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With shift, hospital fees pegged to quality, not length of stay

By
Senior Staff Writer
Tuesday, November 29, 2011

A shift in health insurance compensation to incentivize higher quality care is occurring at many of Rhode Island’s top hospitals, some of which are partnered with Alpert Medical School.

In what advocates are calling a progressive move in line with national health care reform, Blue Cross and Blue Shield of Rhode Island — the state’s largest health insurance provider — announced in mid-November that health care compensation will be based on quality metrics, rather than the length of a patient’s stay or medical services performed.

The move represents a shift from a per-day payment system to a “global payment rate,” where the insurance provider covers a set fee for a certain illness. For example, a patient would be charged a set fee for pneumonia, with no regard for the hospital or length of stay, said Gus Manocchia MD ’86, chief medical officer at Blue Cross and Blue Shield. In this system, hospitals will have incentives to discharge patients as soon as possible, he said.

Because the new system will put an emphasis on primary care and discourage doctors from performing unnecessary tests, it is in line with federal health care reform mandates coming down the pipeline. “We’re actually a little bit ahead of the game,” he said.

“This can only be good for the patients,” said Christopher Koller, health insurance commissioner for the state. Patients should not see any increases in out-of-pocket costs as a result of the shift, Manocchia said.

For the past several years, there has been a “quality component” in health insurance compensation contracts, but quality standards varied from one hospital to another, he said. One goal of the new program is to create a universal standard in contract with the insurance provider, Manocchia added.

The program is divided into three components — metrics based on medical care, patient surveys and success of discharge transitions.

The shift in health insurance compensation has implications for medical training. “We have to teach our med students that the system is changing,” said Glenn Tung, associate dean for clinical affairs.

“In the future, physicians will be paid more on the basis of the quality of the work they perform and the outcomes of that work for their patients rather than on strictly the procedures that they perform,” Tung said.

Manocchia said as a medical student at Brown in the 1980s, he did not learn about “quality insurance.” But the idea of putting more emphasis on patient safety in hospitals and exposing medical students to new expectations in residencies is “critically important,” he said.

“There’s so much of health care reform that affects the students as potential patients, but also students as members of society,” Tung said. Knowledge of reform teaches students “how we can more responsibly create a health care system that can be sustained by the country.”

A spokesperson for Lifespan, one of the state’s largest health systems and a partner with several Rhode Island hospitals, declined to comment for this story.

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