Aetna health insurance company and Carolinas HealthCare System, the largest hospital group in the Carolinas, recently signed a contract intended to control health care costs by better coordinating patient care.
It’s part of a slowly unfolding national movement away from traditional fee-for-service reimbursement that pays doctors and hospitals based on the number of patients they see and procedures they perform.
The new “shared savings” agreement gives Carolinas HealthCare financial incentives to provide high-quality care that focuses on keeping people healthy and out of the emergency room.
Under the contract, signed April 1 and effective June 1, Aetna will pay the hospital system to hire “care coordinators” to encourage patients to better manage chronic diseases and eliminate unnecessary use of expensive services, such as MRI scans.
“Aetna is working to change the health care system to one that focuses on quality and affordability, not just volume,” said Margie Maxwell, president of Aetna’s operations in the Carolinas, Tennessee and Arkansas.
Aetna will continue paying Carolinas HealthCare for most services under its existing fee-for-service contract. But the new contract provides additional targets for which the hospital system will be rewarded “for doing well, not for doing more,” Maxwell said.
To help coordinate patient care and make access easier, Carolinas HealthCare will establish a single telephone number for Aetna patients to make appointments with any office and any service in the system.
“This is the beginning of … moving towards payment-for-performance,” said Russ Guerin, an executive vice president with Carolinas HealthCare.
Most major health insurers and hospital systems are moving toward “population health management” in varying degrees.
Novant Health, the Charlotte region’s second-largest hospital group, has also recently announced an agreement with Cigna insurance company that rewards hospitals and doctors for “value,” not just volume.
Blue Cross Blue Shield of North Carolina officials say they are pursuing contracts with hospitals and doctors that would “align incentives to change (patient) behaviors and pay for (successful) outcomes through value-based reimbursement.”
One program – Blue Quality Physician Program – rewards primary care physicians who meet certain goals regarding information technology, patient education and care coordination. Patients in that program had 52 percent fewer visits to specialists, 70 percent fewer visits to emergency rooms, lower radiology costs and lower average lengths of stay in the hospital.
Aetna’s agreement with Carolinas HealthCare is one of the insurer’s first “accountable care collaborations” designed to give its largest clients, including self-insured employers, benefits from quality improvement and cost savings.
Guerin said Carolinas HealthCare has been meeting with Aetna for a year and a half to discuss the collaboration. Aetna has about 20,000 members who receive primary health care from Carolinas HealthCare, which has about 40 hospitals and 732 doctors’ offices across the Carolinas.
A key to the timing is the recent installation of an electronic records system, called Canopy, that links Carolinas HealthCare hospitals and doctors’ offices. That will make it possible to collect the data needed to show results, Guerin said.
Hospital data, combined with claims data and other information from Aetna, will be used to determine whether the hospital achieves its goals for improving quality and cutting costs. At the end of the year, Aetna will compare the performance of its members who use Carolinas HealthCare to where they were before, and to members who use other hospital systems. If Carolinas HealthCare reaches its goals, Aetna will share savings with the hospital system. Neither organization would disclose financial details of the contract.
Novant’s deal with Cigna
Novant’s contract with Cigna does not include that “shared savings” component, but it does pay Novant to hire care coordinators who will contact patients with suggestions about disease prevention and management, said Derek Goldin, a Novant vice president in charge of managed care relationships.
Even healthy patients could be contacted, Goldin said, if records show they haven’t received recommended screening tests, such as mammography or colonoscopy. About 60,000 Cigna members get their care from Novant physicians. The goal is to “keep the well, well and prevent those who are sick from becoming sicker,” Goldin said.
Aetna and Carolinas HealthCare have outlined performance goals that involve changing the behavior of physicians as well as patients.
For example, Aetna’s Maxwell said Carolinas HealthCare doctors will be encouraged to prescribe generic drugs instead of more expensive brand-name drugs, where appropriate, and to avoid unnecessary use of imaging, such as MRI or CT scans. If scans are necessary, doctors will be encouraged to send patients to lower-cost outpatient centers instead of hospital-based centers, Maxwell said.
Like Cigna and Novant, Aetna will pay Carolinas HealthCare a fee to support “care coordination,” which may mean hiring nurses, social workers or other “physician extenders” whose jobs will be to contact Aetna members to make sure they have complied with doctors’ orders but are not over-using medical services.
For example, patients will be counseled about the appropriate use of emergency rooms and, if appropriate, guided toward less expensive urgent care centers or primary care physicians’ offices within the system. Aetna members may also be advised about how to better manage chronic conditions, keep doctors’ appointments or get prescriptions filled.
How not to ‘over-incentivize’
Carolinas HealthCare’s Guerin said the hospital system is not looking to make a lot of money from Aetna by cutting costs. “What we are looking for is the income to do the increased care coordination and medical management. … Once we get those additional resources, then we can spend more time to do the things that doctors don’t have time to do,” Guerin said.
“In the long run, the hope is that Carolinas HealthCare System network keeps performing better than the overall Aetna network, and they have a desire to put more of their members with CHS, and our relationship becomes more collaborative than confrontational.”
Guerin said the two organizations are being careful not to “over-incentivize” cost-cutting because that’s how health management organizations (HMOs) became so unpopular in the 1990s.
“There was such a huge incentive to not provide care that America erupted,” he said. “We’ve got to make sure that doesn’t happen again.”
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May 12th, 2013