Last spring, Atul Gawande, M.D., became chief executive officer of an unnamed initiative that will cover the health costs of 1.2 million employees and family members of Amazon, Berkshire Hathaway and J.P. Morgan. Shortly after being named CEO, Gawande said the initiative would aim to eliminate three kinds of waste in the health care system: administrative costs, high prices, and inappropriate use of health care services, as Zachary Tracer reported for Bloomberg News.
Last week, we got a clue about how Gawande might approach these three challenges when the initiative hired Dana Gelb Safran, Sc.D., from Blue Cross Blue Shield of Massachusetts. At BCBS, Safran has served as chief performance measurement and improvement officer and senior vice president, enterprise analytics and has been instrumental in developing and running BCBS’ innovative Alternative Quality Contract with physicians and hospitals throughout the state. When it was launched in 2009, the goal of the AQC was to improve quality and slow spending growth. Since then, it has had modest success in meeting both goals.
At CNBC, Christina Farr reported on Safran’s hiring, saying she specializes in analyzing data to improve patient health and will start early next year with title “head of measurement.” In addition to her roles at BCBS, Safran also is an associate professor at the Clinical and Translational Science Institute at Tufts University.
Hiring Safran suggested data will drive health care decision-making for the employees of Amazon Berkshire Hathaway and J.P. Morgan, Farr wrote. What’s more, she added, “Having an exec who worked at a health plan could also be useful if the group decides to take on traditional insurers.”
When developing the AQC, Safran and other executives at BCBS paired a global budget (meaning a total amount that it intended to pay per patient) with 64 quality metrics and aimed to give physicians and hospitals enough of a financial incentive to improve quality while containing costs. In its first years, BCBS designed annual increases to be at about the same level as general inflation. Using historical claims data, BCBS set the global budget to cover all medical services for a year and adjusted that budget annually based on each patient’s health status.
As Safran and colleagues explained in an article in Health Affairs last year, the AQC’s global budget uses shared savings and shared financial risk. “It rewards physicians for savings below the risk-adjusted budget (shared savings) but also requires them to share in deficits with BCBS of Massachusetts for spending above the budget (shared risk),” they wrote.
“Previous analyses have found decreases in medical spending on claims and improved quality performance associated with the contract relative to control, with net savings appearing in the fourth year,” they added. We wrote about that analysis in this blog post, and last month, Priyanka Dayal McCluskey, a health care reporter for The Boston Globe, wrote about how BCBS is tweaking the AQC by paying hospitals to admit fewer patients.