Average Alternative Quality Contract organization cut costs by 3.3% in second year
In a promising sign for the ACO model, the Alternative Quality Contract—a global payment pilot developed by Blue Cross and Blue Shield of Massachusetts (BCBSMA)—successfully lowered costs and improved care quality, according to a new Health Affairs study.
How it works
Under the AQC, a hospital or physician group negotiates a budget—or global payment—that covers the cost of care for all patients in their practice. If providers stay under budget, they receive bonuses; if they overspend, they pay the difference.
To date, 11 organizations have entered AQCs with BCBSMA.
However, early reports raised questions about whether the global payment model was effective at slowing health cost growth. Mass. Attorney General Martha Coakley (D) last year reported that AQCs did not cost less than the traditional fee-for-service model. One month later, a NEJM study indicated that the program generated only "modest" savings.
New evidence suggests model can be successful
Seeking to resolve the debate, a team of researchers at Harvard Medical School examined the progress of the 11 participating organizations in the first two years of the pilot program.
They found that the average participating organization spent:
- 1.9% less than non-participating organizations in the first year; and
- 3.3% less than non-participating organizations in the second year, with one provider achieving 9.9% savings.
At the same time, providers improved the quality of chronic care management, pediatric care, and preventative care among adults, especially in the second year.
According to the authors, the improvement seen in the second year demonstrates that "organizations need time to implement change."
The study found that the organizations' common money-saving strategies included referring patients to lower-cost providers and reducing utilization of extra tests, especially imaging. Study author Michael Chernew says his team could not determine whether providers reduced inappropriate imaging or cut back on procedures that could have improved care.
However, Chernew says that, looking ahead, "[t]he real question is going to become, as the global budget gets tighter, can the groups continue this level of savings?" (Bebinger, WBUR, 7/12; Fleming, "Health Affairs Blog," Health Affairs, 7/12; Schultz, "Capsules," NPR/Kaiser Health News, 7/11; Kliff, "Wonkblog," Washington Post, 7/12).