Study: Massachusetts payment reform model shows promise for improved outcomes, lower costs

A new Harvard study found that a payment reform model that has been tested in Massachusetts for the past eight years is showing promise for improving health and reducing costs (Source: “Changing The Way Doctors Are Paid Made Patients Healthier And Saved Money, Study Finds,” WBUR radio, Boston, July 19, 2019).

In a study published Wednesday in the New England Journal of Medicine, researchers followed hundreds of thousands of patients over eight years in the Blue Cross Blue Shield of Massachusetts’ alternative payment program and compared them to similar patients who were not in the program.

The program promised cash bonuses for health care providers to improve the quality of their care overall, while still saving everyone money.

“There was an 11.7% savings on medical claims on average over the first eight years when we compare against similar populations outside [of the program],” says Dr. Zirui Song, a health care policy researcher at Harvard Medical School and the lead author on the study.

And, he adds, “We see some evidence that patients were healthier in this program.”

The program, called the Alternative Quality Contract, works in two key ways. First, health care providers received bonuses to pay for upgrades at their medical practices like additional staff and improved electronic medical records.

The second part of the program changed how doctors, hospitals and other providers are paid. In this system, primary care providers receive a spending target from Blue Cross Blue Shield for their members’ care. If they spend less than the target amount by the end of the year, the providers and the health insurance company split the cash. If the doctors overspend, they and the insurer split the extra cost.