Medical Group Responses To Global Payment: Early Lessons From The ‘Alternative Quality Contract’ In Massachusetts

Abstract

The largest insurer in Massachusetts, Blue Cross Blue Shield, began a new program in 2009 that combines global payments-fixed payments for the care of patient populations during a specified time period-with large potential quality bonuses for medical groups. In interviews with representatives of the participating medical groups, many of which could be considered prototype accountable care organizations, we found that most groups initially focused on two goals: building the infrastructure to help primary care providers earn quality bonuses; and managing referrals to direct patients to lower-cost settings. Groups are working to overcome numerous challenges, which include improving their data management capabilities; managing conflicting incentives in their fee-for-service contracts; and establishing cultures that emphasize teamwork, patient-centered care, and effective stewardship of medical resources. The participating medical groups are diverse in terms of size, organizational structure, and prior experience with managed care contracting. If the groups can succeed in reducing annual growth in health spending by half over the five-year contract, it could signal that even newly formed accountable care organizations can navigate a shift from fee-for-service to population-based payment models.

Emerging Lessons From Regional and State Innovation in Value‐Based Payment Reform: Balancing Collaboration and Disruptive Innovation

“…[11][12][13] Recently the focus has turned to improving value by enhancing quality, reducing costs, and matching payment innovations to the structure of the delivery system. These value-based payments link providers' reimbursements to the value, rather than the volume, of services.…”

“…These have included the Medicare hospital inpatient prospective payment system, 1 followed by the Medicare resource-based relative value scale for physicians; 2,3 the growth of capitation contracting with medical groups, integrated delivery systems, and pay for performance; [4][5][6] shared savings; 7 bundled payments; [8][9][10] and a risk-adjusted global payment. [11][12][13] Recently the focus has turned to improving value by enhancing quality, reducing costs, and matching payment innovations to the structure of the delivery system. These value-based payments link providers' reimbursements to the value, rather than the volume, of services.…”

Changes in Health Care Spending and Quality 4 Years into Global Payment

“…12-15 These initial savings were exceeded by incentive payments to providers. 12,13 Recently, Medicare ACOs also reported early savings and quality improvements.…”

Legal Mechanisms Supporting Accountable Care Principles

“…8 For example, the insurer Blue Cross and Blue Shield of Massachusetts provided up-front funding, known as “global budgets,” to 8 private medical groups, based on historical per-member-per-year spending, through its Alternative Quality Contract Program, and additional financial incentives to improve the quality and cost of services for its members. 9 Although the funded providers contracted with existing health management organizations instead of creating new co-owned networks, the initial outcomes of the program showed lowered cost and improved quality for eligible populations through providing holistic patient care. 10 Although they are not based strictly on population health measures, these successes nevertheless set the stage for developing an accountable care framework with quality and cost metrics at the federal level.…”