Health insurer gives bonuses for care costs

Blue Cross recognizes 85 as good value, penalizes 35

Arkansas' largest health insurer awarded bonuses to 85 doctors, hospitals and other health care providers for their low costs in 2013 for delivering babies, replacing a knee or hip, or treating congestive heart failure patients, a spokesman for the company said Tuesday.

Arkansas Blue Cross and Blue Shield also penalized 35 providers because their average cost of providing such "episodes of care" was considered excessive, the spokesman, Max Greenwood, said in an email.

Greenwood provided the information to the Arkansas Democrat-Gazette in response to the newspaper's questions about a report that detailed the first year of results from the episodes of care program, which also involves the state Medicaid program and Little Rock-based QualChoice Health Insurance.

Part of the state's Health Care Payment Improvement Initiative, the episodes of care program offers financial rewards to providers who meet quality-related benchmarks and whose cost of providing a certain type of care -- such as replacing a hip or knee -- is low enough to be considered "commendable."

Providers whose costs are above a level considered acceptable must pay penalties.

The report from the Arkansas Center for Health Improvement, a division of the University of Arkansas for Medical Sciences, indicated that 82 providers had costs potentially qualifying them for bonuses from Blue Cross, while 32 had costs exposing them to potential penalties.

Greenwood said provider appeals and calculation adjustments affected the final number of providers subject to bonuses and penalties.

She declined to give the dollar amounts of penalties or bonuses.

Blue Cross used the program for most of its insurance plans in 2013 and plans to extend episode-based incentives next year to the plans it offers on the state's health insurance exchange, Greenwood said.

Some companies that fund their own insurance plans, using Blue Cross as a claims administrator, also use the episode program, she said.

QualChoice expects to issue its first round of penalties and bonuses later this year based on the cost episodes in 2014, Chief Executive Officer Mike Stock said.

The company uses the program for all of its plans, including those offered on the exchange. Participation by providers is voluntary but "strongly encouraged," he said.

Blue Cross' average cost for a knee or hip replacement fell 1.4 percent from 2012-13, she said. The cost of other episodes increased slightly but by less than the company had anticipated, Greenwood said.

"Overall we are pleased with the program and with the resulting discussions about the variation in cost and quality for similar services provided in different sites," she said.

Blue Cross counsels providers at risk of being penalized and gives them information "to help them understand what aspects of their practice are resulting in higher costs and what they might do to modify those outcomes," she said.

The state Medicaid program announced its first round of penalties and bonuses under the episodes program last year.

In June, Medicaid records indicated, for example, that 21 providers received bonuses from Medicaid for the maternity care episode totaling almost $135,000, and 14 received penalties totaling more than $42,000.

The Center for Health Improvement report says Blue Cross found 64 doctors and nurse midwives to have a commendable average cost for delivering babies in 2013. The average cost of 41 providers was considered "acceptable," and that of 29 was unacceptable, the report says.

In 2012, 92 providers had a commendable average cost, 30 had acceptable costs and 12 had unacceptable costs, the report says.

The 2012 cost of the episodes was used as a reference point but was not used to award bonuses or assess penalties.

The state Medicaid program in 2013 found 20 maternity-care providers had a commendable average cost, 70 had an acceptable cost and six had an unacceptable cost, according to the report.

In 2012, 10 Medicaid providers had commendable costs, 73 had acceptable costs and 13 had unacceptable costs, according to the report.

In an email, Arkansas Department of Human Services spokesman Kate Luck said penalties and bonuses are revised as additional claims are submitted.

In the case of the maternity-care episode, the initial results were revised after it was discovered that some episodes included charges from a state Department of Health program for new mothers that isn't available in six Northwest Arkansas counties, Luck said.

For knee and hip replacements, Blue Cross found 17 surgeons had a commendable average cost in 2013 compared with 12 the previous year. Seven had acceptable costs compared with 13 the prior year, and three had unacceptable costs in 2013 compared with two the year before.

Three surgeons who performed knee and hip replacements were subject to Medicaid's program. One had a commendable average cost in 2013, and the other two had acceptable costs, according to the report. In 2012, two surgeons had commendable costs, and one had an acceptable average cost.

The Medicaid program reported in June that two surgeons had received bonuses from the episode totaling $2,692.83.

For congestive heart failure, two hospitals were subject to Blue Cross' program in 2013. One had costs that were considered commendable; the other had acceptable costs. Both hospitals had commendable costs in 2012, according to the report.

In the Medicaid program, 10 hospitals had commendable costs and three had acceptable costs in 2013. In 2012, nine had commendable costs and four had acceptable costs.

Of doctors who treated nonspecific upper-respiratory infections, the Medicaid program found that 95 had commendable costs, 264 had acceptable costs and 100 had unacceptable costs in 2013, according to the report.

For the treatment of sore throats, 54 doctors had commendable costs, 334 had acceptable costs and 116 had unacceptable costs.

For sinus infections, 160 doctors had commendable costs, 117 had acceptable costs and 54 had unacceptable costs.

Information released on the episode in February 2014 indicated that 40 percent of the doctors subject to the program were eligible for bonuses for the three types of upper-respiratory infections totaling more than $69,000, while 22 percent were subject to penalties totaling more than $92,000.

Metro on 02/04/2015

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