Highmark forms firm for after-hospital care company

Aug. 10--Highmark Health will soon begin paying for the quality of medical care provided outside the hospital, taking on a difficult issue that has frustrated health care reform nationwide.

The Pittsburgh health care insurer and hospital network on Wednesday announced the creation of a for-profit company that it expects will manage the full range of services for members after a hospital stay -- setting standards and even steering patients away from operations that don't meet them.

Starting in January, HM Home and Community Services LLC will create a preferred network of skilled and home care agencies that will be required to meet quality of care metrics and low hospital readmission rates.

"This is not meant to be anything but collaborative," said Brian Holzer, who has been named president of the new company. "The goal is to build high-performance networks, not narrow networks."

Dr. Holzer will continue to oversee post-acute care operations at Highmark's Allegheny Health Network, which he joined in 2013. The new company also will be staffed by other Highmark employees.

Medicare spent $17.9 billion for post-acute care in 2014, down slightly from $18 billion in 2013. Studies have shown wide cost variations for "no apparent reason" for patients with the same medical problems when they receive followup care after leaving the hospital, according to a 2013 Kaiser Health News report.

Highmark, which operates one of the biggest home care services in the region, dropped fewer than 20 poor-performing nursing homes from its network last year. About the same number are expected to be cut this year, Dr. Holzer said.

Nursing homes -- and later, home care agencies -- will be judged on quality criteria that was developed by Nashville, Tenn.-based NaviHealth, which has been working with Highmark for a couple years.

High-scoring agencies will be rewarded with higher Highmark reimbursement, creating an incentive to participate, Dr. Holzer said.

An early mark of NaviHealth's success: the average length of stay in a skilled care facility for Highmark members fell to an average of 18 days from about 30 days without increasing the number of patients returning to the hospital within a month of discharge.

Highmark's 4.5 million health insurance members in Pennsylvania will be the first to experience the change, followed by West Virginia and Delaware, where the Blues affiliate also has a dominant market share. In addition, the company will contract with other entities to hold down costs while improving post-acute care.

HM Home has about 15 employees, and is expected to increase to 30 to 40 employees by the end of next year, Dr. Holzer said.

Highmark recently ranked the top 180 skilled nursing homes in the Pittsburgh insurer's network, then met with home administrators to discuss the results.

Despite early pushback, Dr. Holzer the response has been mainly positive.

LeadingAge PA President and CEO Ron Barth said Wednesday that he was not familiar with HM Home. LeadingAge is a Harrisburg area-based trade group representing post-acute care providers.

In announcing the branding initiative, Highmark is taking on a challenge that has dogged health care reform.

The Affordable Care Act goal of paying doctors based on quality of care provided rather than number of procedures performed has been difficult to achieve, according to Jen Johnson, partner at Dallas, Texas-based consultant VMG Health, who estimated that it may be 10 years before the goal is fully realized. Meanwhile, doctors are mostly paid by the number of procedures they perform, which can encourage doing more procedures that may not improve results.

The big hitch has been coming up with a definition for quality of care, Ms. Johnson and other experts say.

Nevertheless, shifting reimbursement to reward quality of care instead of volume is needed, according to Mike Blackwood, principal of Adams Township-based Blackwood Healthcare Consulting LLC.

"It's innovative," said Mr. Blackwood, the retired CEO of Medicaid health insurer Gateway Health. "It's changing the paradigm to get away from production."

Kris B. Mamula:[email protected], or 412-263-1699

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