Global budgets for healthcare, an alternative to the traditional fee-for-service model of reimbursement, can slow the growth of medical spending and improve the quality of care for patients, according to a study.
Researchers from Harvard Medical School’s Department of Health Care Policy analyzed claims data from Blue Cross Blue Shield of Massachusetts’s Alternative Quality Contract (AQC), a global budget program in which 11 healthcare provider organizations received a budget to care for patients who use BCBSMA insurance. The model contrasts with widely used fee-for-service systems, in which providers are reimbursed for each medical service they deliver.
The Alternative Quality Contract predates, but is similar to, the Pioneer Accountable Care Organization contracts that Medicare began this year through the Affordable Care Act. Through that initiative, Medicare will reward groups of providers based on improved outcomes and lower healthcare spending (for more information about ACOs from the Centers for Medicare & Medicaid Services, visit http://go.cms.gov/P1q8FI).
(NOTE: The House of Representatives on Wednesday voted to repeal the Affordable Care Act. The action is unlikely to pass the Democrat-controlled Senate and thus will have no practical effect on healthcare reform. To see coverage of the repeal vote from our partners at USA Today, visit www.nurse.com/aca.)
Reporting for the July 11 issue of Health Affairs, the researchers looked at the first two years of data from the AQC and found that the program has succeeded in lowering total medical spending while simultaneously improving quality of care.
On average, groups in the AQC spent 3.3% less than fee-for-service groups in the second year, the study showed. Provider groups who entered AQC from a traditional fee-for-service contract model achieved even greater spending reductions of 9.9% in year two, up from 6.3% in the first year.
In comparison, groups that entered from contracts that were already similar to the AQC achieved fewer savings in both years. The researchers also found that the improvements in quality of chronic care management, adult preventive care and pediatric care associated with the AQC grew in the second year.
"Moving away from fee-for-service models is high on the agenda of those looking to establish a fiscally sustainable, efficient healthcare system," Michael Chernew, PhD, professor of healthcare policy at Harvard Medical School and senior author of the study, said in a news release. "It is likely that this type of new payment model will grow rapidly in coming years in the nation as a whole, and particularly in Massachusetts. By analyzing this program, we’re studying the future before it gets here."
"Both challenges and opportunities lie ahead," said Zirui Song, the study’s lead author and a student at Harvard Medical School and recent graduate of the Harvard PhD Program in Health Policy. "With global budgets, provider organizations must divide not only dollars, but authority and autonomy among its member physicians and hospitals. While this transition is likely challenging, it represents a real opportunity to align incentives to coordinate care and keep patients healthy. The AQC teaches us that a successful start is possible, and that supportive payer-provider partnerships are critical."
In 2009, Blue Cross Blue Shield of Massachusetts launched the Alternative Quality Contract. In addition to the global budget, participating groups were eligible for bonuses if they met certain quality or financial targets. Conversely, groups took on financial risk for any spending over the budget.
Initially seven groups entered the program, followed by four more in 2010. Last year, Song, Chernew and colleagues analyzed data from the program’s first year and published the findings in the New England Journal of Medicine (http://bit.ly/njqIVA).
Although the first-year analysis also demonstrated reduced spending with increased quality of care, the numbers were even more striking for the second year. Overall savings in year one were 1.9%, as opposed to 3.3% in year two.
For both years, reduced spending was attributed largely to physicians referring patients to lower-cost facilities. For the second year, lower utilization of medical services among some groups also contributed to the savings.
Quality of care improvements were also greater in the second year than in the first.
The researchers noted that while the AQC reduced medical spending, the overall dollar amount paid by BCBSMA did not decline. The AQC was designed to include incentives for lower spending and improved quality that may offset reductions in medical spending.
To read the study, visit http://bit.ly/N0uVrR.
Researchers from Harvard Medical School’s Department of Health Care Policy analyzed claims data from Blue Cross Blue Shield of Massachusetts’s Alternative Quality Contract (AQC), a global budget program in which 11 healthcare provider organizations received a budget to care for patients who use BCBSMA insurance. The model contrasts with widely used fee-for-service systems, in which providers are reimbursed for each medical service they deliver.
The Alternative Quality Contract predates, but is similar to, the Pioneer Accountable Care Organization contracts that Medicare began this year through the Affordable Care Act. Through that initiative, Medicare will reward groups of providers based on improved outcomes and lower healthcare spending (for more information about ACOs from the Centers for Medicare & Medicaid Services, visit http://go.cms.gov/P1q8FI).
(NOTE: The House of Representatives on Wednesday voted to repeal the Affordable Care Act. The action is unlikely to pass the Democrat-controlled Senate and thus will have no practical effect on healthcare reform. To see coverage of the repeal vote from our partners at USA Today, visit www.nurse.com/aca.)
Reporting for the July 11 issue of Health Affairs, the researchers looked at the first two years of data from the AQC and found that the program has succeeded in lowering total medical spending while simultaneously improving quality of care.
On average, groups in the AQC spent 3.3% less than fee-for-service groups in the second year, the study showed. Provider groups who entered AQC from a traditional fee-for-service contract model achieved even greater spending reductions of 9.9% in year two, up from 6.3% in the first year.
In comparison, groups that entered from contracts that were already similar to the AQC achieved fewer savings in both years. The researchers also found that the improvements in quality of chronic care management, adult preventive care and pediatric care associated with the AQC grew in the second year.
"Moving away from fee-for-service models is high on the agenda of those looking to establish a fiscally sustainable, efficient healthcare system," Michael Chernew, PhD, professor of healthcare policy at Harvard Medical School and senior author of the study, said in a news release. "It is likely that this type of new payment model will grow rapidly in coming years in the nation as a whole, and particularly in Massachusetts. By analyzing this program, we’re studying the future before it gets here."
"Both challenges and opportunities lie ahead," said Zirui Song, the study’s lead author and a student at Harvard Medical School and recent graduate of the Harvard PhD Program in Health Policy. "With global budgets, provider organizations must divide not only dollars, but authority and autonomy among its member physicians and hospitals. While this transition is likely challenging, it represents a real opportunity to align incentives to coordinate care and keep patients healthy. The AQC teaches us that a successful start is possible, and that supportive payer-provider partnerships are critical."
In 2009, Blue Cross Blue Shield of Massachusetts launched the Alternative Quality Contract. In addition to the global budget, participating groups were eligible for bonuses if they met certain quality or financial targets. Conversely, groups took on financial risk for any spending over the budget.
Initially seven groups entered the program, followed by four more in 2010. Last year, Song, Chernew and colleagues analyzed data from the program’s first year and published the findings in the New England Journal of Medicine (http://bit.ly/njqIVA).
Although the first-year analysis also demonstrated reduced spending with increased quality of care, the numbers were even more striking for the second year. Overall savings in year one were 1.9%, as opposed to 3.3% in year two.
For both years, reduced spending was attributed largely to physicians referring patients to lower-cost facilities. For the second year, lower utilization of medical services among some groups also contributed to the savings.
Quality of care improvements were also greater in the second year than in the first.
The researchers noted that while the AQC reduced medical spending, the overall dollar amount paid by BCBSMA did not decline. The AQC was designed to include incentives for lower spending and improved quality that may offset reductions in medical spending.
To read the study, visit http://bit.ly/N0uVrR.
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