NJ Insurers Tie Doctors’ Payments to Quality of Care

Beth Fitzgerald | February 23, 2012 | Health Care
New models are being piloted with incentives for improving, coordinating healthcare

Much of the alarming growth in U.S. healthcare spending has been blamed on how the system pays the bills, with providers compensated for everything they do for patients, regardless of how that care is affecting their health. That has begun to change in New Jersey, where health insurers are piloting new models tied with incentives for improving the quality of care.

The models include quality and performance metrics and expanding the roles of nurses and other healthcare providers to act as advocates for follow-up and preventive medicine.

“We know the world is changing, and we need to change the way the [healthcare] delivery model is set up, the way we reimburse providers, and try to make healthcare more affordable,” said Michael McGuire, chief executive officer of UnitedHealthcare of New Jersey.

UnitedHealthcare will pay more to hospitals that hit higher performance targets, but will save money in the long run, McGuire explained. “The metrics we are looking at will overall reduce the cost of care. If lengths of stay go down, if readmissions go down, if hospital acquired infections are down, then the overall cost of care goes down.”

Meanwhile, the type of coordination being pioneered is quite different from the traditional model. Dr. Dan Nicoll, a Cigna regional medical executive for the Northeast, described the old standard using patients with diabetes to illustrate the model that currently compensates doctors: “You go to the doctor, you have your office visit, you have your 20 minutes. Then you go home, the doctor goes home and it’s all over.”

With changes, doctors will now be paid to coordinate care after the office visit. Cigna has partnered with a practitioner group to help facilitate this case management. Follow up is key, Nicoll said, with calls now being made: “You were due in here last month. Your last visit was six weeks ago. We want to see you every month. We need to get these things done. Can you come in Tuesday?”

Nicoll said there are recognized parameters of good medical care, whether the issue is diabetes or heart disease. “And if the patient is at variance with those parameters of care, we need to get that person taken care of.”

Horizon Blue Cross Blue Shield of New Jersey launched a new subsidiary, Horizon Healthcare Innovations, more than a year ago that is compensating primary care providers to coordinate patient care within “patient center medical homes” where the focus is on preventive care and close monitoring of the health of the most at-risk patients.

Funds from Horizon Healthcare Innovations (HHI) allow hiring nurses dedicated to coordinating patient care. In January, HHI began funding a new nursing education program at the Duke University School of Nursing and Rutgers University College of Nursing to train these nurse coordinators.

Other health plans are also investing in programs that compensate providers to dedicate additional resources to coordinate the medical care of their patients. Although there are up-front costs involved to revamp the delivery of healthcare, executives say the investment is repaid through improved patients outcomes, which in turn holds down medical care bills.

Aetna announced in January that it began making extra payments to primary care practices for achieving “patient centered medical home” recognition from the national standards group, the National Committee for Quality Assurance (NCQA). Quarterly payments will go to 222 practices in New Jersey, according to spokeswoman Susan Millerick.

“It’s an incentive, a reward, and it’s meant to be a definite encouragement to continue to embrace the medical home, and to invite other practices to consider adopting the medical home model,” Millerick said.

The program rewards primary care practices for more actively coordinating and managing their patients’ care. The goal is “better health, fewer hospitalizations, improvements in transitions of care, and greater engagement,” said Elizabeth Curran, head of national network strategy for Aetna. “The [Patient-Centered Medical Home] program is one more way we are moving from a system that rewards the quantity of procedures to a system that rewards quality outcomes.”

UnitedHealthcare of New Jersey has piloted various new reimbursement models, said McGuire, the insurer’s chief executive. Among the initiatives is “performance based contracting” as the insurer renews reimbursement contracts with NJ hospitals and physicians. The hospital model began in 2011, and is set to expand to physician practices.

“For hospitals they include things like length of stay, readmissions, hospital acquired infections and conditions, and some administrative things like how efficient and accurate they (hospitals) are in filing claims,” McGuire said. These performance metrics then become part of the negotiations over the reimbursement hospitals receive from UnitedHealthcare.

So far about 15 percent of the New Jersey hospitals in the UnitedHealthcare network have entered into performance-based contracts. McGuire said his goal over the next two years is to bring 80 percent of the company’s hospital spending in New Jersey under performance-based contracts.

In April, the performance-based contracting moves to the physician practice sector. The goal is to “tie everyone to the overall outcomes and the health of the membership,” McGuire said. “We are trying to keep costs down and a good way to do that is to raise quality.” The physicians metrics will include various factors, including often the doctor refers patients to out-of network laboratories, what is their utilization of generic drugs, how efficient and accurate they are in filing claims.

The Medical Society of New Jersey “does not object to new payment models. However new models must compensate physicians fairly and allow all physicians to independently verify that fair compensation is paid,” said the group’s chief executive Lawrence Downs. “The quality and performance metrics must be achievable, transparent and understandable.”

Last December Cigna launched a “collaborative accountable care organization” with East Brunswick-based Partners In Care (PIC), an independent, physicians owned and led organization that specializes in care coordination — working with patients, primary care doctors and specialists to improve patients care. PIC will coordinate the care that Cigna members receive from 360 participating Cigna physicians.

PIC is “a sophisticated practitioner group that understands the importance of disease and case management,” Nicoll said. “They are going to monitor and coordinate all aspects of the patient’s care.” For a diabetic, for example, that involves making sure there is regular testing and monitoring of blood sugar levels and that patients take their medication, and making sure the patients take medication reliably.

Clinical care coordination heads off “a whole bunch of avoidable long-term and short-term problems,” Nicoll said. “For example, it behooves us a great deal to make sure that every single diabetic and every single person with heart disease gets a flu shot. Because if you get influenza, there are going to be doctor visits, there are going to be pharmacy charges, there will be a few people that wind up with pneumonia that have very costly and unnecessary hospitalizations.”

For the diabetics, “maintaining good blood sugar seems to reliably reduce the risk of heart attack, stroke, kidney failure, and blindness, which has an inordinate expense, and that’s much longer term than the flu shot,” he said. “But the principal is the same, and that is by taking very good, diligent care of people you avoid unnecessary complications” and save money.