Governor Pawlenty today announced a new plan to transform the health care system by paying for better performance and better outcomes. The new initiative will improve quality and control cost, according to Pawlenty.

The Governor announced QCare – Quality Care and Rewarding Excellence – a new quality standard that will be used to reward top performing providers while saving millions of dollars in health care costs.

To implement the program, Governor Pawlenty signed an executive order directing state government to apply QCare standards and align payments and incentives for all state purchased health care.

 “QCare will save money and save lives,” Governor Pawlenty said. “QCare is the next step in recognizing, reporting, and rewarding the highest quality health care in Minnesota. We need to avoid unnecessary or harmful care and deliver the right care at the right price.”

The Minnesota Department of Health estimates that if QCare standards are met, more than $153 million in health care costs will be saved annually.

QCare will transform the way health care is purchased in Minnesota by shifting focus solely on the costs charged by providers to the quality of their care. QCare identifies quality measures, sets aggressive targets for health care providers, makes measures available to the public online, and changes the payment system to reward quality rather than quantity.

The Midwest Business Group on Health, one of the nation's leading coalitions of private and public employers, estimates that 30 percent of all direct health care expenditures are the result of poor quality care.

Patient safety and care quality are more concerning with recent studies pointing to a troublesome trend. According to estimates from the Institute of Medicine, between 44,000 and 98,000 Americans – 700 to 1,600 Minnesotans - die each year from medical errors in hospitals. The New England Journal of Medicine reports that patients receive only 55 percent of the care recommended for their respective health conditions.

QCare will initially set standards for quality of care in four areas where much of Minnesota’s health care dollars are spent:
• diabetes
• hospital stays
• preventative care for adults and children
• cardiac care

In each of the health care areas, quality will be measured, reported and rewarded:
1. A recognized standard for care has been identified, measured, and targeted for improvement.
2. All measures will be publicly reported on www.minnesotahealthinfo.org, a website unveiled in 2004 by Governor Pawlenty’s Health Cabinet to provide consumers, providers and purchasers with information on health care costs and quality in Minnesota.
3. Payments to providers and benefit packages will then be aligned to quality measures, providing an incentive to increase quality and performance.

For example, diabetes in Minnesota costs $2 billion in medical expenses, disability, and lost time on the job. The prevalence of diabetes in Minnesota has increased by nearly 50 percent over the past decade and now one in ten Minnesotans has or is at high risk of developing the disease. Currently, only 6 percent of Minnesotans who are diagnosed with diabetes receive the optimal care for their condition.

The QCare standard is that by 2010, 80 percent of patients with diabetes receive optimal care that includes daily aspirin use and lowering blood sugar to less than 8 percent. Providers will be rewarded when the standards are met. For example, some pay for performance models pay providers $100 bonuses for each diabetic patient at the optimal care standard. If these QCare standards are met, there will be an estimated annual health care cost savings of approximately $66 million and a 31% reduction in the risk of complications.

“Diabetes is an epidemic that endangers us all. If you or I do not have diabetes, then it is almost certain that one of our children, parents or friends does,” said Dr. Robert Rizza, M.D. of the Mayo Clinic and former President of the American Diabetics Association. “Therefore it is far better to use our resources to optimally treat this potentially devastating disease rather than spend even larger amounts of money to treat needless complications "The Governor's efforts announced today will help improve the quality of life for diabetics in Minnesota."

The State of Minnesota will lead by example in applying QCare to all state purchased health care – now $4 billion annually – through programs such as Medical Assistance, Minnesota Care, and Minnesota Advantage - the state employee health plan. All state contracts with health plans and health care providers will contain significant new incentives and requirements for greater reporting of costs and quality of care delivered, for meeting targets and goals, for improvements in key areas, and for greater overall accountability and results.

“QCare will further transform the marketplace by using our purchasing power more effectively,” Governor Pawlenty said. “Minnesota Advantage experienced a zero percentage increase in premiums and private health insurance premiums grew less in 2005 than they have in the last eight years.”

Private sector health care purchasers and providers will also be encouraged to adopt QCare through the Smart Buy Alliance and other mechanisms. The Smart Buy Alliance is a unique public-private partnership of health care purchasers in Minnesota. Members of the Alliance include organizations that purchase health care on behalf of over 70 percent of Minnesotans, including government purchasers, large and small employers, and labor unions. One of the Alliance’s goals is to adopt uniform methods of measuring quality of care and results and to purchase health care based on those measurements.

“Health care costs are high and going higher and yet patients still experience terrible medical mistakes and errors that should never occur,” said Cal Ludeman, Acting Commissioner of the Minnesota Department of Human Services and Chair of Governor Pawlenty’s Health Cabinet. “Purchasing health care based on volume, as we do now, does not provide incentives to increase quality. Improving quality will save lives, improve the quality of life for people living with chronic illness, and help to keep health care affordable. QCare will help us change the system to change the results.”

QCare was developed by a coalition of public and private sector partners who participated in the National Governors Association Center for Best Practices Policy Academy on Health Care Quality Improvement in June. The policy academy assisted states in developing comprehensive initiatives to improve, track and measure health care delivery and health outcomes. The group was led by Acting Commissioner Ludeman, and also included:
• Dianne Mandernach, Minnesota Commissioner of Health.
• Carolyn Jones, Health Policy Advisor to Governor Pawlenty.
• Representative Tim Wilkin (R-Eagan), Assistant Majority Leader in the Minnesota House of Representatives, chair of the House Committee on Commerce and Financial Institutions, and a member of the Committee on Heath Policy and Finance.
• Senator Linda Berglin (DFL-Minneapolis), Chair of the Senate Finance Committee’s Health and Human Services Budget Division and member of the Senate Health and Family Security Committee.
• Dr. George Isham, Chief Health Office and Medical Director at HealthPartners
• Timothy Hanson, President and CEO of the HealthEast Care System.
• Dr. Douglas Wood, cardiologist practicing at the Mayo Clinic.
• Lori Larson, manager of health care purchasing for 3M Corporation.
• Scott Leitz, director of the Office of Health Policy, Statistics and Informatics at the Minnesota Department of Health.

QCare builds on current initiatives to measure health care quality in Minnesota:
• Governor Pawlenty’s Health Cabinet unveiled www.minnesotahealthinfo.org to provide consumers with information on health care costs and quality in Minnesota.
• Minnesota leads the country in a collaborative approach between health plans, medical groups, physicians, patients, and employers working together through MN Community Measurement.
• The Minnesota Nursing Home Report Card is an online tool for Minnesota consumers to compare quality of life and resident satisfaction at the state’s 396 Medical Assistance certified nursing homes.
• Governor Pawlenty launched the Smart Buy Alliance – a unique public-private partnership of health care purchasers in Minnesota.
• RxPrice Compare allows consumers to comparison shop prescription drug prices at more than 1,000 local pharmacies using a new feature on the state’s nation-leading prescription drug Web site.

“My administration is providing more information than ever so consumers and purchasers can make informed decisions about where they spend their health care dollars,” Governor Pawlenty said. “The health care market is moving to a consumer driven model where buying health care services will be less confusing and mysterious. QCare will allow consumers, employers, and health plans to comparison shop for health care like they would for other services.”

Click here to listen to Governor Pawlenty's QCare podcast.