Daniel J. Loepp, CEO, discusses how this large plan has realized cost savings with a provider-driven approach
Everyone wants to deliver the best, most efficient care to every patient, but logistics, such as the lack of IT infrastructure, have long gotten in the way of reaching that goal. As advanced technology begins to solve the logistical issues, leaders in healthcare are also examining the cultural changes needed within the industry to improve care.
Specifically, more stakeholders are rethinking their approach to the traditional payer/provider relationship. Rather than bickering over reimbursements, payers and providers are doing some introspection on how they might work together toward the greater good within patient care.
Blue Cross Blue Shield of Michigan (BCBSM)-the state’s largest insurer-has put in years of practical effort on provider collaboration, including clinical best-practice programs. BCBSM has provided funding for a dozen Collaborative Quality Initiatives (CQIs) that are driven entirely by the providers, who have carte blanche to identify and design care improvement their own way.
President and CEO Daniel J. Loepp says the overarching goals must be to strengthen the providers’ ability to improve care as well as to deliver value for health-plan customers.
“I’ve seen models across the country where collaboration with providers is taboo to some degree and where the relationship is pretty much dictatorial,” Loepp says. “I tend to view it as very collaborative as opposed to force feeding. Now, that also means that you have to perform in the clinical world in order to be paid.”
Collaboration is quickly becoming a payer’s essential business strategy for reducing overall spending. For example, over a three-year period, a selection of four CQIs sponsored by BCBSM were measured for savings and effectiveness:
According to the plan’s actuarial analysis, the measured CQIs produced $232.8 million in savings collectively from 2008 to 2010 and have lowered complications and mortality. Loepp says the CQIs changed daily practice patterns in 70 hospitals across the state, and he estimates as much as two-thirds of the savings realized actually benefitted patients outside of BCBSM, such as those on Medicare or Medicaid, those enrolled in other private health plans and the uninsured.
“In that sense, we probably impacted in a positive way the public health side of things as well as our competitors,” he says. “I mean, I’m not overly interested in benefitting my competitors, but that’s a pay off from it. Certainly the public-the Medicare/Medicaid side-benefitted from it, too.”
For example, healthcare institutions participating in the statewide bariatric-surgery CQI, which BCBSM supports, show a comparatively low complication rate, as reported in the Journal of the American Medical Association (July 28, 2010). Overall, 7.3% of bariatric-surgery patients experienced perioperative complications, most of which were wound problems and minor complications.
In addition, the plan reports $14.6 million in statewide savings and $4.7 million in direct savings for BCBSM in bariatric surgery between 2008 and 2010-a significant portion of the total measured CQI program savings thus far.
“It’s a pretty big operation with people who have high risk factors,” says Thomas Simmer, MD, BCBSM chief medical officer and senior vice president of healthcare value.
While bariatric surgery began in the 1980s, the specific techniques involved have changed significantly over the years, he says. In the bariatric-surgery CQI, nearly every surgeon across the state got involved in developing a data-sharing platform to drive new process improvements. BCBSM funds the data support and the collaboration sessions, but according to Dr. Simmer, the plan doesn’t dictate any clinical or cost-containment goals.
“Blue Cross supports them financially so they have the data,” he says. “We resource the surgeons, but Blue Cross isn’t even there at the meetings.”
The University of Michigan Health System serves as the coordinating center, collecting and analyzing comprehensive clinical data from the participating institutions. It examines delivery patterns and identifies best practices and improvement targets.
For example, one finding that emerged from the data-sharing initiative revealed a pattern of worse outcomes for patients when a certain type of suture material was used. Dr. Simmer says switching to a different material didn’t cost any more but resulted in less leakage at the surgical site and fewer complications.
In another project under the bariatric-surgery CQI, four surgeons volunteered to have live procedures recorded on video and critiqued by their peers. As a result of the process improvement in this case, mortality rates improved from 0.75% to 0.25%, Dr. Simmer says.
He says the surgeons have always had the motivation to collaborate with their colleagues and advance their care techniques, but without the CQI program, they didn’t have an avenue to get there.
“One of the attributes of this program is that the results are not seen overnight, but the results go to all patients who have bariatric surgery, not just Blue Cross members,” he says.
BCBSM also funds the Michigan Society of Thoracic and Cardiovascular Surgeons’ Quality Collaborative. More than 100 clinicians from 33 sites meet four times a year to discuss improvement opportunities based on collected data. Surgeons swap site visits to see first-hand how their peers are making progress on implementing best practices.
