Aetna to Reimburse NYU Medical Center on a Pay-for-Performance Contract.

NEW YORK -- Aetna (NYSE: AET) has entered into a pay-for-performance contract with the NYU Medical Center. Under the new "hospital services compensation schedule," Aetna will financially reward NYU Medical Center for superior performance and/or continuous improvement on nationally recognized measures of patient safety and quality of care, as well as mutually agreed upon measures for efficient delivery of medical services. If successful, this pay-for-performance pilot is intended to serve as a model for future Aetna hospital contracts in the New York market.

"Inconsistent use of evidence-based treatment protocols is well documented in health care systems throughout the United States," explained Terry Golash, MD, Aetna's New York medical director. Indeed, a 2003 Rand Study found that 45 percent of the time patients do not receive care in accordance with clinical best practices. "Such widespread variation in the way care is delivered can endanger the health of patients and create quality gaps with financial implications for us all," Dr. Golash said. "To address this, Aetna is developing payment systems that change how health care providers are compensated, moving from a system that has traditionally paid for services based on volume, to one that rewards clinical performance and effectiveness."

The performance measures being used for NYU Medical Center are based on the recommended guidelines of nationally respected medical professional organizations, and include payment incentives NYU had a hand in designing.

The selected measures are intended to achieve the following objectives:

* Member care that is effective and efficient

* Member care that meets clinical quality standards and results in quality of care and outcome improvements for members.

* Care practices that promote patient safety

* Administrative efficiencies that improve the timeliness and transactional costs of administration between Aetna and NYU Medical Center.

For the Aetna/NYU Medical Center pilot, 50% of the criteria are derived from nationally established quality benchmarks employers use to evaluate health plan performance, and which have been adopted by the Centers for Medicare and Medicaid Services1; 30% involve clinical performance measures, such as length of stay and hospital readmission rates; and the final 20% are based on patient-safety yardsticks developed by the Leapfrog Group2, the business consortium representing 34 million employees from Fortune 500 and other companies. The Leapfrog Group named NYU Medical Center among the top 50 hospitals in the nation in its first Hospital Quality and Safety Survey late last year.

"We worked for months with Aetna to evaluate data, refine the efficiency measurements, and build a collaboration for quality, taking maximum advantage of the information that we each bring to the table to the benefit of our patients," said Karim Habibi, V.P. and Senior Administrator, NYU's Office of Managed Care. "This type of collaboration is a far cry from the "gotcha" mentality of some insurers or the "cookie cutter" approach of others," he said.

"This is a great first step," said Sheila Sweeney, Vice President of Health & Welfare Strategy and Programs at Assurant, Inc. "I applaud Aetna and NYU for working together to move the quality and efficiency agenda forward. I look forward to the expansion of their measures set to include additional performance measures that are currently available and to the development of new ones."

The pay-for-performance pilot will extend for a little over three years. Aetna and NYU Medical Center both intend that continuous improvement will be made in each year of the program and for that reason performance goals and specific performance measures may be adjusted to reflect progress already achieved. Financial incentive payments will also vary from year to year based on the performance criteria being measured.

About NYU Medical Center

With roots stretching back over 160 years, NYU Medical Center is a national leader in scientific research, patient care, and the education and training of physicians. The Medical Center consists of NYU School of Medicine and NYU Hospitals Center facilities: Tisch Hospital, an acute-care tertiary hospital serving more than 35,000 inpatients annually; Rusk Institute of Rehabilitation Medicine, the first and one of the largest of its kind, serving approximately 2,500 inpatients and 55,000 outpatients each year; and NYU Hospital for Joint Diseases, one of only five orthopedic/rheumatology hospitals in the world. NYU Medical Center has recently opened major multi-specialty ambulatory facilities, one for cancer patients and the other for children. In all, the Medical Center receives over 600,000 ambulatory visits per year.

About Aetna

Aetna is one of the nation's leading diversified health care benefits companies, serving approximately 34.9 million people with information and resources to help them make better informed decisions about their health care. Aetna offers a broad range of traditional and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life, long-term care and disability plans, and medical management capabilities. Our customers include employer groups, individuals, college students, part-time and hourly workers, health plans and government-sponsored plans. www.aetna.com.

1The five CMS Quality of Care Measures being used in this pilot include:

1. Patients given appropriate beta blockers at discharge

2. Patients given ACE inhibitor or ARB for Left Ventricular Systolic Dysfunction

3. Pneumonia patients given initial antibiotics within 4 hours after arrival at the hospital

4. Surgery patients who received preventive antibiotics one hour before incision

5. Preventive antibiotics for surgery patients are stopped within 24 hours after surgery.

2 The Leapfrog Group Patient Safety Measures being used in this pilot include:

1. Computer physician order entry - medication orders entered via computers linked to prescribing error prevention software (can reduce hospital-based prescribing errors by 50%)

2. ICU staffing with physicians who have special training in critical care medicine (shown to reduce risk of patients dying by 40%)

3. Leapfrog Safe Practices Score - assesses hospital's progress on 27 additional safe practices endorsed by the National Quality Forum (can reduce risk of patient harm in certain processes, systems and environments of care)