State launches pay-for-performance health initiative

WILLMAR -- When the state of Minnesota negotiates new contracts this fall for its publicly purchased health care programs, quality will be front and center.

WILLMAR -- When the state of Minnesota negotiates new contracts this fall for its publicly purchased health care programs, quality will be front and center.

The initiative, called QCare -- Quality Care and Rewarding Excellence -- will set specific goals and offer financial incentives to doctors and hospitals who meet certain quality standards.

State officials want it to be the first step in realigning health care reimbursement to reward quality rather than quantity.

"It's going to be, we think, transformational in the way health care is looked at," said Cal Ludeman, chairman of the Governor's Health Cabinet and acting commissioner of Minnesota Department of Human Services.

Cabinet members visited Willmar Monday to outline the initiative, which was signed in July as an executive order by Gov. Tim Pawlenty.


Pay for performance is already happening on a limited scale, most notably through the Buyers Health Care Action Group and its Bridges to Excellence program. Earlier this year, Bridges to Excellence awarded bonuses to top-performing clinics -- Affiliated Community Medical Centers among them -- in diabetes management.

This time the stakes are higher.

Minnesota's publicly funded health programs do $4 billion worth of business in the state each year. They cover about 650,000 people, or one-fifth of the state's population. They include the Medical Assistance program for the poor; MinnesotaCare, the subsidized program for people who might otherwise be uninsured; and Minnesota Advantage, the state employee health plan.

Providers who see these patients will now be asked to take a new approach.

They'll be expected to work towards specific goals -- for instance, providing optimal care to 80 percent of patients with diabetes by the year 2010.

They'll be asked to measure their results and report them. Those who are successful will be rewarded with bonus pay.

"It's ongoing. It's all the time," Ludeman said. "We're going to set the bar higher and higher and higher."

Four areas are being concentrated on: diabetes, cardiovascular disease, hospital safety, and preventive care for children and adults, such as recommended immunizations and cancer screenings.


These areas were chosen because they have identifiable quality standards, they're feasible to track and measure, and they have the potential for the largest impact on Minnesotans' health care quality and costs.

State officials estimate that such measures could save $153 million a year by better managing patient care and preventing complications and medical errors.

"We could save millions and reward high-performing providers at the same time," Ludeman said.

The state also is urging the private sector to follow suit by building similar quality goals and incentives into their health care purchasing contracts.

Cabinet members told their audience Monday that it'll take hard work to reach these goals.

One of the biggest obstacles could be the patients themselves.

Achieving an 80 percent success rate in the management of patients with diabetes will likely take "a massive, dramatic improvement in patient behavior," Ludeman said. He pointed to a recent study that found 35 percent of new prescriptions never get filled.

Affiliated Community Medical Center is ranked by the Minnesota Community Measurement program as one of the best clinics in the state at managing diabetes, but even so, there have been challenges with some patients, said Terry Tone, administrator of the regional multi-specialty clinic.


"It's just really frustrating," he said. "It only takes a few to drive up costs enormously."

In some cases, the barriers are external. Dr. Michael Morris, a family practice physician and CEO of Family Practice Medical Center, said his clinic routinely offers specialized counseling and nutrition education to help diabetes patients manage their disease.

"We encourage them and set it up for them, and three weeks later we find they didn't show," he said.

The reason: many health plans have high co-payments for patient education, or don't cover it at all, Morris said.

"You need to be paid for that coaching session," responded Minnesota Department of Health Commissioner Dianne Mandernach.

"There's enough money in the system," she said. "It's being paid for the wrong things. We're starting to shift the focus."

Mandernach said QCare can also be an opportunity for everyone in health care, from public health agencies to school nurses, to adopt a coordinated, communitywide approach to health improvement.

"It takes all of us, absolutely all of us," she said. "We all have a vested interest in it. The outcome is stronger health for every citizen in the state of Minnesota."

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