSMA was proud yesterday to present Dana Farber with the second Health Care Excellence Award.

Today, patient engagement and empowerment at Dana Farber permeates the organization, from the bedside to the boardroom.
o Patients and families sit on 93 different hospital committees, making recommendations and participating in decision-making.
o Patients are asked and encouraged to review lists of their medications and allergies, to identify and correct discrepancies.
o The “You CAN” campaign encourages patients to Check medications, Ask questions, and Notify staff of changes in treatment, giving patients the tools – and the permission – to be more involved with their own care.

BCBSMA commends Dana Farber for the cultural transformation they have achieved. They have bravely welcomed a new perspective – one that offers first hand knowledge of how things work and, more importantly, how they can work better. Our congratulations to everyone – doctors, nurses, administrators, and patients and families – who have been part of this remarkable effort.

Andrew Dreyfus is Executive Vice President for Health Care Services at Blue Cross Blue Shield of Massachusetts and former President of the Blue Cross Blue Shield of Massachusetts Foundation.

Capitation earned much of its negative reputation because, as Dorsey and Berwick point out, insurance companies too often “claimed to manage care but in many cases only managed money.” Payment levels were set artificially low, and the system had little way to monitor the quality of care and watch for patterns of under-use.

We should not, however, let capitation’s failings prevent us from learning lessons from its successes. Scattered among the bad experiences of the ‘90s were innovations that resulted from capitation’s original design: aligning economic and clinical incentives to promote creativity in delivering the best care for patients. Indeed, Dorsey and Berwick, who were both then at Harvard Community Health Plan, credit capitation for such advances as early electronic medical record adoption, patient reminders, creative roles for advanced practice nurses and physician assistants, and quality measurement.

So, as the call for payment reform grows louder (both Governor Patrick’s Healthy Mass Compact and Senate President Murray’s recently introduced legislation seek to link payment to quality), we need to look at ways to capture the value of capitation while fixing the problems with it. We know that additional innovations could flourish in a payment system that supports flexibility and creativity in ways that the current system does not. For example, group visits, e-visits, and home visits — all of which have great potential in the management of chronic illness — are implausible in our fee-for-service system.

Nearly two months ago, Blue Cross unveiled plans to offer a new optional quality contract to our providers. The goal of the contract is to base payment on quality, outcomes, safety, and efficiency, rather than on the number of services provided and the complexity of each service. We tried to combine the best features of capitation and pay-for-performance, while correcting the problems of first-generation capitation models. The new model, which we’re calling an alternative quality contract, combines a global payment with significant incentives for quality performance.

Some have suggested that our new contract is merely reverting to the flawed capitation model of the past. Here are several ways our alternative quality contract differs from capitation:

The global payment does not represent a reduction from current payment levels
The global payment is based on actual costs. Our goal is not to reduce payments made today for health care but rather to slow the rate of increase in cost to be closer to inflation over time, while giving providers flexibility to find new, innovative, better ways to deliver care.

Under capitation, health plans often set reimbursements below costs, forcing providers to find immediate efficiencies to achieve a margin. The global payment is based on current costs, and increased every year in line with inflation. When providers manage their costs below the payment level, they keep the difference to reinvest in their organization.

The global payment is adjusted for health status
The global payment is set for each member/patient based on their age, gender, and health status. This should eliminate incentives for practices to favor healthy members and may even encourage efficient and effective clinicians to take on sicker patients.

The global payment is comprehensive, and paired with quality incentives
The global payment includes all services received by the member/patient, so that everyone within the health care organization has the same incentive to provide the most efficient, effective care. For example, if a physician spends extra time with a patient, and the patient avoids an unnecessary hospitalization, the patient enjoys better health and the savings benefit the physician and medical organization. Today’s system works in the opposite way: a prevented admission lowers a provider’s revenue.

On its own, the global payment could create incentives for under-treatment, because physicians are paid the same amount regardless of the amount of care they provide. Under the BCBSMA payment model, we have coupled global payment with significant financial incentives based on performance against quality measures, to guard against this possibility. Quality incentives are paid based on the latest nationally accepted measures of quality, effectiveness, and patient experience of care.

In short, the new BCBSMA quality contract attempts to maintain the positive features of capitation while rewarding the best clinical performance.

