Alternative Quality Contract: Improving Health Care Quality While Reducing Spending Growth

1. Alternative Quality Contract:Improving Health Care Quality While Reducing Spending Growth Alliance for Health Reform Deborah Devaux Monday, August 10, 2009

2. Transformation Vision: 2016 A health care system that provides safe, timely, effective, affordable, patient-centered care for everyone in Massachusetts.

3. Cornerstones of the Alternative QUALITY Contract The Alternative QUALITY Contract model is composed of key components that are standard across provider entities • Integration across the continuum of care • Accountability for performance measures (ambulatory and inpatient) • Global payment for all medical services (health status adjusted) • Sustained partnerships (5 year contract) This will lead to … • New products differentiating Alternative QUALITY Contract providers • Member incentives to encourage healthy behaviors

4. Key components of the alternative contract model Unique contract model: • Physicians & hospital contracted together as a “system” – accountable for cost & quality across full care continuum • Long-term (5-years) Controls cost growth: • Global payment for care across the continuum • Annual inflation tied to CPI • Incentive to eliminate clinically wasteful care (“overuse”) • Improved quality, safety and outcomes: • Robust performance measure set creates accountability for quality, safety and outcomes across continuum • Substantial financial incentives for high performance (up to 10% upside) Expanded Margin Opportunity Efficiency Opportunity Inflation Performance INITIAL GLOBAL PAYMENT LEVEL

5. How Is this Different from Capitation? • Includes a significant upside potential based on a sophisticated set of measures that address patient safety, appropriateness of care and patient satisfaction • Initial payment level is derived from the historical experience of the provider group. • Payment is adjusted annually in line with inflation • Global payment is not reset annually • Providers can retain margins derived from reduction of inefficiencies • Payment is health status adjusted to adequately consider changes in patient morbidity

6. Clinical process measures Acute MI Heart Failure care Pneumonia care Surgical care Clinical outcomes measures Hospital-acquired infections Complications after major surgery (AMI, PE/DVT, Pneumonia) Obstetric trauma Patient Care Experiences Communication quality: physicians Communication quality: nurses Responsiveness Discharge support/planning Developmental Measures Measure # 1 Measure # 2 Performance Measures For The AQC Hospital Quality and Safety Ambulatory Care Quality • Clinical process measures • Depression • Diabetes • Cardiovascular Disease • Cancer Screening • Pediatric: Appropriate Testing / Treatment • Pediatric: Well Child Visits • Clinical outcomes measures (triple-weighted) • Diabetes (HbA1c, LDL-c and BP control) • Hypertension (blood pressure control) • Cardiovascular Disease (BP control, LDL-c control) • Patient Care Experiences • Quality of clinical interactions • Integration of care • Access to care • Developmental Measures • Measure # 1

7. Performance Achievement Model

8. Provider Feedback Transition and management support Risk accountability Member communications alignment PCP responsibility

9. Massachusetts Payment Reform Commission Global payment as predominant form of payment Transition not to exceed five years Careful transition with infrastructure Create new independent Board to implement Complementary strategies • health plan design • evidence based coverage • consumer engagement (lifestyle; self-management) • administrative simplification • medical malpractice reform • end of life care • primary care workforce development