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"The Growing Consensus for Payment Reform" by Andrew Dreyfus

In a front page story in the New York Times this week, reporter Kevin Sack suggested that the Commonwealth is facing “a day of reckoning.” We must confront our health cost problem, the article suggested, with the same vision and leadership that led us to embrace the challenge of coverage reform three years ago.

As contributors to this blog have written, there is little debate that the cost problem is urgent and threatens the sustainability of our pioneering coverage law. And most experts point to the same root causes of our rising spending: the growing incidence of chronic disease, the rapid introduction and spread of new medical technology, and the explicit incentives and expectations in our system that more care equates to better care – which can lead to unnecessary and even harmful treatment.

Conventional wisdom suggests that the consensus then breaks down: we might agree on the sources of the cost problem, but we will never agree on solutions. Some argue that it just too complicated and that competing interest groups are unwilling to compromise. We forget however, that this same skepticism plagued our early debate on coverage.

We couldn’t agree on how best to finance expansion. We were unsure how to balance employer and individual responsibility. We questioned the proper role of government in a private insurance market and health delivery system. Yet we found common ground and created what the New York Times article called “perhaps the boldest health care experiment in American history.”

And there are early signs of a consensus emerging again. I serve on the state’s Special Commission on the Health Care Payment System which is charged with developing new payment models to address the rising cost of health care in the state. At its first meeting, the group developed a set of guiding principles. I expected that arriving at a consensus would be difficult, but we reached agreement fairly quickly – that we must fundamentally change the current fee-for-service reimbursement system.

At Blue Cross Blue Shield of Massachusetts, we believe that paying for quality and patient outcomes is the best way to move forward. To accomplish this, we are offering physicians and hospitals a new approach to payment – the Alternative Quality Contract (AQC). The AQC is a new model that combines a global payment with performance-based incentives to reward physicians based on nationally accepted measures of quality, effectiveness, and patient experience. In fact, my colleagues from Blue Cross Blue Shield of Massachusetts, Patrick Gilligan and Dana Safran, presented the framework of the Alternative Quality Contract (AQC) last week to the Health Care Payment Commission.

The momentum for participation in the AQC is growing quickly. Several physician groups have signed the AQC over the past three months, and health leaders who have been skeptical in the past are now asking to participate. Last week, I received a call from a CEO of a Massachusetts hospital who had expressed skepticism of the AQC last year. When we spoke, he told me he now sees the value of the AQC – in part because it is the only comprehensive alternative in the state to the fee-for-service system of today.

He and other leaders tell me they see both public and private payers moving toward some form of bundled payment– and those provider organizations that participate early and learn from it today will be in a better position tomorrow.

One thing is certain, as Kevin Sack’s article notes, if we’re able to solve the cost problem, “…health policy experts argue that it would be as audacious an achievement as universal coverage.”

It’s time for us to be audacious again – this time in addressing the way we pay for care.

Andrew Dreyfus is Executive Vice President for Health Care Services at Blue Cross Blue Shield of Massachusetts and former President of the Blue Cross Blue Shield of Massachusetts Foundation

This program aired on March 19, 2009. The audio for this program is not available.

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