Partnering with payers to improvesurgical quality: The Michigan planNancy J. O. Birkmeyer, PhD,a David Share, MD, MPH,c Darrell A. Campbell Jr, MD,a Richard L.Prager, MD,a Mauro Moscucci, MD,b and John D. Birkmeyer, MD,a Ann Arbor and Detroit, Mich

From the Michigan Surgical Collaborative for Outcomes Research and Evaluation, Departments of Surgerya

and Medicine,b University of Michigan, Ann Arbor, and Blue Cross/Blue Shield of Michigan,c Detroit

WITH GROWING RECOGNITION that surgical outcomesvary widely across providers,1-4 employers andpayers are becoming more actively involved in strat-egies for improving the quality of surgical care.5

Employers have obvious interests in minimizingproductivity losses from employees undergoingsurgical procedures. With ever-rising health carecosts, purchasers and payers are also increasinglyaware of the financial implications of surgical com-plications. According to one recent analysis, majorcomplications add over $11,000 to the baselinecost of a surgical procedure.6

Payers are using a variety of tactics to improvesurgical outcomes. Some are focusing on selectivereferral strategies. For example, the LeapfrogGroup5,7,8 is using public reporting, selective con-tracting, and a variety of financial incentives to steerpatients to hospitals or surgeons likely to have thebest results. However, many payers are shifting theirfocus to ‘‘pay-for-performance’’ (P4P) strategies,using direct financial incentives to motivate qualityimprovement. With P4P, hospitals are rewardedfor meeting specific performance benchmarks, asdetermined by process of care or direct outcomemeasures. For example, in a new P4P initiativelaunched by the Center for Medicare and MedicaidServices, hospitals scoring in the top decile of per-formance (based on a composite of 8 quality indica-tors) for coronary artery bypass will receive a 2%bonus on their Medicare payments for this proce-dure.9,10 Similarly, both Centers for Medicare &Medicaid Services (CMS) and many private payersare implementing P4P plans focused on the appro-priate use of perioperative antibiotics.

Accepted for publication June 24, 2005.

Reprint requests: John D. Birkmeyer, MD, 2920 TaubmanCenter, 1500 East Medical Center Drive, Ann Arbor, MI 48109.

Surgery 2005;138:815-20.

0039-6060/$ - see front matter

� 2005 Mosby, Inc. All rights reserved.

doi:10.1016/j.surg.2005.06.037

Although interest in P4P continues to gain mo-mentum, there are several reasons for pessimismabout the ultimate effectiveness of these strategies.First, as currently formulated, bonuses in P4P plansare too small to motivate major infrastructureupgrades (eg, computerized physician order entrysystems, intensive care unit physician staffing).Second, current P4P programs in surgery are un-likely to change behavior because they go to hospi-tals, not surgeon decision makers. Third, P4P plansare limited by inherent problems in measuringsurgical performance. Direct outcomes measuresare flawed by sample size problems,11 as well asthe lack of a clinical data infrastructure on whichto track provider outcomes with appropriate riskadjustment.5 Although easier to measure, processmeasures (eg, prophylactic antibiotic use) oftenrelate to secondary outcomes and account for littleof observed variation in provider outcomes. Finally,in rewarding some providers while (at least indi-rectly) punishing others, someworry that P4P createsa competitive environment among hospitals that ulti-mately hinders meaningful quality improvement.

In this report, we describe a more collaborativeand potentially more effective ‘‘pay-for-participation’’model for improving surgical quality. Funded bya single large private payer, this initiative aims toimprove the safety and effectiveness of cardiacsurgery, bariatric surgery, and other major generaland vascular procedures in Michigan.

OVERVIEW

Blue Cross Blue Shield of Michigan and BlueCare Network (BCBSM) have decided recently tofund statewide surgical outcomes registries andquality improvement programs in cardiac, bariatric,and other areas of general and vascular surgery. The3 projects are ‘‘pay-for-participation’’ rather than‘‘pay-for-performance’’ incentive programs. Thus,hospitals (and their physician groups) are compen-sated for their data collection efforts and participa-tion in quality improvement activities—regardless

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of their individual performance and how they rankrelative to other hospitals. Success of the programswill be judged primarily according to improvementin statewide performance measures.

