NEJM: One year in, new payment model yields modest savings
The Alternative Quality Contract (AQC), a contracting model implemented in 2009 by Blue Cross Blue Shield of Massachusetts (BCBS) based on global payment and pay-for-performance (P4P), was associated with modestly lower medical spending and improved quality in the first year after implementation, according to an article published online July 13 in the New England Journal of Medicine.
The savings derived largely from shifting outpatient care to providers who charged lower fees and were seen primarily among high-risk enrollees, according to lead author Zirui Song, BA, of the department of health care policy at Harvard Medical School in Boston, and colleagues.
The AQC has three features separating it from the traditional fee-for-service contract pack:
The AQC currently contains 12 physician groups accounting for 44 percent of the patients enrolled in a BCBS health maintenance organization (HMO) or point-of-service program.
Song and colleagues evaluated the effect of the AQC system on healthcare spending and on the quality of ambulatory care in 2009. The researchers used an intervention-control, pre-intervention-post-intervention, difference-in-differences approach to isolate the effect of the AQC.
The intervention group included 380,142 subjects and there were 1.3 million subjects in the control group. All subjects had at least one year of continuous enrollment from 2006 through 2009.
Healthcare spending increased for both AQC and non-AQC enrollees in 2009, but the increase was smaller for AQC, according to Song et al. “Statistical estimates indicated that the intervention was associated with a $15.51 decrease in average quarterly spending per enrollee in 2009, a 1.9 percent savings relative to the control group (p=0.007).” There were no significant differences in spending trends between the intervention, they wrote.
Analysis according to enrollees' health status showed that enrollees in the highest quartile of risk score accounted for most of the savings (savings of $14.75, P=0.01), the authors wrote.
For quality, the intervention was associated with an increase of 2.6 percentage points in the proportion of eligible enrollees for whom quality thresholds for chronic care management were met and an increase of 0.7 percentage points in the proportion of eligible enrollees for whom pediatric care thresholds were met.
”The improvements in quality are probably due to a combination of substantial financial incentives and BCBS data support,” Song and colleagues deduced. “In total, the magnitude of savings was modest. Sustainability of the AQC and the financial viability of the model for providers will ultimately depend on identifying and addressing clinically inefficient care and changing utilization patterns.
"Nevertheless, our findings on changes in referral patterns and improvements in quality suggest that provider groups changed their behavior in 2009," reported the writers. "Changes in referral patterns can subsequently affect pricing in the healthcare market, as high-price facilities feel pressure from decreased volume.”
The savings derived largely from shifting outpatient care to providers who charged lower fees and were seen primarily among high-risk enrollees, according to lead author Zirui Song, BA, of the department of health care policy at Harvard Medical School in Boston, and colleagues.
The AQC has three features separating it from the traditional fee-for-service contract pack:
- Physician groups enter into five-year global budget contracts.
- Groups are eligible for P4P bonuses of up to 10 percent of their budget, with performance measures of ambulatory care and hospital care each contributing to half of the calculation of the bonus.
- AQC groups receive technical support from BCBS, including reports on spending, utilization and quality, to assist them in managing their budgets and improving quality.
The AQC currently contains 12 physician groups accounting for 44 percent of the patients enrolled in a BCBS health maintenance organization (HMO) or point-of-service program.
Song and colleagues evaluated the effect of the AQC system on healthcare spending and on the quality of ambulatory care in 2009. The researchers used an intervention-control, pre-intervention-post-intervention, difference-in-differences approach to isolate the effect of the AQC.
The intervention group included 380,142 subjects and there were 1.3 million subjects in the control group. All subjects had at least one year of continuous enrollment from 2006 through 2009.
Healthcare spending increased for both AQC and non-AQC enrollees in 2009, but the increase was smaller for AQC, according to Song et al. “Statistical estimates indicated that the intervention was associated with a $15.51 decrease in average quarterly spending per enrollee in 2009, a 1.9 percent savings relative to the control group (p=0.007).” There were no significant differences in spending trends between the intervention, they wrote.
Analysis according to enrollees' health status showed that enrollees in the highest quartile of risk score accounted for most of the savings (savings of $14.75, P=0.01), the authors wrote.
For quality, the intervention was associated with an increase of 2.6 percentage points in the proportion of eligible enrollees for whom quality thresholds for chronic care management were met and an increase of 0.7 percentage points in the proportion of eligible enrollees for whom pediatric care thresholds were met.
”The improvements in quality are probably due to a combination of substantial financial incentives and BCBS data support,” Song and colleagues deduced. “In total, the magnitude of savings was modest. Sustainability of the AQC and the financial viability of the model for providers will ultimately depend on identifying and addressing clinically inefficient care and changing utilization patterns.
"Nevertheless, our findings on changes in referral patterns and improvements in quality suggest that provider groups changed their behavior in 2009," reported the writers. "Changes in referral patterns can subsequently affect pricing in the healthcare market, as high-price facilities feel pressure from decreased volume.”