For a quarter century, Dr. Timothy Johans had been practicing in some of Idaho’s largest hospitals. He paid special attention to using the best quality, most cost-effective equipment. His complication and infection rates were low – meaning fewer expensive hospital readmissions and treatments.
Then he learned about a program from Blue Cross of Idaho (BC Idaho) that would reward doctors who out-performed their peers on cost-effectiveness, while maintaining the highest quality care. He met with BC Idaho experts to take a look at his numbers.
“They showed me my data, and I’m looking at it,” says Johan, “and here’s the bell curve. I thought I would be the least expensive. I was the most.”
Johans would never allow his quality to suffer to save patients money. But he thought, “We can have a more efficient, high-quality system that costs less.” He asked BC Idaho about his options, determined to make a change.
Paying higher fees to more efficient providers
BC Idaho’s pay-for-performance program incentivizes doctors like Johans to provide high-quality care that is more cost effective for a particular episode of care. An “episode of care” means the full spectrum of care provided by one physician for one condition.
The goal? To help doctors understand changes they can make to improve overall care quality in the most cost-effective way, reducing duplication and waste. Todd York, vice president of provider partnerships for BC Idaho, describes how this might work with a knee replacement: The insurer associates one doctor with that entire episode of care – including the surgery, doctor’s office visits, anesthesia, physical therapy, tests – and ranks that doctor against his or her peers on the cost efficiency of that care. The more efficient the care, the higher the fee the doctor earns. Quality improvement programs underpin the entire effort to ensure patient care improves alongside efficiency.
Importantly, says York, the program ensures a focus on high-quality care that helps patients’ health improve and takes into account the complexity of the care and the health of each patient. At the same time, the data helps doctors understand their own power to manage costs.
Data in action
“Arming doctors with some data about their practices has been powerful,” says Becki Wallace, a provider network manager for BC Idaho.
In the past, she says, doctors haven’t had the information they need to see which facilities or medications offer high-quality results at a lower cost.
“They assumed that an MRI one place costs the same and offers the same quality as an MRI somewhere else,” Wallace says. “Showing them there’s an independent imaging facility that’s 50 percent less cost than at a hospital [with the same quality], they’ll send their patients to the independent facility.”
The program helped Johans understand that one of the major drivers of his costs was where he practiced. Some hospitals charge more than others. So Johans decided to refer more of his BC Idaho patients to another hospital, a specialty surgical center. Quality is high there, and costs are significantly lower. His referral rates have dropped a bit because of the change in venue, but Johans says it’s alright.
“I’ve been around 25 years. My motivation now is that I love to do my job. I take my patients to the best place,” Johans says. “And if that’s the less expensive hospital, that’s a win for everyone.”
Blue Cross of Idaho is an independent licensee of the Blue Cross Blue Shield Association, an association of independent, locally operated Blue Cross and Blue Shield companies.