The 3 programs are patterned after the BlueCross and Blue Shield of Michigan CardiovascularConsortium (BMC2).12 Launched in 1997, BMC2

maintains a statewide clinical outcomes registry ofpatients undergoing percutaneous coronary inter-vention (PCI). The registry now includes datafrom more than 65,000 consecutive patients from18 participating hospitals in Michigan. Quarterlymeetings of the BMC2 participants coincide withthe generation of reports providing informationon risk-adjusted outcomes to each hospital and indi-vidual operator. Links between process of care andoutcomes are examined systematically to identifybest practices, which are then implemented region-wide. For example, such analyses have promptedgreater use of preprocedure aspirin and glycopro-tein IIb/IIa blockers and lower use of postproce-dure heparin and contrast media. These changesin practice have resulted in significant reductionsin rates of nephropathy requiring dialysis, strokeor transient ischemic attack, and in-hospital deathafter PCI.13

Based on its experiences with PCI, BCBSMdecided to extend this model to other common,relatively high-risk surgical procedures. In devel-oping and funding new improvement-orientedclinical registries, it established several key ele-ments and guiding principles.

Rigorous and efficient systems for data collec-tion. Data should be collected according to clearand unambiguous coding rules and definitions toensure standardized measurement. These defini-tions should conform to established norms andconventions whenever possible to enhance compa-rability with existing literature. For cost efficiencydata collection should be limited to the minimumset of data elements required to assess and improvethe quality of care. These elements should includedata on the processes and outcomes of care as wellas patient characteristics necessary for risk adjust-ment. Data collection instruments should have theflexibility to accommodate new evidence, changesin health care delivery, and technologic innova-tions. Finally, data completeness and accuracyshould be ensured with multitiered data auditing.

Explicit platform for quality improvement. Pro-jects should go beyond data collection and perfor-mance feedback—they should have an explicitmechanism for guiding quality improvement activ-ities. Toward this end, each site is required todesignate one or more clinical champions and a

coordinator for the project for whom participationin collaborative meetings (held 2 to 4 times peryear depending on the project) is mandatory. Atthese meetings, outcomes that vary across hospitalsare flagged as potential opportunities for improve-ment. Relationships between outcomes and mea-sured processes of care are examined empiricallyto identify potential interventions for quality im-provement. Participants agree on a limited num-ber of such interventions to implement withintheir institutions and commit at subsequent meet-ings to assess their effects and how they might besubsequently refined or modified.

Data confidentiality and trust. Data collected inthese projects should not be used to reward orpunish the performance of the participants but toguide collaborative quality improvement efforts.Whereas the reports allow the providers to comparetheir own performance to others individually andin aggregate, the identity of individual physiciansand hospitals is strictly protected. BCBSM requiresannual reporting of data sufficient to show thateach provider is contributing data in an accurateand timely fashion and participating in the group’squality improvement efforts. Otherwise, BCBSMrepresentatives only have access to aggregateddata sufficient to judge the effectiveness of theeffort region-wide.

SPECIFIC PROJECTS

The 3 new surgical quality improvement initia-tives target procedures for which performance isbelieved to vary widely (cardiac surgery, bariatricsurgery, and other major general and vascularprocedures). The 3 projects share common pur-poses: to foster regional collaboration between hos-pitals and surgeons, to identify variations in bothpractice and outcomes and thus opportunities forimprovement, and to implement improvement ac-tivities and evaluate their effectiveness. With eachof the 3 projects, BCBSM is funding a substantiveshare of the cost of data collection at the partici-pating sites (via supplements to established DRGpayments). It also funds centralized functions re-lated to data audit, analysis, and reporting as well asregular meetings of the participants. The partici-pating hospitals are required to designate one ormore surgeons as their ‘‘clinical champion(s),’’ aswell as a nurse or administrator coordinator. Theseindividuals are responsible for timely and accuratedata collection at their sites, for attending (inperson) quarterly quality improvement meetings,and for ensuring implementation of improve-ment efforts at the local level. Although the projectsshare many common features, they differ in many

