Blue Cross Blue Shield of Massachusetts’ Alternative Quality Contract slowed the rate of medical spending growth by up to 12 percent while improving patient care over the course of eight years, according to a Harvard Medical School study published in the New England Journal of Medicine. The study compared patients covered under the AQC to comparable populations within a traditional fee-for-service model. The AQC is one the largest and longest-running private payment innovations in the country.

Courtesy: Blue Cross Blue Shield of Massachusetts

The Harvard Medical School study found the original 2009 AQC physician groups yielded average savings on claims costs over eight years, from 2009 through 2016, with savings accelerating over time. The average annual claims by patients with doctors in the AQC were $461 less than those of the control group, an average claims savings of 11.7 percent per patient. Physician practices that entered the AQC in later years experienced smaller or comparable savings on claims. The study also found that the AQC improved the quality of patient care across several measures compared to New England and national averages, including those managing chronic conditions like diabetes and high blood pressure.

“The study suggests that the AQC has helped motivate changes in the delivery of care over its first eight years,” says Zirui Song, M.D., Ph.D., assistant professor of health care policy and medicine at Harvard Medical School and Massachusetts General Hospital, and the study’s leading researcher. “It has helped change the rates that physicians order tests and some imaging modalities, the rates of emergency department admissions, and the management of chronic conditions, as demonstrated through several aspects of care quality compared to regional and national averages over this time period.”

The AQC was introduced by Blue Cross in 2009 and changed a century-old medical reimbursement system from one based primarily on fee-for-service for doctor visits, tests and hospital admissions to one based on the quality of care, health outcomes, and patient satisfaction. Physicians receive a “global” budget rather than payment for each test and office visit. The system emphasizes preventative care to keep patients healthy, and gives clinicians flexibility to innovate in patient care – for example, by making social services, behavioral health care, and home care available to those who need it. By linking financial incentives to clinical quality, patient outcomes and overall resource use, the AQC is designed to moderate cost growth, while producing significant improvements in the quality of patient care.

Physicians and hospitals that adopt the AQC agree to take responsibility for the full continuum of care received by their patients, regardless of where the care is provided. Today, more than 80 percent of the physicians and hospitals in the Blue Cross network participate in the AQC. According to company executives, Blue Cross Blue Shield plans are leaders in payment innovation, transforming health care delivery through value-based models like the AQC. More than 74 million Blue Cross Blue Shield members are part of payment programs that support and reward care coordination, appropriate utilization, and health outcomes.

“This independent and rigorous evaluation of eight years of data demonstrates that the AQC is achieving its twin goals of lower costs and better care for our members,” says Andrew Dreyfus, president and CEO of Blue Cross. “These impressive results would not have been possible without the incredible effort, commitment and leadership of our physician and hospital partners.”

Combined with earlier evaluations of the AQC, the researchers also found that savings on claims, which were initially smaller than incentive payments to the provider groups during the early years of the AQC, began to exceed incentive payments to generate net savings starting at around year four. Moreover, the AQC was associated with an improved quality of care in a fairly sustained way, starting as early as the first year of the payment model through the eight-year study period.

“The continued success of the AQC reflects the commitment of the participating physicians and hospitals to redesign the way they deliver care to emphasize quality and efficiency,” Dreyfus says. “Our partnership provides strong evidence that global budget models like the AQC can lead to significant quality improvements and cost savings.”