Purchasers of Health Care: Roles of Employers and Health Plans in the U.S. Health Care System

You are the administrator of a large, multispecialty medical group (140 physicians). Approximately 70 percent of your patients are insured by Blue Cross/Blue Shield (BCBS) or by large employers that contract with BCBS to administer their health benefits plans. Many of these large employers are strong supporters of greater "provider accountability" in health care, especially with respect to the quality of care provided by physician groups caring for employees who have chronic illnesses, such as diabetes or asthma. When checking your email one last time before going to bed, you discover that BCBS plans to use its claims data to construct performance measures for all primary care physicians in its network including your 50 primary care physicians. Going forward, it plans to "tier" primary care physicians in the health plan's network, classifying them as one star, two star, or three star providers, which three stars indicating that a physicians is in the top third of all primary care physicians in the BCBS network. Initially, there will be no financial incentives in the plan design to reward plan members for choosing a three star physician, but BCBS has hinted that it is considering doing so in the future.

1. Your first reaction is to be quite upset by this news. You compose a brief email that evening that you send to the BCBS provider network manager explaining the reasons for your concern. The main points you make in your email are:

2. The next morning, as you are preparing to go to work, you begin to have second thoughts about the email you sent to BCBS. Perhaps you should have been more positive - after all, BCBS accounts for most of your revenues. As a result, the first thing you do when you arrive at your office is to compose a second email to the network manager in which you make several hopefully helpful suggestions concerning steps that BCBS could take to make its "performance-based" network tiering plan more acceptable to your medical group. The suggestions you make are:

Students should be able to:

• Describe and contrast different approaches to performance measurement.

• Discuss strengths and weaknesses of these approaches.

• Discuss the role of risk adjustment techniques in measure construction and how they are applied.

• Discuss different alternatives for attributing patients to providers for measurement purposes

• Discuss the nature of the contracting process from the health plan and provider perspectives.

• Describe how provider reimbursement levels are determined.

• Discuss issues pertaining to tiered provider networks.