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Global Payments Change Spending & Quality

Early results are in, but are these changes generalizable and sustainable?

In an effort to slow the growth of health care spending, Blue Cross Blue Shield (BCBS) of Massachusetts, an early reform state, entered into alternative quality contracts (AQC) with providers. AQCs are two-sided contracts that share savings if spending is below budget and share risk if spending exceeds the budget. In this analysis, the authors discuss savings, risk payments, and incentive payments for 2009-2012 in comparison to a control cohort.

The intervention group consisted of 4 cohorts of the BCBSAQC organizations for 2009, 2010, 2011 and 2012.  The control group consisted of commercially insured persons in employer-sponsored plans in 8 other Northeastern states. All persons were younger than 65 years old and were enrolled in a non-public insurance plan for at least a year. Control states had demographics and risk scores similar to those in Massachusetts. The authors compared spending (claims payments), incentive payments (shared savings, quality bonuses, and infrastructure payments for care redesign), and care quality outcomes.

The 2009 AQC cohort consisted of 1100 primary care providers and 2000 specialists. Across the 4 cohorts footer_logospending grew more slowly after entering the contract compared to controls: an average of $62.21 per enrollee per quarter less than control (average savings of 6.8%). Savings resulted from procedures, imaging, and tests. Models with standardized pricing demonstrated 40% of savings were due to decreases in volume. Incentive payments exceeded claims savings in 2009 and 2011. By 2012, the total spending and incentive payments were 3.6% below projection. AQC’s chronic disease management quality scores increased 3.9% over controls. Adult and pediatric preventive care scores increased 2.7% and 2.4 %, respectively.

Limitations to this study include selection bias (AQC participation is voluntary) and internal validity concerns if control plans underwent similar reforms. These results may not be generalizable to public insurance programs such as Medicare.

These data from one AQC experiment are encouraging. This is one of the first studies to demonstrate the effectiveness of global payments. Although these results are promising, the observation timeline is short and New England is unique environment. Can these gains also be made nationally?

Will Medicare, which has contracted with 360 ACOs covering 5.3 million beneficiaries, implement global payments?

commentary by Laura Grubb, MD, MPH, FAAP


BACKGROUND: Spending and quality under global budgets remain unknown beyond 2 years. We evaluated spending and quality measures during the first 4 years of the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract (AQC).

METHODS: We compared spending and quality among enrollees whose physician organizations entered the AQC from 2009 through 2012 with those among persons in control states. We studied spending changes according to year, category of service, site of care, experience managing risk contracts, and price versus utilization. We evaluated process and outcome quality.

RESULTS: In the 2009 AQC cohort, medical spending on claims grew an average of $62.21 per enrollee per quarter less than it did in the control cohort over the 4-year period (P<0.001). This amount is equivalent to a 6.8% savings when calculated as a proportion of the average post-AQC spending level in the 2009 AQC cohort. Analogously, the 2010, 2011, and 2012 cohorts had average savings of 8.8% (P<0.001), 9.1% (P<0.001), and 5.8% (P=0.04), respectively, by the end of 2012. Claims savings were concentrated in the outpatient-facility setting and in procedures, imaging, and tests, explained by both reduced prices and reduced utilization. Claims savings were exceeded by incentive payments to providers during the period from 2009 through 2011 but exceeded incentive payments in 2012, generating net savings. Improvements in quality among AQC cohorts generally exceeded those seen elsewhere in New England and nationally.

CONCLUSIONS: As compared with similar populations in other states, Massachusetts AQC enrollees had lower spending growth and generally greater quality improvements after 4 years. Although other factors in Massachusetts may have contributed, particularly in the later part of the study period, global budget contracts with quality incentives may encourage changes in practice patterns that help reduce spending and improve quality. (Funded by the Commonwealth Fund and others.). PMID: 25354104

Song, Z, et al. NEJM. 2014; 371 (18): 1704-14.

Laura K. Grubb, MD, MPH, FAAP
About Laura K. Grubb, MD, MPH, FAAP

Dr. Grubb is an adolescent medicine specialist and general pediatrician with research interests in health care reform implementation, single payer model realization in Vermont, and cost effectiveness of health care interventions. Dr. Grubb graduated cum laude with a BS in Biology from Georgetown University and received her MD from George Washington University. She completed pediatrics residency at the Naval Medical Center San Diego and is Board Certified in Pediatrics. She is a Fellow of the American Academy of Pediatrics. She served seven years in the Navy as a pediatrician and general medical officer. She completed her fellowship in Adolescent Medicine and an MPH (focusing on Health Systems Organization in the Management, Community Health, and Policy tract) at the University of Texas Health Sciences Center at Houston. She is currently an assistant professor of pediatrics at the Floating Hospital for Children at Tufts Medical Center in Boston. Contact: Website | Facebook | More Posts

1 Comment on Global Payments Change Spending & Quality

  1. I remain skeptical that a “global payment” arrangement can work to change clinician and hospital behavior unless the payment represents a significant portion of such entities total income.

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