“We have our own warehouse of data that we can mine very rapidly-we can mine it in an hour if needed,” says Richard Prager, MD, the collaboration’s project director.
Dr. Prager says every site chooses two quality initiatives to improve upon each year. With BCBSM funding, the participants can share and analyze data from their own databases as well as that of the Society of Thoracic Surgeons, access to which BCBSM also funds.
“I don’t think we would have accomplished everything we’ve accomplished without the funding,” he says.
For example, the collaboration has implemented procedure improvements that have reduced the amount of blood usage and increased the use of appropriate preoperative and postoperative medication. Individual institution’s performance against the emerging best practices is openly shared with the group, Dr. Prager says. And the transparency is motivating.
“We just share the information,” he says. “We don’t beat around the bush anymore like we did five or six years ago.”
Collaborative models have the effect of encouraging competing hospitals and practices to set their politics aside and focus on learning best practices from each other. BCBSM takes on the role of a catalyst, leveraging its large statewide network and its ability as the state’s largest insurer to draw providers into quality programs.
“As you look at what’s going on from a best-practices standpoint across the country, among those that are ahead of the curve in pay for performance and collaborative pay for performance, the outcomes seem to be better,” Loepp says. “It’s a business imperative.”
However, as the healthcare landscape changes under the Patient Protection and Affordable Care Act (PPACA), Loepp believes payers will have to modify their strategies.
“What we’re doing around patient-centered medical homes and our Physician Group Incentive Program may be different in two or three or four years,” he says. “It may take a different turn; I’m not sure what, honestly, because there are a lot of unknowns with the Affordable Care Act. But, I can’t see any situation where the collaborative model isn’t going to be at the forefront.”
He says the collaborative programs with providers go after some low-hanging fruit and organize processes around improvement opportunities. And the plan has seen substantial adoption rates. For example, BCBSM grew its patient-centered medical home participation from 1,200 physicians in 2009 to more than 2,500 physicians in 2011.
But in the future, all types of care delivery will be examined in great detail because of healthcare’s unsustainable costs, Loepp says. Provider contracts will be inexorably tied to quality and will span multiple contract years. Primary care groups have embraced performance-based payment because they see the change coming, but practices of all types-even those that were resistant in the past-will eventually make the leap.
“And now you’ve got specialists coming to complain about the fact they can’t get into the game as quickly, compared to the primary care docs,” Loepp says.
The plan’s hospital contracts will have inflation adjustments, but any reimbursement hikes above that will be based on performance outcomes that are set collaboratively. He says the days of paying for volume are waning, especially in more competitive markets like Detroit.
“We signed the first outcomes-based hospital agreement in 2011 with St. John Providence,” he says. “We’ve now got performance-based contracts with three of the five largest health systems in the state participating, so we’re getting some traction on the hospital side.”
On a national level, Loepp says, Michigan continues to be a relatively cost-conscious state. According to the Kaiser Family Foundation, Michigan had the lowest rate of premium increases nationally from 1999 to 2009. Premiums increased 88%, however, other states saw rates increase as much as 145% in that time period. He says the same is true for BCBSM.
“Our benefit cost trend was 2.2% for 2011, and that’s considerably down,” says Loepp. “That’s six years in a row where we’re lower than the national average.”
With 5.3 million members and its role as the insurer of last resort, BCBSM has its share of high-cost members. According to Loepp, the upcoming guaranteed issue regulation under PPACA has been part of everyday operations for his plan for more than 30 years.
“The world becomes us in 2014,” he says. “Because up until now, we have been the insurer of last resort, and we take everybody.”
In 2014, every insurer will be required to do the same.
He anticipates the mix of members will change for BCBSM. While some groups might drop coverage, government and individual business will rise.
“There was a lot of discussion of whether we should be aggressive in the government side of the healthcare business, and right now you would look at yourself and say ‘duh,’ right? But, five or six years ago, that wasn’t the case,” he says.
Even though the covered population will change, the quality initiatives must continue to keep costs under control.
“We’re offering networks and service, basically,” Loepp says. “And, the idea of us partnering with physicians and with hospitals in order to get that value-that part of it isn’t going to change. In fact, and we’ve seen through these programs and our collaboration, that we offer more value than those we’re competing against. And so, I don’t see that that changes in the future. I’m not a soothsayer, so I’m not even going to try to guess, but the idea of collaboration, and significant collaboration with providers, I think is table stakes today and tomorrow.”