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Reform Model Lowers Costs, Improves Care

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  • Reform Model Lowers Costs, Improves Care

    Since there seems to be a concerted effort lately to try and find some sort of doom-and-gloom, it's worth highlighting some good news that came out earlier this month. I'm talking about the release of some updated results from a private sector payment reform experiment whose approach is being replicated around the country under the Affordable Care Act.

    Study: Mass. Global Payment Approach Lowers Costs, Improves Care
    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 Acts 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 Shields 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.
    Encouraging news.

    For a taste of what this means on a wider scale, here's a flashback from a year ago when Blue Cross Blue Shield of MA was describing the implications of the Year One results of the Alternative Quality Contract (AQC):

    The provider organizations participating in the AQC exemplify the concept of Accountable Care Organizations (ACO) and Patient Centered Medical Homes (PCMH) as envisioned by the Patient Protection and Affordable Care Act of 2010 (PPACA) and the recommendations of Massachusetts Special Commission on Health Care Payment System in 2009. [...]

    The PPACA promotes the experimentation of delivery system and payment reforms, such as ACOs and PCMHs, through Medicare demonstrations and payment reform policies, Medicaid program options for states, as well as the Center for Innovation at the Centers for Medicare and Medicaid Services (CMS). [...]

    For federal and state policymakers, the findings from the first year of the AQC hold several important lessons. Among these is evidence that improvements in both health care quality and spending are achievable through a payment model that establishes provider accountability for quality, outcomes and costs.
    Now I suppose we can add to that lesson that it just keeps getting better in year two.

  • #2
    Re: Reform Model Lowers Costs, Improves Care

    Originally posted by Greenbeard View Post
    Since there seems to be a concerted effort lately to try and find some sort of doom-and-gloom, it's worth highlighting some good news that came out earlier this month. I'm talking about the release of some updated results from a private sector payment reform experiment whose approach is being replicated around the country under the Affordable Care Act.

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

    Encouraging news.

    For a taste of what this means on a wider scale, here's a flashback from a year ago when Blue Cross Blue Shield of MA was describing the implications of the Year One results of the Alternative Quality Contract (AQC):

    Now I suppose we can add to that lesson that it just keeps getting better in year two.
    I would have to see the entire study to make any judgements on this. When they say improvements were made in chronic care, pediatric care, and adult preventive care, what happened in other areas? Who paid for this study? Were there any negative affects not printed in the article? etc.


    • #3
      Re: Reform Model Lowers Costs, Improves Care

      Originally posted by OldmanDan View Post
      When they say improvements were made in chronic care, pediatric care, and adult preventive care, what happened in other areas?
      The AHQ is based on 32 ambulatory care measures, with incentive payments linked to performance along those metrics. The contract looks at three different types of measures: process, outcomes, and patient experience.

      The process measures are taken from a very commonly used set of quality measures (HEDIS) produced by the National Committee for Quality Assurance. These measures are the ones the study in the OP examined.

      Quality scores for the first group of folks to participate in the Alternative Quality Contract (the 2009 cohort) increased on every one of these metrics pre-AQC to post-AQC, which wasn't true of the non-AHC control groups. More than that, they increased more over the first two years of the AQC than did quality scores for the non-AQC control groups on almost every metric.

      Meanwhile, as those quality scores were improving, spending trends relative to the non-AQC control group were falling:

      Who paid for this study?
      The research was conducted by a group of doctors and health policy researchers from Harvard and Brandeis, primarily supported by The Commonwealth Fund.

      This research was supported by a grant from the Commonwealth Fund to Michael Chernew. Zirui Song is supported by a predoctoral M.D./Ph.D. National Research Service Award (No. F30-AG039175) from the National Institute on Aging and a predoctoral Fellowship in Aging and Health Economics (No. T32-AG000186) from the National Bureau of Economic Research. The analysis of pediatric quality measures was funded by a grant to Chernew from the Charles H. Hood Foundation.
      Were there any negative affects not printed in the article? etc.
      None that I can see. The ACQ saw nearly 10% savings relative to trends for providers coming into the contract from fee-for-service arrangements, in large part through reductions in the volume of services provided. That's one of the primary purposes of new payment models like this: fee-for-service has notoriously bad incentives baked into it, not least the incentive for more volume. That's why the shared savings/accountable care arrangements launching in Medicare under the Affordable Care Act are exciting. Medicare has traditionally been a fee-for-service payer but is now introducing payment models that incentivize quality, not quantity.

      For providers in the ACQ who weren't coming from strictly fee-for-service arrangements, savings were achieved by shifting referral patterns in favor of lower cost providers and settings. Again, a good development, particularly in a market like Massachusetts, which is dominated by certain high-cost providers, as long as quality isn't sacrificed (which it doesn't seem to have been--quite the contrary).

      The need to spur and support these kinds of payment and delivery reforms on a wider scale is exactly why the ACA is so important. And if we're serious about doing it right, the future might actually be rather bright. These results aren't conclusive but they're certainly suggestive.


      • #4
        Re: Reform Model Lowers Costs, Improves Care

        Incentive payments linked to performance. How capitalist of them.

        I won't say anything bad about the project. It may be onto something. I am just wary of "studies" that prove what those who paid for them wanted.


        • #5
          Re: Reform Model Lowers Costs, Improves Care

          Originally posted by OldmanDan View Post
          Incentive payments linked to performance. How capitalist of them.
          Indeed. And at long last Medicare is moving in that direction. See: Value-Based Purchasing — National Programs to Move from Volume to Value.

          The National Quality Strategy of the U.S. Department of Health and Human Services broadly defines the outcomes that the Centers for Medicare and Medicaid Services (CMS) wants to achieve through the care it purchases for its beneficiaries. The strategy's three aims of better health, better care, and lower costs capture CMS's concept of value — improved outcomes for individuals and populations at lower costs. CMS has many tools to support the three aims, but we believe that value-based purchasing (VBP) is one of the most potentially transformational. VBP rewards providers who deliver better outcomes in health and health care for the beneficiaries and communities they serve at lower cost. Unlike voluntary programs, such as the Shared Savings Program, VBP applies to nearly all providers in a given setting. Two programs are under way, and a third will begin next year (see CMS's Value-Based Purchasing (VBP) Programs).


          • #6
            Re: Reform Model Lowers Costs, Improves Care

            Too bad costs havn't gone down in Massachusetts.


            • #7
              Re: Reform Model Lowers Costs, Improves Care

              Originally posted by JDJarvis View Post
              Too bad costs havn't gone down in Massachusetts.
              The governor just signed the bill today, you may be asking for results a little too soon....