Senate panel turns to insurers for Medicare pay reform advice

Private insurance companies tell lawmakers about the potential benefits of using group payments, pay-for-performance and shared savings plans to improve the health care system.

By Charles Fiegl amednews staff — Posted June 22, 2012

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Private insurance companies shared with Senate leaders their ideas for payment delivery models that could be possible replacements to Medicare’s current pay system.

The private models discussed during a June 14 Senate Finance Committee hearing included group payments for physicians, alternative spending targets, and rewards for lowering costs while maintaining quality — all representing what would be big shifts from the current fee-for-service model.

“Fee for service rewards physicians who do more tests and more procedures, even if those services are unnecessary,” said Sen. Max Baucus (D, Mont.), the committee’s chair. “It does not encourage physicians to coordinate patient care to save money and improve results. We need an efficient system that rewards physicians for providing high-quality, high-value care.”

Several insurers presented payment models that they said would fit within that vision. CareFirst BlueCross BlueShield has implemented a patient-centered medical home model for primary care physicians in Maryland, Virginia and Washington. Doctors care for panels of about 3,000 CareFirst members, and the insurer uses a base projection that each panel will incur about $12 million in health care expenditures each year.

The process for setting actual spending targets is similar to how premium prices are calculated, said Chet Burrell, CareFirst’s president and CEO. The insurer reviews a previous year’s claims for patients, determines an illness burden for the population set and evaluates overall health trends in the region.

The insurance company expects physicians to coordinate patient care and provide high-quality services to beat the expected cost projections, he said. As time goes on, the targets become more difficult to achieve, but doctors in the program can draw from previous experiences to keep costs contained.

A group of about 10% of CareFirst members who have multiple chronic conditions account for 60% of the program’s costs, Burrell reported. The medical home model is designed to manage and monitor the chronically ill closely.

“The premise of our PCMH program is simple: Let primary care providers serve as the ‘quarterback’ of a team of health professionals to focus on providing coordinated care for those patients who need it most,” Burrell said.

The same concept can be applied to Medicare patients, he added. Physicians involved in the program would coordinate care for Medicare patients as they do for CareFirst patients.

Blue Cross Blue Shield of Massachusetts launched an alternative quality contract for participating physicians in 2009. The new payment model combined global payments and quality incentives. By June 2012, three-quarters of primary care physicians and specialists in the insurer’s network had signed contracts under the five-year plan.

Contracts include budgets for inpatient and outpatient services, medicine and medical supplies, said Dana Gelb Safran, ScD, a senior vice president for performance measurement and improvement with the Massachusetts health insurer. Researchers have found that participating groups reduced spending growth during the first year of the program. Savings were achieved by implementing care delivery changes, such as moving the sites of laboratory or diagnostic services, but changing utilization patterns remains a challenge, she said.

Lawmakers must consider the role of the patient when legislating change to the Medicare system, said Lonny Reisman, MD, Aetna’s chief medical officer. That insurer tested a program that provided patients with medicines at no cost following heart attacks, but less than half of patients took the drugs, Dr. Reisman said.

“For all the best intentions of doctors, patients are frequently not adhering to therapy,” he said.

Electronic prescribing programs have the ability to track patient refills. Care coordinators also can help coach patients to manage chronic conditions better, Dr. Reisman said.

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