An alternative provider payment program under way in Massachusetts is showing promising results, according to an internal report, giving hope that payment strategies outside traditional fee-for-service can work to reduce costs and increase quality.
Pilot payment plan cuts costs
Non-traditional model also improving quality
Blue Cross and Blue Shield of Massachusetts launched its Alternative Quality Contract, AQC, in January 2009. The five-year contract is a modified global payment model where annual payments to medical groups are linked to monthly budgets for each patient with performance incentives.
In the first year, the 6,300 physicians working under AQCs improved care more than the 14,200 physicians working in the Blues' traditional HMO network, according to the report released by the Boston-based insurer.
The participating physicians have the opportunity to earn up to an additional 10% of their global budget by meeting 64 quality measures, including 32 hospital measures. These measure processes, outcomes and patient-care experience. AQC participants did better than those physicians working under the traditional network agreement. For instance, the AQC groups' performance on preventative-care measures was three times that of non-ACO groups.
Reducing the rate of hospital readmissions and non-emergent emergency use are also goals of the program. The readmission rate for both groups averages 8%, but AQC groups in the program longest showed improvements, and a decrease equivalent of $1.8 million in avoided readmission costs. One AQC reduced its non-emergent ER visits by 22% in the year, a $300,000 savings in ER costs, according to the report.
“When we launched the AQCs, we had the goals of improving quality and outcomes while significantly lowering the rate of growth in healthcare costs,” said Dana Safran, vice president for performance measurement and improvement for the Massachusetts Blues. “We are strongly on track with both these goals.”
All the first-year provider groups met their budgets, and the program is on tract to reduce annual healthcare cost trends by one-half over the first five years, Safran said. Physicians in the AQCs treat a total of 470,000 of the Blues' 2.9 million members.
Many officials in Massachusetts are eager to expand global payments. Today, about one in five physicians in the state are paid through this type of model, according to the Massachusetts Medical Society. In July 2009, a special state commission recommended switching from fee-for-service to a global payment system across the state. Gov. Deval Patrick is expected to present a proposal to the state Legislature in the coming weeks that would move payers and providers in this direction.
The Massachusetts Medical Society supports pilot programs exploring alternate payment schemes, but cautions that without adequate oversight, these types of models could lead to capitation.
Dr. Alice Tolbert Coombs, president of the Massachusetts Medical Society, said she would like to see further data from the Blues plan on the AQC program. “Is this population reflective of the population to which global payments would be applied?” she asked.
Coombs said some physicians, such as those working in small practices, might not be ready to take on the risk that goes along with a global payment strategy, or have sufficient data or information technology capabilities to accurately measure patients. Another concern is adequate payment over time.
“Five years later, the global payment budget can't be the same as when you started,” she said.
Better care coordination and adequate support are important components to success, Safran said. Already, the Blues plan is working with existing AQC participants to pilot the program with patients with coverage outside of HMOs, such as those in preferred provider organizations.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.