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Table. Detailed comparison of the 3 new Blue Cross Blue Shield of Michigan and Blue Care Networkdata registry/quality improvement projects

Category Cardiac General/vascular Bariatric

Procedures Coronary artery bypass andcardiac valve procedures(;30,000 patients peryear)

Systematic sample of majorgeneral and vascularprocedures (;30,000patients per year), plusoversampling of patientsundergoing certainprocedures of interest

Bariatric surgery (;6,000patients per year)

Hospitals 30 hospitals participatingin the Michigan STS

15 relatively large hospitals 20 to 30 hospitalsperforming bariatricsurgery

Measurement platform National STS Registry American College ofSurgeons NSQIPRegistry

Registry developed for thispurpose

Data analysis/reportingcenter

Duke Clinical ResearchInstitute

University of ColoradoHealth OutcomesProgram

University of MichiganSurgical Center forOutcomes Research andEvaluation

Process of care variables Standard STS measures(IMA use, minimallyinvasive/off-pumpapproaches, valveprosthesis type, bypassand ischemic times),plus additional processof care variables

Common perioperativeprocesses (eg, antibioticuse), procedure-specificprocesses to bedetermined

Antecedent evaluation andtreatment, type/detailsof bariatric procedure,follow-up treatment

Main performancemeasures

Standard STS (operativemortality, reoperation,stroke, deep sternalwound infection, renalfailure, and prolongedventilatory support,LOS)

Standard NSQIP (specialty-specific operativemortality and morbidity,21 surgicalcomplications);procedure-specificperformance for selectedoperations

d Short term: operativemortality andcomplications

d Long term: weight loss,comorbidity resolution,need for furtherinterventions, mortality

Data verification andaudit system

Training program for data collectors and software checks for completeness, consistency,and out of range values, and site visits for data audit

QI platform Local analysis and feedback of regional process/outcome linked data, collaborativemeetings and academic support for the design, implementation, and evaluation of theconsortium’s quality improvement efforts

Annual costs $1.2 million $2.9 million $800,000

STS, Society of Thoracic Surgeons; NSQIP, National Surgical Quality Improvement Program; QI, quality improvement; IMA, internal mammaryartery; LOS, length of stay.

important respects, including the extent to whichthey build on existing regional or national efforts(Table).

Cardiac surgery. Administered by the MichiganSociety of Thoracic and Cardiovascular Surgeons,the cardiac surgery improvement project involvescardiac and thoracic surgeons from 31 hospitalsinvolved in open heart surgery. All centers andsurgeons submit data to the national cardiac sur-gery registry of the Society of Thoracic Surgery,14,15

which includes data on patient characteristics (forrisk adjustment purposes), selected processes

of care (eg, preoperative medications, operativedetails), and outcomes, including mortality, reop-eration for bleeding, sternal wound infection,stroke, and others. As with any hospital participat-ing in the STS program, hospitals and surgeons re-ceive quarterly reports summarizing their practicesand performance relative to both national andregional benchmarks.

Funding from BCBSM will add value to theMichigan STS effort in several important ways.First, it will allow for systematic data auditing toassure data accuracy and completeness (currently,

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the STS National Cardiac Database relies onvoluntary data submission and is not audited).Second, payer funding will allow for local analysisof the data and explorations between processof care and outcomes, thus establishing localcontrol and direction of quality improvementefforts. Finally, funds from BCBSM will providethe resources necessary for coordinated qualityimprovement activities and the expertise to guidethem.

Major general and vascular surgery. With in-volvement by the 15 largest hospitals in Michigan,this project will make use of data collection andanalysis instruments developed by the NationalSurgical Quality Improvement Program (NSQIP).Originally developed for use in Department ofVeterans Affairs’ hospitals, NSQIP is being pro-moted widely by the American College of Surgeonsfor broader adoption in the private sector. Trainednurse reviewers collect information about pa-tient characteristics and outcomes (including 21different complications) on a sample of patientsundergoing major general or vascular surgical pro-cedures. Data are transmitted electronically to anational NSQIP data coordinating center, whichgenerates regular reports on hospital performance(in the form of observed to expected ratios foroperative morbidity and mortality, overall and byspecialty).

