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The 'Alternative Quality Contract,' based on a global budget, lowered medical spending and improved quality.

ABSTRACT: Seven provider organizations in Massachusetts entered the Blue Cross Blue Shield Alternative Quality Contract in 2009, followed by four more organizations in 2010. This contract, based on a global budget and pay-for-performance for achieving certain quality benchmarks, places providers at risk for excessive spending and rewards them for quality, similar to the new Pioneer Accountable Care Organizations in Medicare. We analyzed changes in spending and quality associated with the Alternative Quality Contract and found that the rate of increase in spending slowed compared to control groups, more so in the second year than in the first. Overall, participation in the contract over two years led to savings of 2.8 percent (1.9 percent in year 1 and 3.3 percent in year 2) compared to spending in nonparticipating groups. Savings were accounted for by lower prices achieved through shifting procedures, imaging, and tests to facilities with lower fees, as well as reduced utilization among some groups. Quality of care also improved compared to control organizations, with chronic care management, adult preventive care, and pediatric care within the contracting groups improving more in year 2 than in year 1. These results suggest that global budgets with pay-for-performance can begin to slow underlying growth in medical spending while improving quality of care.

SUBMITTER: Song Z

PROVIDER: S-EPMC3548447 | biostudies-literature | 2012 Aug

REPOSITORIES: biostudies-literature

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The 'Alternative Quality Contract,' based on a global budget, lowered medical spending and improved quality.

Song Zirui Z Safran Dana Gelb DG Landon Bruce E BE Landrum Mary Beth MB He Yulei Y Mechanic Robert E RE Day Matthew P MP Chernew Michael E ME

Health affairs (Project Hope) 20120711 8

Seven provider organizations in Massachusetts entered the Blue Cross Blue Shield Alternative Quality Contract in 2009, followed by four more organizations in 2010. This contract, based on a global budget and pay-for-performance for achieving certain quality benchmarks, places providers at risk for excessive spending and rewards them for quality, similar to the new Pioneer Accountable Care Organizations in Medicare. We analyzed changes in spending and quality associated with the Alternative Quali ...[more]

PMID: 22786651

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Project description:BackgroundIn 2009, Blue Cross Blue Shield of Massachusetts (BCBS) implemented a global payment system called the Alternative Quality Contract (AQC). Provider groups in the AQC system assume accountability for spending, similar to accountable care organizations that bear financial risk. Moreover, groups are eligible to receive bonuses for quality.MethodsSeven provider organizations began 5-year contracts as part of the AQC system in 2009. We analyzed 2006-2009 claims for 380,142 enrollees whose primary care physicians (PCPs) were in the AQC system (intervention group) and for 1,351,446 enrollees whose PCPs were not in the system (control group). We used a propensity-weighted difference-in-differences approach, adjusting for age, sex, health status, and secular trends to isolate the treatment effect of the AQC in comparisons of spending and quality between the intervention group and the control group.ResultsAverage spending increased for enrollees in both the intervention and control groups in 2009, but the increase was smaller for enrollees in the intervention group--$15.51 (1.9%) less per quarter (P=0.007). Savings derived largely from shifts in outpatient care toward facilities with lower fees; from lower expenditures for procedures, imaging, and testing; and from a reduction in spending for enrollees with the highest expected spending. The AQC system was associated with an improvement in performance on measures of the quality of the management of chronic conditions in adults (P<0.001) and of pediatric care (P=0.001), but not of adult preventive care. All AQC groups met 2009 budget targets and earned surpluses. Total BCBS payments to AQC groups, including bonuses for quality, are likely to have exceeded the estimated savings in year 1.ConclusionsThe AQC system was associated with a modest slowing of spending growth and improved quality of care in 2009. Savings were achieved through changes in referral patterns rather than through changes in utilization. The long-term effect of the AQC system on spending growth depends on future budget targets and providers' ability to further improve efficiencies in practice. (Funded by the Commonwealth Fund and others.).

Project description:BackgroundPopulation-based global payment gives health care providers a spending target for the care of a defined group of patients. We examined changes in spending, utilization, and quality through 8 years of the Alternative Quality Contract (AQC) of Blue Cross Blue Shield (BCBS) of Massachusetts, a population-based payment model that includes financial rewards and penalties (two-sided risk).MethodsUsing 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.ResultsDuring the 8-year post-intervention period from 2009 to 2016, the increase in the average annual medical spending on claims for the enrollees in organizations that entered the AQC in 2009 was $461 lower per enrollee than spending in the control states (P<0.001), an 11.7% relative savings on claims. Savings on claims were driven in the early years by lower prices and in the later years by lower utilization of services, including use of laboratory testing, certain imaging tests, and emergency department visits. Most quality measures of processes and outcomes improved more in the AQC cohorts than they did in New England and the nation in unadjusted analyses. Savings were generally larger among subpopulations that were enrolled longer. Enrollees of organizations that entered the AQC in 2010, 2011, and 2012 had medical claims savings of 11.9%, 6.9%, and 2.3%, respectively, by 2016. The savings for the 2012 cohort were statistically less precise than those for the other cohorts. In the later years of the initial AQC cohorts and across the years of the later-entry cohorts, the savings on claims exceeded incentive payments, which included quality bonuses and providers' share of the savings below spending targets.ConclusionsDuring the first 8 years after its introduction, the BCBS population-based payment model was associated with slower growth in medical spending on claims, resulting in savings that over time began to exceed incentive payments. Unadjusted measures of quality under this model were higher than or similar to average regional and national quality measures. (Funded by the National Institutes of Health.).

Dataset Information

The 'Alternative Quality Contract,' based on a global budget, lowered medical spending and improved quality.

Publications

The 'Alternative Quality Contract,' based on a global budget, lowered medical spending and improved quality.

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