12 Key Points on Massachusetts Blue Cross' Model ACO Program

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The Alternative QUALITY Contract, created by Blue Cross Blue Shield of Massachusetts, is one of the most advanced versions yet of an accountable care organization. It was introduced in Jan. 2009, three years before the Medicare ACO program is set to begin. April Greene, director of payment reform at Massachusetts Blue Cross, makes 12 key points about the program.

1. High participation in program.
The AQC program encompasses one-fourth of Blue Cross' HMO provider network and 33 percent of membership. Ms. Green warns this voluntary program "may not be the best fit for every provider." It requires a substantial commitment and making basic changes in providing care.

2. Both physicians and hospitals can join. Contracted organizations include physician organizations, which can be made up of solo or small practices, and joint ventures between physicians and hospitals. While hospital participation is not required, all participants need to have a pool of primary care physicians.

3. Minimum number of members needed. The minimum number of Blue Cross members a contracted provider needs to have varies depending on the risk-sharing arrangement, but it must be at least 5,000-10,000 HMO members. The thresholds ensure Blue Cross's population-based data would not be influenced by dramatic swings in care for small numbers of patients.

4. Now limited to HMO members.
The program is based on Blue Cross' existing HMO program, called HMO Blue, which accounts for half of the company's book of business. This is a much higher HMO penetration rate than most of the country, but HMO Blue, unlike traditional HMOs, hasn’t been making capitated payments to providers. HMO Blue does, however, designate primary care physicians for patients, a basic requirement of the new AQC program.

5. PPO participation may come later.
The typical insurance arrangement around the country is a PPO, which doesn't identify a primary care physician for members. Ms. Green says several Massachusetts providers have asked to expand AQC to the Blue Cross PPO plan but this would be a challenge because there are no designated primary care physicians. "We're looking at possible alternative methodologies," she says. One methodology is "attribution," which involves identifying in claims data the last primary care physician the patient saw and assigning the patient to that physician.

6. Sustained partnerships with providers. AQC contracts last for five years, longer than the company's usual contracts. "This allows for a stable environment for the organization to make the changes they need to make," Ms. Green says. Payments for care, however, are adjusted yearly, based on health status and inflation.

7. Moving away from adversarial relationships. The collaborative nature of the program moves away from traditional managed care contracting, where providers push for the highest possible reimbursements and the insurer pushes back. "This is a new kind of partnership," Ms. Green says. "It is a collegial relationship in which we are committed to each other's success."

8. Program allows freedom to innovate. Providers are expected to come up with their own approaches to improve quality and reduce costs, such as e-mail exchanges with patients, group visits and follow-up home visits after hospitalizations. Such approaches would not be reimbursed under traditional payment models.

9. Providers get extensive data. Blue Cross provides data on utilization of services and referral patterns, giving contracted providers insight into their performance. At least once a month, providers receive data on hospital admissions, radiology services and other utilization. Blue Cross officials review the reports with each group. Even though the program is heavily data-based, having an EMR system is not necessary to participate.

10. Global budget for each provider. Blue Cross sets a global budget for the provider that will be used later to determine extra payments for reducing costs. The global budget covers all medical expenses the patient incurs, such as inpatient, outpatient, pharmacy, behavioral health and nursing home — including from providers not participating in the program. The global budget includes an adjustment for inflation and the health status of the provider's specific group of patients.

11. How payments are made. Initially, all member claims are reimbursed on a fee-for-service basis. At the end of the year, the cost of all services provided to the patient –whether or not they were furnished by the contracted provider – is measured against the global budget to determine performance incentive payments. If the provider reduces costs, it is entitled to as much as 10 percent to reimbursements. Performance incentive payments are also linked to meeting clinical performance measures for process, outcomes and patient care experience. "This is a departure from the fee-for-service dynamic, in which every time a service is rendered, a payment is made," Ms. Green says.

12. Return on investment is still unclear. All organizations that started in 2009 achieved their efficiency targets and all have made substantial improvements in quality, but it is too early to release specific ROI measures, Ms. Green says. Blue Cross's goal is to reduce the medical expense trend of participating organizations by half over the term of the five-year contract.

Find out about the Alternative QUALITY Contract.


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