New therapy for old woes

Blue Cross measure aims to slow runaway costs, improve quality of healthcare

By Alice Dembner
Globe Staff

Massachusetts’ dominant health insurer is proposing to overhaul the way it pays doctors and hospitals, in what company officials said is an attempt to slow runaway healthcare costs and improve the quality of care.

Blue Cross and Blue Shield of Massachusetts wants to stop paying doctors and hospitals for each patient visit or treatment, a common arrangement that most experts agree has led to unnecessary, inefficient, and fragmented care that is sometimes harmful to patients.

Instead, they want to pay doctors and hospitals a flat sum per patient each year, adjusted for age and sickness, plus a significant bonus if the providers improve care, Blue Cross officials said. In most cases, the payment would cover all services from primary care doctors, specialists, counselors, and hospitals – forcing them to work together closely.

“We’re not looking to spend less than we do today, but we want spending to grow at a rate that’s affordable,” said Andrew Dreyfus, executive vice president for healthcare services at Blue Cross. “And we want to empower physicians and hospitals to provide the right care.”

The ambitious proposal makes Blue Cross and Blue Shield of Massachusetts a national pioneer in the effort to transform the way healthcare is delivered, health policy specialists said. But some fear the plan could bring back the most problematic aspects of managed care.

As national and state pressure intensifies to control healthcare spending, Blue Cross hopes to halve the growth in medical costs in two to four years among providers who accept the new payment system. Blue Cross also expects the move to attract more business, increasing its market share, which already includes about half of Massachusetts residents.

Blue Cross expects patients could see dramatic changes, such as quicker access to the doctor by phone or e-mail or same-day appointments, home visits by nurses to the chronically ill, and smoother transitions between hospital, rehabilitation center, and home.

National health policy specialists praised the move.

“If we don’t try something like this, the alternative is a continual free-for-all of spending or some sort of regulation,” said Stuart Altman, dean of the Heller School for Social Policy and Management at Brandeis University in Waltham. Altman believes the new payment plan should be mandatory for providers instead of optional, as Blue Cross proposes.

But healthcare providers and patient advocates are giving the proposal mixed reviews – praise for the effort but concern about the details. Some question whether the plan would restrict patient choice and encourage doctors to withhold care on one hand and make doctors responsible for costs beyond their control on the other.

The most significant savings and changes may involve chronically ill patients. For example, patients sent home after hospitalization for heart failure are now frequently left to manage on their own. The condition, which affects millions of older people, often follows a heart attack.

Typically, patients go home with a list of medications, a recommended diet, and instructions to alert doctors to any significant weight gain, which could signal worsening of the illness. A follow-up office visit is scheduled a week or two later, but all too often, patients’ problems escalate and they end up rehospitalized.

Under the Blue Cross contract, the hospital or doctor might instead send a nurse to visit the patient on the first day home from the hospital, since those healthcare providers could get a bonus for providing continuity of care and ensuring patients understand how to care for themselves. The nurse could make sure the patient took needed medication and help the patient stock cabinets with healthy food. For the first few weeks, the nurse might call the patient daily to check on weight and give advice.

If any problems cropped up, the patient could get in to see the doctor quickly and would be likely to avoid another hospital stay with a simple medication change. The savings from fewer hospitalizations would go to the doctors and hospitals, to pay for home visits or for bonuses, but eventually could lead to slower growth in healthcare costs, Blue Cross said.

While the bonuses are designed to drive improvement, State Senator Mark Montigny worries that the payment system could distract doctors from making “a decision based solely on medical soundness.” Montigny, a New Bedford Democrat, helped establish a patients’ bill of rights in the mid-1990s to counteract problems in managed care.

The Blue Cross plan has some similarities to the “capitation” payment system behind those problems, which was widely used in the 1990s but was vehemently rejected by many doctors and patients. Blue Cross says its plan includes safeguards to avoid the undertreatment, underpayment, and strict controls on patient choices that doomed capitation.

“We have no interest in returning to the heyday of managed care or denying care,” Dreyfus said. He said several mechanisms would prevent patients from being denied appropriate care, including public scrutiny of doctors’ performance and Blue Cross’s commitment to cut off any caregiver providing substandard service.

While many insurers’ contracts already include performance measures, the Blue Cross plan goes further, by offering up to a 10 percent bonus, based on progress toward dozens of quality standards, such as keeping blood pressure and diabetes under control, and providing immediate access to the doctor around the clock.

Blue Cross must get widespread participation from doctors and hospitals before the effort could slow the rise in insurance premiums. Dreyfus said they are finalizing contracts with two large doctors’ groups.

Officials at Partners HealthCare, the state’s largest medical system, and at Beth Israel Deaconess Medical Center said they support the principles driving Blue Cross’s initiative but are not quite ready to sign on. They are worried about the impact on their bottom lines and about being held responsible for care and costs over which they have little control, such as patient stays in nursing homes.

Blue Cross is still figuring out how the plan could work for doctors in small practices and for patients not in HMOs.

John McDonough, executive director of the advocacy group Health Care for All, said Blue Cross’s initiative has promise, especially if other insurers and the government adopt similar approaches.

“What we have now is killing us financially, and in some cases medically,” he said.
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