As with the cardiac surgery project, BCBSMfunding adds value to a preexisting quality mea-surement program. It will allow Michigan surgeonsand investigators to collect 100% samples ofpatients undergoing procedures of specific inter-est, eg, surgery for colon cancer and carotid arterydisease. Funding will make it possible to collectdata on process of care variables, currently lack-ing in NSQIP. And finally, it will provide datafor local data analysis linking process to out-comes, a key requirement for meaningful qualityimprovement.

Bariatric surgery. Of the 3 projects, the bariatricsurgery project is the only one that does not buildupon a preexisting quality measurement platform.All of the hospitals performing bariatric surgeryin the state (currently 60) have been invited toparticipate. The clinical registry will include datapertaining to patient characteristics and processesof care, such as those used in selecting patientsfor surgery and technical details related to theprocedure itself. As with the other 2 projects, peri-operative morbidity and mortality will be importantmeasures of performance. However, the bariatricsurgery project will also focus on longer-term mea-sures of surgical effectiveness, including patient

weight loss, comorbidity resolution, and need forfurther interventions.

CHALLENGES FOR THE FUTURE

In many ways, Michigan is particularly fertileground for payer-sponsored quality improvementinitiatives. First, Michigan is home to several verylarge employers (including those in the auto indus-try) with a long history of seeking value (quality aswell as low price) for the health care that theypurchase. Second, Michigan is dominated by asingle private payer (BCBSM), which controls ap-proximately two thirds of the state’s private healthcare market and about 50% of the market overall.Although BCBSM does not compel hospitals toparticipate in its quality improvement initiatives, itsmarket position gives it significant leverage in thisregard. It also ensures that BCBSM’s investments insurgical quality will substantially benefit patients inits own health plans. And finally, a statewide qualityimprovement project has been successful in Mich-igan before. The angioplasty improvement project(BMC2), also funded by BCBSM, has provided boththe template and evidence of effectiveness to justifysimilar ventures in other clinical areas.

Even in Michigan, however, implementing andsustaining these initiatives will be a challenge.Surgeon buy-in and collaboration is an obviousprerequisite. To date, surgeon participation in the3 programs has been enhanced by several factors.Most Michigan cardiac surgeons were already sub-mitting their outcomes data to the national STSregistry and meeting regularly (through their statesociety) to discuss their results. Transferring datacollection costs to Michigan BCBS did not requiremuch persuasion. Although there has been nosimilar network in bariatric surgery, many surgeonsin this field have been anxious about payers’efforts to limit coverage or restrict surgery to asmall number of selected providers. BCBSM, whichfunds two thirds of all bariatric surgery in the state,has not made voiced intentions in this direction.However, some bariatric surgeons were no doubtconcerned about being on the ‘‘outside’’ in theevent that BCBSM changed its coverage policies.No such leverage underlies surgeon participationin the NSQIP-based program in other areas ofmajor and general surgery. Thus, surgeon partici-pation may be attributable to genuine interests in‘‘doing the right thing,’’ particularly if data collec-tion costs are externally subsidized.

Maintaining surgeon participation long termwill require trust among providers and betweenproviders and payers. Because surgeons themselveshave ownership of the performance measurement

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process, trust is probably less of a problem in payfor participation than pay for performance. How-ever, hospitals and surgeons with relatively poorperformance may still worry that their better-performing counterparts will advertise these datato their competitive advantage. They may also besuspicious that payers will change the rules andbegin recognizing and rewarding performance. Inaddition to contractual safeguards in this regard,maintaining trust will require both diplomacy andrelationship building as the projects mature.