Amid the growing consensus that linking payment to quality is an essential tool to slow the growth of health care cost, we have to be ready to look at new payment models. And maybe to look at old models in new ways.

Andrew Dreyfus is executive vice president for health care services at Blue Cross Blue Shield of Massachusetts and former president of the Blue Cross Blue Shield of Massachusetts Foundation.

Last January, BCBSMA CEO Cleve Killingsworth challenged the company to examine how our method of paying hospitals and physicians could be transformed to better support the high quality care we all know our system is capable of delivering. Currently, Blue Cross and most other health plans base payments principally on the number of services provided, and the complexity of each service. For example, surgical and specialty care is rewarded more than primary care, and hospitals receive higher reimbursement when they perform more tests and procedures. As Karen Davis, president of the Commonwealth Fund, has written, “Fee-for-service payments create incentives to provide more and more services, even when there may be better, lower-cost ways to treat a condition…It’s not realistic to tell hospitals and doctors that they must improve quality if by doing so they are likely to lose money.”

What Cleve asked us to create was a system that would instead base payment on quality, outcomes, safety and efficiency – did the patient get the best result from the most appropriate treatment (eg. based on the best medical evidence) by the right kind of provider (eg. specialist, family doctor, nurse) at the right time (as early in the illness as possible).

A team of physicians, finance experts, and measurement scientists worked for months to develop a model that would give hospitals and physicians meaningful incentives to improve quality and safety of care while conserving health resources. We tested the concept through many conversations with key hospital and physician leaders, policy experts, employers and health care purchasers.

The result: a new, innovative optional contract that combines two forms of payment: a global or fixed payment per patient, per year, adjusted for the health of patients: and substantial performance incentives tied to the latest nationally accepted measures of quality, effectiveness, and patient experience of care.

Can the seemingly arcane payment methods of health plans promote quality and moderate health spending? Growing evidence suggests they can. According to the Centers for Medicare and Medicaid Services (CMS), “quality of care has improved significantly in hospitals participating in the CMS Premier Hospital Quality Incentive demonstration, a groundbreaking Medicare pay-for-performance demonstration project. Improvement in these evidence-based quality measures is expected to provide long term savings, because of their demonstrated relationship to improved patient health, fewer complications and fewer hospital readmissions.”

That’s the goal of this new contract, which combines this kind of performance incentive with flexibility to allow physicians to provide services according to patient needs. The contract will be offered as an option to hospitals and physicians in our network this year.

For hospitals, we believe that payment reform will accelerate initiatives already underway to improve safety and performance. For physicians, our new contract should liberate the whole care team to spend more time with patients, and offer innovative services, such as “e-visits” and group visits for patients with chronic illness. For employers, state agencies, and individuals who pay for care, we believe the new contract could cut in half medical cost trend, which has been rising at rates up to 12% annually, for those who participate.

So, as the state discusses how best to moderate health spending, let’s put the need to pay for quality at the center of the debate.

Andrew Dreyfus is executive vice president for health care services at Blue Cross Blue Shield of Massachusetts and former president of the Blue Cross Blue Shield of Massachusetts Foundation.

At the same time, a parallel national debate is intensifying over similar pressures facing the federal Medicare program. A recent Congressional Budget Office report suggested that answers must be found that improve the value of health care: “Substantial evidence exists that more expensive care does not always mean higher quality care. Consequently, embedded in the country’s fiscal challenge is the opportunity to reduce costs without impairing health outcomes overall.”

As we attempt to sustain health care reform, we must seek similar solutions: reducing costs while continuing to improve health outcomes. One organization that is trying to understand how to capitalize on that opportunity is the Health Care Quality and Cost Council, which has set ambitious goals to contain costs and improve quality.

The hard part, of course, is developing a plan to achieve those goals, and the QCC is being remarkably collaborative in going about the task. Last month, the QCC issued a wide-open invitation for comments, creating a timely opportunity for a much-needed community conversation on this topic.

Now is the time for all stakeholders to take advantage of this invitation to share their experience and perspective. The more input the Council gets, the better informed and creative their solutions can be. Comments can be submitted to the QCC at hcqcc@massmail.state.ma.us.

Andrew Dreyfus is Executive Vice President for Health Care Services at Blue Cross Blue Shield of Massachusetts and former President of the Blue Cross Blue Shield of Massachusetts Foundation.