Pay for performance continues to evolve at a rapid pace and providers nationwide are finding more and more of their reimbursement dollars at risk for actual gains in quality.

From New England through the Midwest and out to California, payers are employing new contracting methods with the dual hope of achieving lower costs and improving outcomes for their members. These advancements are taking place ahead of Medicare's shift to value-based purchasing.

In Minnesota, under Blue Cross Blue Shield's shared incentive model, providers sign a traditional fee-for-service agreement, but as the contract period matures, payments increasingly become tied to efficiency and quality improvements. The Massachusetts Blues plan has been promoting itsAlternative Quality Contract since 2009. It's a per-patient global payment in which providers share savings from any efficiency gains. They also can achieve a 10 percent bonus payment for meeting certain quality benchmarks. In neighboring Rhode Island, nearly 90 percent of the state's hospitals have signed onto Blue Cross Blue Shield's Hospital Quality Program, which holds them accountable for meeting a specific set of quality measures.

The Rhode Island scenario is somewhat unique because a major impetus for the new contract came from state regulators. Under a directive from the state health insurance commissioner, guaranteed annual updates in Rhode Island now are limited to the Medicare market basket. The regulation, however, encourages insurers to offer hospitals increased payments for attaining mutually agreed upon performance metrics.

"The guaranteed rate increases are pretty small," explains Gus Manocchia, M.D., BCBSRI's senior vice president and chief medical officer. He says that the quality program is a way to offer hospitals a higher reimbursement, but it also puts a significant portion of dollars at risk. If hospitals fail to reach the quality benchmarks, they'll only get the modest inflationary update. Significantly, the program's measures are heavily weighted toward transitions of care: 60 percent of a hospital's score is tied to discharge planning. The other 40 percent is split evenly between scores for specific conditions such as heart failure and patient satisfaction [see chart, page 16]. The growing problem of readmissions and the poor continuum of care most patients face are partly why the program is so heavily weighted toward discharge planning, Manocchia says. But the state also had some influence.

Through a collaborative effort that included insurers and providers, the state quality improvement organization for a couple of years had been developing a program called Safe Transitions, which provides tools for improving patient handoffs and discharge planning.

For health systems like Lifespan, the increased attention to the care continuum was in line with its strategic goals of improving care for all patients, says Mary Reich Cooper, M.D., senior vice president and chief quality officer of the five-hospital system. She says the system's ambitious information technology plan has played a major role in improving the discharge process. Physicians must sign off on a continuity of care document before a patient can be discharged. That electronic record includes such vital information as medication reconciliation and is sent electronically or faxed to the next provider. Lifespan staff also work with patients to ensure that their follow-up care is in place, going so far as to set up the appointments.

Manocchia says that hospitals can expect quality metrics to get "more intense" over time, even before current contracts expire.

Hospital executives who have not yet entered into quality or value-based contracts should be gearing up nonetheless, advises James Smith, senior vice president, the Camden Group. He says, hospitals should work with insurers to determine which measures will be included and ensure that they can collect the data in real time, or as close to real time as possible.

"We try to steer insurers in the same direction that we are going," says Domenic Delmonico, senior vice president, managed care contracting and network management at Care New England. The three-hospital system has a quality contract with BCBSRI and negotiated quality measures for Women & Infants Hospital of Rhode Island, for instance, because its patient population doesn't fit into most Medicare core measures.

Paying for Quality

Under Blue Cross Blue Shield of Rhode Island's new quality-based contracting method, hospitals are eligible for incentive payments if they meet specific benchmarks.

Measuring Care for Specific Conditions

• Heart attacks
• Heart failure
• Pneumonia
• Surgical infection prevented for select procedures

Measuring Patient Perception/Satisfaction

• Communication with clinicians
• Responsiveness of hospital staff
• Cleanliness and quietness of the hospital environment
• Pain management
• Communication about medicines
• Discharge information
• Overall rating

Measuring Best Practices for Hospital Discharge

• Notify primary care physician about admission
• Provide hospital clinician's contact information
• Provide written discharge instructions
• Provide follow-up phone number
• Conduct medication reconciliation
• Provide summary clinical information to primary care physician
• Schedule outpatient follow-up appointment