Quality-based reimbursement deal gives hope for real reform

I've been saying for some time now that health reform is nothing without payment reform. Today, I'm happy to report that outcomes-based reimbursement is becoming more than just a pilot or a demonstration or an experiment, at least in Massachusetts.

As many of us woke up from tryptophan-induced food comas last Friday, Blue Cross Blue Shield of Massachusetts and Boston-based Caritas Christi Health Care System announced a five-year "alternative quality contract [1]," covering 1,110 physicians and 60,000 enrollees. It's a two-part reimbursement system, including both a fixed payment per patient and a performance bonus of up to 10 percent for following nationally accepted quality standards, hitting specific quality targets and achieving patient satisfaction.

With the Caritas Christi deal, 20 percent of the Massachusetts Blues provider network is now under this type of contract, the insurer says.

The contract apparently doesn't have any health IT requirements, but every study I've seen says that quality reporting is difficult--if not prohibitively expensive--without electronic medical records. In fact, the Wall Street Journal reports [2] that technology gives quality-based reimbursement a chance to succeed now where capitation failed last decade. "In the 1990s, some providers lost millions of dollars using capitation because it took months to determine if patients were going outside of the network or being prescribed expensive drugs," the Journal says. "Proponents say this time will be different, in part because improved information systems will enable hospitals and doctors to better track the amount of care they are providing and make quick adjustments if costs head out of control."

If this program succeeds, you can count on other Blues plans to adopt a similar contract in short order. Other insurers would be sure to follow. Whether Congress has the political will to touch Medicare again anytime soon, well, I'm not willing to place any bets. - Neil [3]