CDH Joins Alternative Quality Contract System with BCBS

NORTHAMPTON — Blue Cross Blue Shield of Massachusetts (BCBSMA) announced that Cooley Dickinson Hospital (CDH) and the Cooley Dickinson Physician Hospital Organization (CDPHO has joined BCBSMA’s innovative payment system known as the Alternative Quality Contract (AQC). Introduced in 2009, the AQC is a modified global payment model designed to slow the growth in health care spending and improve patient care by helping physicians and hospitals emphasize quality and value over volume.

Cooley Dickinson Hospital and CDPHO are adopting the newest version of the Alternative Quality Contract, known as AQC 2.0, which will require them to outperform their region in managing the growth in health care spending or risk giving back some of the payments they receive.

“By joining the AQC, Cooley Dickinson Physician Hospital Organization and Cooley Dickinson Hospital have committed to work with us in a deeper, more collaborative way to lower the cost and improve the quality of the care they deliver to our members in the Northampton area,” said Andrew Dreyfus, BCBSMA’s president and CEO. “We are pleased that the hospital has also agreed to reduce the prices they charge for their services, further moderating the cost of care for our employer customers and members.”

CDPHO, with 66 primary-care physicians and 160 specialists participating in this agreement, is one of the largest physician-hospital organizations in Western Mass. to join the AQC. The agreement will cover approximately 8,900 BCBSMA members.

Norman Stachelek Jr., president and executive director of the organization, said that “CDPHO is pleased to be participating in an innovative, long-term arrangement that recognizes a focus on high-quality and cost-effective care. Coordinating care between our physicians and CDH has proven to result in better outcomes for the community. We look forward to participating with Blue Cross in the AQC to further our ongoing efforts.”

Cooley Dickinson Hospital’s improvement in costs (through its rate reduction), combined with the quality of care provided (as measured by nationally accepted quality measures), means that the hospital will now be designated as a high-value option in the Western Mass. region. BCBSMA members with a Blue Options tiered network plan design, or a HMO or PPO plan that includes the Hospital Choice Cost-Sharing (HCCS) benefit feature, will now pay less out-of-pocket when they seek care at CDH. Members in these types of plans pay less when they seek care from high-quality, lower-cost providers.

“Cooley Dickinson has always put our resources into keeping our community healthy, avoiding unnecessary hospitalizations, even though the historic fee-for-service payment systems penalized us for our prevention efforts. We are pleased to be moving to the AQC model of care so that Cooley Dickinson and our physicians can be rewarded, rather than penalized, for doing the right thing for patients,” said Craig Melin, CDH’s president and CEO. “We look forward to using this contract to further not just the quality of care at CDH, but also the affordability for Blue Cross members.”

Recent independent studies conducted by Harvard Medical School, published in the New England Journal of Medicine, and by Brandeis University, published in Health Affairs, found that the AQC is achieving its twin goals of improving care and slowing costs.

These studies found that, in the first year of the AQC:

  • Medical spending was nearly 2{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} lower among physicians and hospitals participating in the AQC compared with those working in traditional fee-for-service contracts. Importantly, for physicians and hospitals with no previous experience in a global payment model, spending was 6{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} lower than that of providers in traditional fee-for-service contracts;
  • Quality of care among AQC providers was significantly higher than that of non-AQC providers in the BCBSMA network, especially for adults with chronic illness and for children. Groups identified coordination of care for high-risk patients as a top priority and implemented several different initiatives to help reduce avoidable hospital admissions, readmissions, and emergency-department visits;
  • All groups identified quality improvement for patients as a top priority because the AQC offers much greater financial rewards for high quality than typical pay-for-performance programs; and
  • The first year of the AQC was a financial success for participating medical groups.