The Alternative Quality Contract: Cuts costs, but not quality

A two-sided risk-sharing payment program introduced by Blue Cross Blue Shield (BCBS) across the state of Massachusetts led to reduced spending that did not compromise the quality of care and in some cases, actually improved it, according to a study published in the Aug. 28 issue of JAMA. The benefits affected not only BCBS members, but some Medicare beneficiaries as well.

"These findings suggest that provider groups are willing—and able—to make systemic changes that result in higher-value care for patients across the board," said lead author J. Michael McWilliams, PhD, of Harvard Medical School in Boston in a press release.

BCBS’ Alternative Quality Contract (AQC), an accountable care organization initiative implemented in 2009, offers financial incentives to providers who spend less than their budgeted amount and who meet performance goals on quality of care measures. Providers who spend more than their allotted amount absorb the extra costs.

Researchers compared Medicare beneficiaries who received care between 2007 and 2010 by 11 different provider groups who entered the AQC between 2009 or 2010 (the intervention group) to Medicare patients enrolled in non-AQC health plans (control group).

They determined the amount of quarterly medical spending per patient. As secondary outcomes, they broke down the spending by setting and type of service, five different quality measures, hospitalizations that could have been prevented and readmissions within 30 days of discharge.

The five measures they assessed were screening mammography for women between 65 and 69 years of age, low-density lipoprotein (LDL) cholesterol testing for patients with a significant cardiovascular history and for individuals with diabetes, they looked at hemoglobin A1C testing, LDL cholesterol testing and retinal examinations.

Before participation in the AQC, spending per beneficiary in the intervention group was $150 higher than in the control group. Two years after the AQC,  the difference had decreased to $51.

Spending on outpatient care decreased by $73 and included a $9 decrease in spending on office visits, $3 on visits to the emergency department, $3 on minor procedures, $12 on imaging and $4 on laboratory tests.

Outpatient care cost cutting was better for patients in the intervention group with five or more conditions. ($125 in savings vs. $61).

Performance on the quality measures among the intervention group was better in year two for diabetics’ LDL cholesterol screenings (a 5.2 percentage point increase) and LDL screening for patients with cardiovascular disease (2.5 point increase). Performance on the other measures did not change significantly.

"The spillover savings in Medicare that we found suggest that at least some of the interventions providers adopted in response to the AQC changed the way care was delivered for all patients," McWilliams said. But, the authors explained, the fact that other measures did not improve also suggested that some of the efforts at quality improvement target BCBS members.

Nonetheless, they argued that the observed Medicare spillover should encourage providers to pursue similar payment contracts with other insurers.

“[T]hey could be rewarded for the savings and quality improvements achieved for the other insurers’ enrollees,” they wrote.

For insurers, however, the AQC may be a double-edged sword. “[C]ompeting insurers with similar provider networks could offer lower premiums without incurring the costs of managing an ACO,” the researchers concluded.