"Hospitals send a data feed to Premier on a monthly basis and Premier scores them on quality metrics, then sends a scorecard back to the hospitals. Every single metric is transparent—every hospital gets to see how every other hospital performs on the metrics," Raethel says.
That kind of open scrutiny tends to motivate poor-performing hospitals, he says, citing one hospital in particular that added resources to make improvements to its metrics after languishing at the bottom of the list for the first 18 months of the program.
"Part of it was simply that the hospital has a very high proportion of government-pay patients and [it is] running a lean shop, but even [so, it still has] a responsibility to provide high-quality care," he says. "Not only were they not performing well in terms of the metrics, they were also earning at the lower end of their potential so they were leaving money on the table. The primary incentive is about improving patient care, but there is a financial incentive for doing it."
"We are absolutely convinced that this is the right direction to take," Raethel adds. "We want these hospitals to do very well on these metrics because we believe by doing that, they are improving the quality of care that our members receive."
While HMSA initially set a target of 15% of hospital reimbursement tied to outcomes, based on the success of the accountable care agreement and the collaboration with Premier QUEST, HMSA plans to roll out in 2014 the next generation of the ACA, in which up to 30% of reimbursements are tied to outcomes.
Hawai'i Pacific Health, a 564-licensed-bed system based in Honolulu, is the first hospital to enroll in the program.
"The leadership in both organizations have a similar vision for a sustainable model for healthcare in Hawaii and have been able to reach an agreement that provides support for mutual success under this vision," says David Okabe, Hawai'i Pacific's executive vice president, CFO, and treasurer.
Under the ACA, Hawai'i Pacific will benefit financially from what Okabe calls "a three-legged stool" of payment criteria: patient management services, shared savings and shared risk related to actual medical cost trends, and the quality of healthcare services provided.