Early Massachusetts Experience With Global Payment

By July 26, 2011Commentary

One of the earliest real-life experiences with something like an accountable care organization with a global payment is the program by Blue Cross of Massachusetts to use a global budget with some of its enrollees who must choose a primary care physician.  An article in the NEJM reviews initial results from the program.   (NEJM Article) The program has a five-year budget system, under which physicians get to share in results under budget, but also are at risk for over-budget excess spending.  The physicians also get significant quality performance bonus opportunities.  Blue Cross provides significant data and other support for the program.  About 4000 physicians were initially participating in the program.

The authors compiled data and conducted complex statistical analyses to attempt the isolate the effects of being covered by the program.  There was a substantial increase in average spending per quarter per member for both the members under the program and a control group, but the increase was $15.51, or about 2%, lower for the group under the global payment.  The bulk of the savings came from procedures, imaging and testing, largely in the hospital outpatient setting.  There were no significant savings in inpatient or physician care.  Members with the greatest health risk accounted for most of the savings.  Utilization was basically unchanged, so most of the savings, over 90% in fact, were the result of lower prices, due to physicians changing referral patterns to lower-cost providers.

The greatest savings occurred among physicians who had not previously been under any form of risk-based payment.  Quality in regard to chronic disease management increased by 2.6% and for pediatric care by .7%, but there was no difference in adult preventative care.  While the global budget system resulted in less health spending, after sharing of savings, quality bonuses and the cost of supporting the program, Blue Cross was actually spending more on these members.  The results suggest that the savings are largely a one-time effect from shifting enrollment patterns.  Now the key will be what will the trend in unit prices for those referrals be and can any other savings avenue be created.  If not, the payment method won’t slow either health spending or its rate of growth.

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