Skip to content

Study: Mass. Global Payment Approach Lowers Costs, Improves Care

There’s some encouraging news in the ongoing struggle to control health care costs without sacrificing quality.

The Alternative Quality Contract, a global payment model put in place by Blue Cross Blue Shield of Massachusetts in 2009, has both curbed costs and improved the quality of care, according to a Harvard Medical School study published today in the journal Health Affairs.

Global payments, a lump sum to cover all the care of a defined group of patients, are viewed by many experts as a cost-effective alternative to the traditional fee-for-service system.

Massachusetts enacted sweeping state health reforms in 2006 considered by many to be a prototype of the 2010 federal health law, and it is now experimenting with equally dramatic measures to rein in health care spending. The AQC is very similar to the Affordable Care Act’s Pioneer Accountable Care Organization contracts – a part of the Medicare shared-savings program.

In the state version, 11 health care provider groups were given a fixed budget to care for patients covered by BCBSMA insurance. If the providers stayed under budget, they were given bonuses. If they went over, they had to eat those costs.

After studying data from Blue Cross Blue Shield’s claims and comparing them to claims from doctors not participating in the AQC, the researchers found that – during the second year – providers participating in the global payment system spent an average of 3.3 percent less than the other groups. Those providers who came from traditional fee-for-service contract models achieved the greatest savings – as much as 9.9 percent in year two.

The study also found the participating provider groups achieved quality improvements in chronic care management, pediatric care and adult preventive care,  especially in year two.

“If these results and improvements continue, the health care system can be put on a sustainable path,” said Michael Chernew, the senior author of the study, which was paid for by the Commonwealth Fund.

Chernew noted that the findings about the quality of care in the AQC may not be conclusive because “quality measurement is an evolving field.”

For example, he said, one of the main ways providers within the AQC cut costs was by reducing the amount of imaging they did. Chernew said he “can’t say precisely” whether this means they were reducing wasteful imaging or whether they cut back on imaging procedures that could have improved care.

But, he said, the study provides at least some hope that it is possible to rein in the rapidly metastasizing costs of health care without providing a substandard product to patients.

“One way or another, we’re going to have to control spending,” Chernew said. “We as a country simply can’t move forward with the budget trajectory that we’re on. … How will providers respond? Can providers survive in a world where [health care spending] rises more slowly? Our study is optimistic.”