Health Care In The States

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

By David Schultz

July 11th, 2012, 4:52 PM

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.”

6 Responses to “Study: Mass. Global Payment Approach Lowers Costs, Improves Care”

  1. mark gaunya says:

    It is true…it appears the Alternative Quality Contract has slowed rising health insurance costs…for the time being. AQC is the “new and improved” global capitation reimbursement method that failed miserably in the late 80s and early 90s…why? Because it is based on the flawed principles of “doctor knows best” and “insurer, how much care can I receive” and misses the biggest driver or rising costs, the healthcare consumer. The only way to stem the rising tide of health insurance costs is to understand that health insurance is expensive because healthcare is expensive. Real costs need to be transparent to consumers – you and me – and that means all players must be at the table…federal (medicare and medicaid), private insurers and all providers (doctors, hospitals and rx). With real transparency and the introduction of responsibility and
    opportunity through Health Savings Accounts and a focus on personal well-being ca

  2. mark gaunya says:

    It is true…it appears the Alternative Quality Contract has slowed rising health insurance costs…for the time being. AQC is the “new and improved” global capitation reimbursement method that failed miserably in the late 80s and early 90s…why? Because it is based on the flawed principles of “doctor knows best” and “insurer, how much care can I receive” and misses the biggest driver or rising costs, the healthcare consumer. The only way to stem the rising tide of health insurance costs is to understand that health insurance is expensive because healthcare is expensive. Real costs need to be transparent to consumers – you and me – and that means all players must be at the table…federal (medicare and medicaid), private insurers and all providers (doctors, hospitals and rx). With real transparency and the introduction of responsibility through health savings accounts, we can bend the heallthcare trend.

  3. Pete says:

    Mitt Romney is responsible for “Romneycare” in Massachusetts. It is, without any doubt, the best thing to happen to Massachusetts in decades. Mitt Romney should be proud of this great achievement. Mitt Romney gave Massachusetts universal health care and, in so doing, Massachusetts has an unemployment rate of less than 6 percent. So much for the naysayers that say Obamacare will bankrupt the nation. Massachusetts is thriving because of Romneycare. America could be enjoying the same thing if Republicans would stop their “repeal” nonsense and allow Obamacare to roll out. Only insane people believe that Romneycare or Obamacare is perfect. Romneycare has been adjusted several times since being enacted. This is true with any new law. Nothing is perfect. In my opinion, the problem is that Republicans can stand the fact that a black Democratic President took a decades old Republican idea, a Heritage Foundation idea, a Newt Gingrich endorsed idea, a Romneycare idea, and that black man got it passed and enacted. Even the Supreme Court upheld Obamacare as Constitutional. Yet, Republicans will not stop their nonsense of trying to repeal their very own idea. In my opinion, Republicans think Obamacare is way too much audacity for a black man to have.

  4. This story is great news — an authoritative study that indicates that healthcare costs really can be controlled when providers keep real costs in mind. I look forward to more studies on quality improvements in chronic care management and adult preventive care. Preventive care will provide enormous savings down the road if providers take the long view and concentrate on that now.

  5. Stephen J says:

    Maybe in the near future we can begin to move away from buzz words like “Obamacare” and “Romneycare” and just call it sustainable healthcare that works for Americans. Seems to have a better ring to it without all the partisan connotations attached. Next up, “Prolife” and “Prochoice”.

  6. Pete says:

    Good point…

    The problem is not what you call it, the simple truth is the Massachusetts health plan works very well and the Massachusetts health plan could work as well for the nation if it’s allowed to roll out. However, all Republicans have signed on to an agenda to make President Obama a one-term President. That is their prime focus. That is their only focus. They don’t care about the economy or jobs, they don’t care about making sure more people have access to affordable health care, all they care about is one thing. Defeat President Obama in November 2012. They will stop at nothing to see him defeated in the November 2012 elections. They will flip-flop on “any” policy they may have embraced in the past if it looks like President Obama likes it too. They would cut off all ties to their own mother if they knew she might like President Obama. This isn’t the GOP of the 1990′s or before. This isn’t even the GOP while George W. Bush was President. The GOP of today has morphed into something that resembles Nazi Germany in the 1930′s.

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