New Harvard Piligrim /Partners Deal Offers Hospitals Quality-Based Incentives

In a "twist on traditional managed care contracts," Harvard Pilgrim Health Care, one of Massachusetts' largest managed care companies, and Partners HealthCare System Inc., one of the state's largest hospital systems, have signed a four-year agreement that will "offer financial incentives if Partners meets certain quality-of-care measures," the Boston Herald reports. Under the deal, Partners hospitals will receive financial incentives for closely following what are considered to be the "best practices in caring for patients" as well as meeting "patient safety guidelines" (Powell, Boston Herald, 6/20). For example, Partners will receive incentives for providing people with diabetes with routine eye exams and tests for kidney disease. The hospital system will also receive incentives to reduce medical errors during doctors' visits and outpatient hospital procedures. Quality of care will be measured using data from Partners and Harvard Pilgrim (Kowalczyk, Boston Globe, 6/20). Incentives will be based on the performance of the entire system instead of individual physician groups. Dr. Samuel Their, CEO of Partners, said, "(Harvard Pilgrim) is incenting people to take better care of their patients. This way every doctor will care about what happens to every patient."

The High Cost of Quality
The Herald reports that improving quality of care will not "come cheap." Typically, managed care contracts provide incentives to physicians and hospitals who can cut costs (Boston Herald, 6/20) In fact, this new contract will still contain incentives for Partners to reduce pharmacy costs and the length of hospital stays (Boston Globe, 6/20). But Harvard Pilgrim has agreed to increase payments to Partners, with the hospital system to receive 25% to 30% more for services at the end of the four-year deal. Harvard Pilgrim CEO Charles Baker said the increased payments have already been built in to next year's rates, which are expected to increase between 10% and 15%. Baker added that the increases are "in line" with agreements the managed care company has with other hospital systems. The new contract must be approved by state Attorney General Tom Reilly, who said in a statement yesterday, "This agreement is good news for Harvard Pilgrim's plan members who will continue to have access to some of the finest health care facilities in this area" (Boston Herald, 6/20).