Shift from treating sickness to ensuring health

NORTHAMPTON - When Cooley Dickinson Hospital and its physicians group inked a deal last fall with Blue Cross Blue Shield to launch a new way of paying for medical care, it joined the vanguard of a movement that many believe will reshape health care in America.

The change, being pushed at both the federal and state levels, will move the existing fee-for-service payment plans toward a concept known as global payment plans.

Under these new plans, groups of doctors, hospitals and other health care providers join forces under one umbrella called accountable care organizations, or ACOs. These organizations provide the full range of medical care for patients.

The premise behind the cost-conscious plans is to increase coordination of a patient's care so that keeping people healthy is the focus instead of solely treating sickness, said Cooley Dickinson CEO Craig Melin.

It is also an attempt to rein in health care costs by putting providers on an annual budget to cover all costs associated with caring for a patient. Providers who meet budget by keeping patients healthy will get to keep more of the budgeted amount, though some may go back to insurance companies or even to patients. Those who go over budget would face financial penalties.

Melin said the new plans are a better fit for the type of patient care Cooley Dickinson prefers to provide.

"We are moving to a new world that fits our values and direction very well," he said. "This is terrific for the way we've been handling things."

Insurance companies and the federal government likely will continue to be the funding mechanisms under the new ACO system. That means patients or employers will still pay premiums to a commercial insurer for coverage. Medicare and Medicaid patients would fall under a different payment model now in an experimentation phase.

Although many details still need to be ironed out, most agree that global payment systems are the wave of the future in health care.

"I think it certainly does have that potential," said Dr. Lynda Young, a Worcester pediatrician who is president of the Massachusetts Medical Society. "I think we've already seen some change for the better. Physicians are a lot more aware about what things cost."

Joel Feinman, president of Valley Medical Group, said the new model is a "very good trend," but cautions that concerns remain.

"It's the only way to go right now given what our citizenry will support," he said.

Like it did with its universal health care initiative, Massachusetts is taking the lead in creating a new system of global payment.

Gov. Deval Patrick created a patient reform commission that in 2009 recommended eliminating the fee-for-service system by 2015 in favor of a global payment system that it contends will encourage more careful coordination and collaboration among a patient's physicians, nurses, hospitals and other care providers.

The governor further touted the change in his state-of-the-state address last month.

Explaining ACOs

Traditional insurance pays doctors and hospitals for certain tasks like office visits, tests and medical procedures.

Many health experts argue that in this fee-for-service system, medical care emphasizes volume and is organized around treating a specific episode of illness.

ACOs are designed to change that dynamic, rewarding doctors financially for reducing expenses by avoiding unnecessary tests and procedures and encouraging prevention efforts that keep patients healthy and out of the hospital.

Under the system, physicians and hospitals are placed on an annual budget that covers not just the care provided by the doctor, but also by specialists, labs, imaging centers, therapists and hospitals. ACOs make these providers jointly accountable for the health of their patients, giving everyone financial incentives to cooperate.

"Doctors and others in an ACO will be even more motivated to improve health and cut costs," Feinman said.

Young anticipates that ACOs will come in different variations depending on geography, patient mix and other factors. Additionally, some ACOs may reward insurance companies, and even patients, if cost savings are achieved.

"There will be different versions," she said. "It's going to have a lot of nuance because there's so much variation in the state."

Dr. Mark Novotny, chief medical officer at Cooley Dickinson, predicts that the ACO model will lead to greater coordination of care and make it easier to navigate an often confusing health care system.

"It should be easier to use the health care system in this model," he said.

Additionally, doctors will start getting paid for services they provide that are critical to a patient's health.

"ACOs broaden the caregiving concept to include social issues, things like coordinating visits, helping with medications, transporting patients to and from appointments," Novotny said.

For example, doctors also might be able make phone calls or communicate with patients through email or video call services like Skype.

"Under the ACO model, we get paid for that service," said Novotny. "Now, if we did that, we don't get paid."

When communicating with the public, Novotny likes to stay away from the lingo of "ACO" and talk about "improving the health of the population" instead of treating patients one at a time.

"The word 'accountable' is intended to communicate that thinking about an entire population, and being accountable for the care of an entire population is very different from taking care of just the people that choose to come to you, one at a time," he said.

For example, it means thinking about and finding ways of identifying people who are not healthy, or have chronic illness and are not currently receiving care, and engaging them in prevention or treatment. The old model was "we treat those who come to us," he said.

No matter what happens, the cost to treat a patient is borne by the providers, which Melin said is an incentive to work to keep patients healthy. That makes the overall health of a community a much more critical focus.

Many insurers and medical practices aren't waiting for lawmakers to create new rules. Instead, they are teaming up to implement global payment systems. A recent Boston Globe survey of insurers found that one in five Massachusetts residents is being treated by providers working under these new models.

The shift is already under way at Cooley Dickinson Hospital and Valley Medical Group.

The hospital, along with its physicians group, has partnered with Blue Cross Blue Shield to begin a new global payment system called Alternative Quality Contract. The system began in January and covers about 8,900 Blue Cross members. Melin said the hospital is in negotiations with several other insurance companies to implement similar systems.

Valley Medical Group meanwhile has had a similar contract with Blue Cross in place for two years and is looking at adding similar contracts with other insurers, said Feinman.

The hospital CEO adds, however, that it will take some time to switch from the current fee-for-service model to the ACO model.

"We're moving that way," Melin said. "We're still serving in the current model, so there will have to be a bridge."

Eventually a form of the new system will be in place throughout the country, as the federal government is pushing the changes as part of its Affordable Care Act. Medicare patients may see the change early next year. The federal Health and Human Services Department estimates that ACOs could save Medicare up to $940 million in the first four years.

Chad Cain can be reached at ccain@gazettenet.com [1].

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