Another challenge will be ongoing funding.BCBSM investment in the 3 surgical programsalone will be nearly $5 million annually. This levelof funding will only continue if BCBSM—and theirpurchaser clients—see a tangible return on invest-ment. At a minimum, programs will need to showsubstantial improvements in patient outcomes andthus greater value for purchasers. Evidence oflower costs as a result of lower surgical complica-tion rates would further strengthen the businesscase for quality.

And finally, these programs will no doubt facepressures from purchasers and patients who wantto see provider-specific performance data. Thereremains considerable debate about whether publicreporting of performance data accelerates orhinders quality improvement activities.16-19 Propo-nents argue that patients have a basic right to thisinformation and that public accountability addsmotivation for change and ultimately greaterimprovements.20,21 Opponents counter that publicreporting has little demonstrable effect on patientdecision making and that it may actually inducecounterproductive behaviors by hospitals and pro-viders (eg, surgeons avoiding high-risk patients).22,23

Although both the benefits and harms are likelyoverstated, the strong feelings surrounding the is-sue of public reporting are not. Many purchasersand patients—who ultimately pay the bill for theseactivities—will likely want to see the data. However,they may be satisfied by evidence that qualityimprovement has successfully reduced variation inperformance among hospitals and surgeons.

CONCLUSIONS

Pay for performance programs hope to redresspast failures of the US health care financing systemto provide adequate incentives for the provisionof high-quality care. Although few would disagreewith the underlying goals, the competitive structureof many pay for performance initiatives may ulti-mately impede meaningful quality improvement.Although the comparative effectiveness of pay forparticipation models has yet to be established, one

large payer inMichigan is betting that collaborationwill be more effective than competition in improv-ing surgical quality.

REFERENCES

1. Birkmeyer J, Stukel T, Siewers A, Goodney P, Wennberg D,Lucas F. Surgeon volume and operative mortality in theUnited States. N Engl J Med 2004;349:2117-27.

2. Birkmeyer J, Siewers A, Finlayson E, et al. Hospital volumeand surgical mortality in the United States. N Engl J Med2002;346:1128-37.

3. Hannan E, Kilburn HJ, O’Donnell J, Lukacik G, Shields E.Adult open heart surgery in New York State. An analysis ofrisk factors and hospital mortality rates. JAMA 1991;264:2768-74.

4. O’Connor G, Plume S, Olmstead E, et al. A regional pro-spective study of in-hospital mortality associated withcoronary artery bypass grafting. The Northern New Eng-land Cardiovascular Disease Study Group. JAMA 1991;266:803-9.

5. Galvin R. Large employers’ new strategies in health care.N Engl J Med 2002;347:939-43.

6. Dimick J, Chen S, Taheri P, Henderson W, Khuri S,Campbell D. Hospital costs associated with surgical com-plications: a report from the Private-sector National Surgi-cal Quality Improvement Program. J Am Coll Surg 2004;199:531-7.

7. The Leapfrog Group. Rewarding higher standards forpatient safety. Leapfrog Fact Sheet. 2005. Available from:http://www.leapfroggroup.org.

8. Milstein A, Galvin R, Delbanco S, Salber P, Buck CJ. Improv-ing the safety of health care: The Leapfrog Initiative. EffectClin Pract 2000;4:94.

9. Rewarding superior quality care: The Premier HospitalQuality Incentive Demonstration. Centers for Medicare &Medicaid Services Fact Sheet. United States Departmentof Health & Human Services, 2004. Available from:http://www.hhs.gov/news.

10. Darr K. The Centers for Medicare and Medicaid Servicesproposal to pay for performance. Hospital Topics 2003;81:30-2.

11. Dimick J, Welch H, Birkmeyer J. Surgical mortality as an in-dicator of hospital quality: the problems with small samplesize. JAMA 2004;292:847-51.

12. Moscucci M, Share D, Kline-Rogers E, et al. The BlueCross Blue Shield of Michigan Cardiovascular Consortium(BMC2) collaborative quality improvement initiative in per-cutaneous coronary interventions. J Int Cardiol 2002;15:381-6.

13. Moscucci M, Rogers E, Montoye C, et al. The effect of acontinuous quality improvement initiative on practice vari-ations and outcomes of contemporary percutaneous coro-nary interventions. Circulation 2005; in press.

