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Success in Lower-Cost, Higher-Quality Healthcare


How Blue Cross Blue Shield of Massachusetts achieved success with its Alternative Quality Contract payment model.

Money and stethascope

One of the largest, oldest private insurance plans to use population-based global budgets achieved sustained success in slowing spending growth while improving the quality of patient care.

Instead of paying a fee for each service rendered-reformers suggest giving clinical practices a global yearly budget to care for a population of patients.

According to research published in The New England Journal of Medicine, a team from the Department of Health Care Policy in the Blavatnik Institute at Harvard Medical School (HMS), found that over an eight-year period, Blue Cross Blue Shield of Massachusetts’ (BCBSMA) Alternative Quality Contract (AQC) payment model slowed the rate of healthcare spending while improving patient care. The researchers examined changes in spending on medical claims, the volume of services patients used, and the quality of care they received through eight years of the Blue Cross Blue Shield of Massachusetts

The AQC is one of the country’s largest, longest-running private payment reform initiatives. It was developed through collaboration with clinicians in Massachusetts. Under the AQC model, physicians receive a “global” budget rather than payment for each test and office visit.

“Using a difference-in-differences method to analyze data from 2006 through 2016, we compared spending among enrollees whose physician organizations entered the AQC starting in 2009 with spending among privately insured enrollees in control states. We examined quantities of sentinel services using an analogous approach. We then compared process and outcome quality measures with averages in New England and the United States,” the researchers wrote.

Specifically, the study found the original 2009 AQC groups yielded average savings of 12% on claims costs from 2009 to 2016, with savings accelerating over time. The results also showed that patients in the AQC received improved quality of care for chronic diseases such as diabetes and high blood pressure and had fewer unnecessary lab tests, imaging, and emergency room visits than peers in comparison states and nationwide.

“The study offers strong evidence that we save money when we pay physicians for quality and cost control,” says Andrew Dreyfus, president and CEO of BCBSMA.

Related: Intermountain Forms Value-Based Care Company

“The HMS findings show that models like the AQC offer a framework for slowing spending growth without sacrificing quality of care,” Dreyfus says. “In fact, the study found that the AQC improved the quality of care for patients across several measures compared to New England and national averages, including chronic disease management such as diabetes and hypertension and adult preventive care and pediatric care. More BCBSMA members are getting cervical, breast, and colorectal cancer screenings. The rate of patients with cardiovascular conditions managing their cholesterol and blood pressure has jumped. More diabetic patients are getting their yearly diabetic eye exams and controlling their blood sugar. There have been drops in unnecessary emergency department visits and unneeded imaging and lab tests. The model is enabling physicians to provide better care in the right setting, which helps to slow cost growth.”

A paradigm shift

When the AQC was first launched, Dreyfus said that BCBSMA knew it was a paradigm shift and had the potential to fundamentally transform the way health plans pay for care.

“For years, the thinking across the healthcare field was that controlling costs would hurt quality,” he says. “It was important to us to be open with our processes, measures, and data, sharing it with researchers and seeking rigorous, objective validation that this type of value-based approach works, in the hopes that it could serve as a model across the country, which it has.”

The AQC is one the largest and longest-running private payment innovations in the country, according to Dreyfus. “It’s also one of the most rigorously evaluated global budget models-studies like this one from Harvard Medical School show that even after a decade, the AQC is still achieving its twin goals of lower costs and better care, and the longer physician groups participate, the greater the savings,” he says. “Today, more than 80% of the physicians and hospitals in the BCBSMA network participate in the AQC.”

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