S.F. experiment aims to improve medical treatment, lower costs

Researchers long ago established that certain medical procedures are performed at dramatically different rates from place to place, and that these disparities affect the quality and cost of health care.

Now, health insurers, hospitals and government agencies from the Bay Area to Washington, D.C., are getting more aggressive about tackling variation in medical care.

The issue will surface in San Francisco with a collaboration that started this summer among Blue Shield of California and some local hospitals and physicians, aimed at better coordination of patient care for about 26,000 public employees.

The partnership is modeled after a similar one in the Sacramento region whose early efforts to rein in variation resulted in training doctors in newer medical techniques and offering patients less-invasive treatment options.

In the case of weight-loss surgeries, procedures fell in one year by 13 percent.

“When you have over-utilization, it is both a cost and quality issue,” said Paul Markovich, Blue Shield’s chief operating officer. “Hospitals are not really safe places to be. … You only want to be there if you have to be there.”

Also this summer, the Centers for Medicare & Medicaid Services (CMS) started using a new data-mining technology to detect and prevent fraud in the Medicare program, the federal health insurance program for people 65 and older.

Extreme variation in care is one pattern the technology will be looking for.

The technology uses algorithms and an analytical process to identify billing patterns that could indicate fraud and prioritize them by risk, said Peter Budetti, director of the CMS Center for Program Integrity.

“We’re focused on variation that is so out of line that it clearly indicates there’s a problem,” Budetti said. “We know all too well that variation alone does not necessarily mean bad medical care or fraud. But variation in the extreme is something we’ll be looking carefully for and at.”

There’s a lot at stake, not only for patients’ health, but for their pocketbooks.

Last year, Medicare made an estimated $48 billion in improper payments, accounting for nearly 40 percent of that year’s federal wasteful spending, according to a July report from the U.S. Government Accountability Office.

Improper payments can include payments for services that were not medically necessary and payments for fraudulent claims.

Accountable care

 In San Francisco, some health care providers and Blue Shield came together to create what’s called an accountable care organization, a network of providers who work together to closely coordinate care for their patients.

San Francisco county and school employees and retirees became part of this experiment in July by choosing Blue Shield HMO as their insurer and joining one of the participating physicians groups: Hill Physicians Medical Group and Brown & Toland Physicians.

Participating hospitals include two Catholic Healthcare West facilities, UCSF and California Pacific Medical Center.

They say the aim is to reduce costs and improve quality. All agreed not to raise members’ health care premiums, at least for the current one-year contract, and to take a financial hit if they couldn’t save enough to make up for keeping rates steady.

“We insisted the insurers and providers create this partnership to address rising health care premiums and complaints from members about a lack of coordination of care,” said Catherine Dodd, director of the San Francisco Health Service System, which negotiates benefits for the public employees.

In an earlier collaboration, initiated last January in Sacramento, Blue Shield worked with Hill Physicians and Catholic Healthcare West to coordinate care for more than 40,000 members of the California Public Employees’ Retirement System.

After one year, it was heralded as a success, resulting in $20 million in savings. Of that, $15.5 million went toward keeping the rates the same and the remainder was shared among the medical providers and Blue Shield.