Leapfrog Group, NJ Blues start recognition program

Hospitals to be given choice of two programs

Horizon Blue Cross Blue Shield of New Jersey (BCBSNJ), headquartered in Newark, in collaboration with The Leapfrog Group, in Washington, DC, has launched the Horizon BCBSNJ Hospital Recognition Program, offering New Jersey hospitals financial and public recognition for high-quality and effective hospital care.

Horizon BCBSNJ, reportedly the first health plan in the nation to implement a statewide hospital recognition program in collaboration with The Leapfrog Group, will offer all of its network hospitals the option of participating either in a program based on the Leapfrog Hospital Rewards Program or in a similar program created by Horizon BCBSNJ.

The Leapfrog program provides a nationally standardized methodology to assess the value of patient care by measuring performance along two dimensions — the quality of the care hospitals provide, and how effectively they deliver it. Its methodology utilizes standardized performance measures developed by the Joint Commission on Accreditation of Healthcare Organizations, the Centers for Medicare & Medicaid Services (CMS), and Leapfrog itself.

However, says William Finck, MBA, the director of physician and ancillary networks at Horizon BCBSNJ, "We recognized that there is a cost to participation in the Leapfrog program, and we did not want to force hospitals to incur a cost in order to participate."

Horizon already had its own recognition program, which included the reporting of compliance with the Joint Commission's National Patient Safety Goals and CMS' 20 core measures for disease states. "We added compliance with the IHI's 100,000 Lives campaign and some patient satisfaction and administrative measures," says Finck.

"We aim to catalyze change, and in Horizon we've found a willing partner," adds Suzanne Delbanco, PhD, chief executive officer of The Leapfrog Group. "The significance of this partnership is that we are working together from the 'buy' side of the market to create a more sustainable and more potent pay-for-performance program than most of what's out there."

Part of the innovation that comes with Hospital Rewards, she continues, is that it is not entirely based on purchasers or payers needing to put all 'new' money on table. "It's not like new funds have to be found to create incentives or rewards," she explains. "Instead, much of it is paid out from the savings that occur as the hospitals improve. That's a shift from what the typical pay-for-performance program is designed to do."

Recognizing improvement

Horizon BCBSNJ had been producing its report based on CMS core measures and JCAHO safety goals for the past two years, Finck relates. "Internally, we were trying to determine whether it was having any effect," he shares. "What we were delivering to the individuals hospitals was, 'Here's how you compare to the network.' We felt we should develop some form of recognition to go along with the reporting."

As they looked around, Horizon ended up with Leapfrog. "In the areas of heart attack/aspirin on arrival and discharge and how much more important one was versus the other, Leapfrog had done some actuarial work," he explains. "In addition, from the perspective of hospital participants, this would no longer be 'Horizon's program.' These are nationally valid measurements, actuarially proven, that show improvements in outcome based on financial and public recognition."

"What this means is that when we looked for what clinical areas to focus on, we wanted to choose not only areas where there were clinical shortfalls, but also where we knew there was potential for significant improvement," Delbanco explains.

"We knew, for example, that LOS and readmission rates for these areas had that potential. When we see a lot of variation in LOS, it means that some hospitals have to figure out how to do it better and more efficiently use their resources. So, actuarially, we looked very carefully at the data in areas where we knew there were opportunities for reducing LOS and readmission rates," she says.

Clinical areas

Leapfrog has chosen five clinical areas (coronary artery bypass graft, community acquired pneumonia, percutaneous coronary intervention, acute myocardial infarction, and deliveries and newborn care) "that are significant to the private sector — either because their performance tends to change tremendously — with some hospitals performing below what we know is possible — and/or because they are known to be expensive," Delbanco observes. "By highlighting the importance of improving in these areas and creating an environment more conducive to improvement, we will see a lot of unnecessary waste being reduced."

Actuaries at Towers Perrin analyzed hospital quality and payment data to identify these areas. These five areas represent approximately 33% of admissions and 20% of inpatient expenditures for commercial payers and present significant opportunities for improvement. To measure the efficiency of resource use, Leapfrog examines severity-adjusted average length of stay and readmission rates for each of the five clinical areas.

Another thing that's unique about the program, Delbanco says, is that "It's one of the first to use efficiency measures; we will look directly at resource use. And, it's a completely open methodology, which, I would argue, is meaningful to patients. If someone wants to get care, the last thing they want to do, for example, is go to a hospital with a high readmission rate," Delbanco says.

Open evaluation process

The evaluation process itself likewise will be transparent. "Hospitals currently report to their core measure vendor for the Joint Commission and CMS," Finck notes. "The core measure vendor then sends it to Leapfrog's data aggregator — Thomson Medstat — which runs the data and returns the results. The hospital can question the results if they wish, and nothing is finalized until the hospital agrees with the data."

The hospitals then are ranked in Levels I through IV, in increments of 25%.

"The maximum a hospital can earn is between $100,000 and $200,000," says Finck. In addition, he notes, the rankings will be put on Horizon's web site. "We will report twice a year and recognize facilities once a year," he says.

Finck is convinced the program will help improve quality. "We think it will, because in order to get recognition you have to have improved your performance standard; you have to move from the current level to next," he says, adding that a hospital that is already in the top tier will be recognized if it remains there.

"But if you improve more than 10% from the previous report period, we want to say 'thank you,' and let people know what you've accomplished," he says.

(Leapfrog estimates that potential savings due to lives saved and avoided readmissions for six types of admissions for the entire Horizon patient population could amount to as much as $138 million.)

"We think that because of Leapfrog's vetting of performance standards, plus the efficiency resource component, this is a good, strong program," Finck adds. "Payers and their hospitals are not always the best of friends; during negotiations, especially, they can get antagonistic. We're trying to take that [antagonism] away."

Leapfrog is looking to establish similar partnerships in other states — and with other payers and purchasers as well, says Delbanco. "The initiative does not have to be statewide; we already have a lot of movement in the Memphis marketplace, and we are also working with a couple of national health care insurance carriers," she shares.