Global payments show promise of reining in healthcare costs

November 4, 2014

Study finds slower spending increases, better outcomes compared with traditional payment methods

With growing numbers of Americans treated by physicians who are in accountable care organizations (ACOs), a new study shows the potential for ACOs and similar ‘global budget’ arrangements to improve outcomes while slowing the growth of healthcare spending.

The study compared costs and outcomes for Massachusetts residents whose physicians were in health plans using global budgets from 2009 through 2012 with those of patients covered by employer-sponsored, fee-for-service plans in eight other Northeastern states.The demographic characteristics and risk scores in the control states were similar to those in Massachusetts.

The Massachusetts health plans included Blue Cross Blue Shield of Massachusetts’ alternative quality contract (AQC), a similar arrangement developed by Tufts Health Plan, and five organizations participating in Medicare’s Pioneer ACO program. According to the study, the AQC is “a two-sided contract with shared savings if spending is below budget and shared risk if spending exceeds the budget…Organizations receive quality bonuses that are based on 64 measures, including data on processes, outcomes, and patients’ experiences in the ambulatory care and hospital settings.”

Read: ACOs redefine relationships with specialists

The researchers found that medical spending for the 2009 AQC cohort increased by an average of $62.21 per enrollee per quarter as compared with the control group during the four years of the study. The dollar amount is equivalent to 6.8% of the average spending level for patients in the cohort. Similar or slightly larger savings were realized for patients in the 2010, 2011 and 2012 AQC cohorts.

Claims savings were greatest in outpatient settings, which saw decreases of 4% for professional spending and 19.3% for facility spending. Among specific services, the largest savings were in imaging (10.9%), tests (9.7%) and procedures (8.7%). The authors attribute the savings to reduced prices along with decreases in utilization. Claim savings were less than incentive payments to providers in 2009, 2010 and 2011, but savings exceeded payments in 2012.

To compare quality outcomes, the authors used outcome measurements in three broad categories: chronic disease management, adult preventive care and pediatric care. Because data from the control group did not include quality measures, the authors instead compared the AQC data with New England and national Healthcare Effectiveness Data and Information Set [HEDIS] scores. They found that aggregate outcome quality in the 2009 cohort increased each year of the study as compared with the HEDIS national and New England averages.

“These results are encouraging, because throughout our healthcare system, spending is growing at an unsustainable rate and our quality of care is not as high as it should be,” Zirui Song, MD, PhD, the study’s lead author and a Harvard Medical School clinical fellow said in a press release. “Global budgets and other payment reform initiatives provide incentives for physicians and hospitals to think collectively about population health and focus on coordination of care.”

The study, “Changes in Health Care Spending and Quality 4 Years into Global Payment” appears in the October 30 issue of the
New England Journal of Medicine.

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