14. Ferguson TJ, Dziuban SJ, Edwards F, et al. The STS NationalDatabase: current changes and challenges for the newmillennium. Committee to establish a national database incardiothoracic surgery. The Society of Thoracic Surgeons.Ann Thorac Surg 2000;69:680-91.

15. Grover F. The Society of Thoracic Surgeons National Data-base: current status and future directions. Ann Thorac Surg1999;68:367-73.

16. Marshall M, Shekelle P, Leatherman S, Brook R. The publicrelease of performance data: what do we expect to gain?A review of the evidence. JAMA 2000;283:1866-74.

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17. Lee T, Meyer G, Brennan T. A middle ground on publicaccountability. N Engl J Med 2004;350:2409-12.

18. Epstein A. Public release of performance data: a progressreport from the front. JAMA 2000;283:1884-6.

19. Epstein A. Performance reports on quality: prototypes,problems, and prospects. N Engl J Med 1995;333:57-61.

20. Dziuban SJ, McIlduff J, Miller S, Dal Col R. How a New Yorkcardiac surgery program uses outcomes data. Ann ThoracSurg 1994;58:1871-6.

Invited commentary: Tthis a true partnership

L. D. Britt, MD, MPH, Norfolk, Va

From Department of Surgery Eastern Virginia M

THERE is no reasonable challenge to the factthat the rising cost of health care is, quitefrankly, unsustainable. The recent Instituteof Medicine report highlighting the stagger-ing number of medical errors contributingto deaths (up to 98,000 deaths per year)and the associated high morbidity or compli-cation rate resulting from medical mistakesprovide the driving incentive for all stake-holders to rigorously revamp the currenthealth care model. With each major compli-cation adding thousands of dollars to thebaseline cost of a medical intervention, focus-ing on optimal performance strategies (in-cluding pay-for-performance initiatives) is alogical approach. The authors propose aplan (the Michigan Plan) which is, ostensibly,a more collaborative and effective partner-ship between the provider and a single largepayer with an emphasis on improving thequality of care. They highlight ‘‘new surgicalquality improvement initiatives’’ targeted forprocedures for which performance is be-lieved to vary widely (eg, cardiac surgery,bariatric surgery, and other major generaland vascular procedures). Although this isa laudable effort by the authors, they pro-vide no more than a vague description ornarrative.

Unfortunately, the following key questionshave not been addressed:

21. Chassin M, Hannan E, DeBuono B. Benefits and hazards ofreporting medical outcomes publicly. N Engl J Med 1996;334:394-8.

22. Omoigui N, Miller D, Brown K, et al. Outmigration for cor-onary bypass surgery in an era of public dissemination ofclinical outcomes. Circulation 1996;93:27-33.

23. Narins C, Dozier A, Ling F, Zareba W. The influenceof public reporting of outcome data on medical decisionmaking by physicians. Arch Intern Med 2005;165:83-7.

he Michigan Plan–Is?

edical School

d Are the criteria proposedby the authors basedon

clinical outcomes and evidence-basedmedicine?

d Who actually decides on the criteria to be used?

d Considering that, on average, it takes physicians

approximately a decade to actually implement

new clinical methodologies, is the effectiveness

(resulting in change of behavior) owing to new

clinical techniques and treatment modalities or

financial incentives?

d Are the incentives at odds, given the difference in

payment methodologies (DRG vs discount—fee

for service)?d Are the initiatives proposed by the authors estab-

lishing cost-effective care via clinical protocol or

are they selecting physicians who already had

cost-effective outcomes?

Before the Michigan Plan (or any similarproposal) is embraced as a useful template toaddress how best to collaborate or to establisheffective partnership between the payers andprovider, the above-mentioned questionsmust be answered. Also, the sobering factthat cannot be ignored is the realization thatnone of the existing plans adequately addressthe exponential growth of the uninsured.With approximately a third of this nation’spopulation having either no health care in-surance or being, essentially ‘‘underinsured,’’this will inevitably be the proverbial straw thatwill break the camel’s back.