Health care is a deeply partisan issue, as the presidential campaign makes clear every day. Yet beneath the bitter debates and far from the daily headlines, Republicans and Democrats have quietly come to agree on one reform with far-reaching consequences: transforming our century-old system for paying doctors for the care they provide from one based on fee-for-service visits, tests, and hospital admissions to one based on quality of care, health outcomes, and patient satisfaction, otherwise known as value-based care.
At the federal level, top Trump administration health officials are strong advocates for value-based payment initiatives that originated during the Obama administration. Hundreds of accountable care organizations that care for millions of patients are tying payments to quality of care, improved patient outcomes, and better use of resources. The model has been adopted or explored in many states, some led by Republican lawmakers, others by Democrats.
There has been, however, legitimate skepticism in the public and private sectors about how well a value-based care model can work in the long run. Prior studies showed promising results, but there was not rigorous proof of sustained improvement in care and lower cost over time. Now there is. Research published last week in the New England Journal of Medicine — a meticulous examination of one of the largest and longest-running value-based arrangements in the country — shows that this model can help solve the cost and quality problems that plague the U.S. health care system.
The study, led by Harvard Medical School researchers, compared health and spending among several hundred thousand members of my health plan, Blue Cross Blue Shield of Massachusetts, over an eight-year period with health and spending among a control group of more than 1 million privately insured enrollees in other states. The Blue Cross Blue Shield members were cared for by physicians participating in what we call the Alternative Quality Contract (AQC), a model that provides significant financial incentives to physicians and hospitals for delivering high-quality patient care and for controlling costs. The rest were cared for by out-of-state physicians paid under the traditional fee-for-service model.
The researchers saw smaller growth in average annual medical spending on claims for the Blue Cross Blue Shield members than for those in other states, with savings deepening over time, up to 12%. At the same time, patients cared for under the AQC model received better preventive care compared to the control group and achieved better management of chronic illnesses such as diabetes and high blood pressure.
The percentage of Blue Cross Blue Shield of Massachusetts members who met the clinical criteria for quality care for chronic disease management increased from an average of 75% before the initiation of the AQC to 85%, in stark contrast to the New England and national averages, which declined slightly. Unnecessary emergency room visits dropped, as did unneeded imaging.
My hope is that these impressive results for value-based care will encourage accelerated, nationwide reform in the way health care is paid for. Here are some of the key ingredients for success:
Value-based partnership. A decade ago, Blue Cross Blue Shield of Massachusetts started talking with local physicians about alternatives to traditional fee-for-service payment. Many told us they would welcome financial incentives to do what was best for their patients, not what was most costly. Under the AQC model that we developed with their insights, physicians receive a global budget for each member’s care, with incentives tied to quality improvement and savings.
To address concerns that this approach could provide clinicians with incentives to avoid sick patients or withhold necessary care, the AQC model shares financial risk, adjusts payments to reflect the health or illness of a physician’s patient population, and includes significant rewards for quality care. When physicians stay under budget, they benefit from the savings along with Blue Cross Blue Shield; if they overspend, we share in the losses. Clinicians receive bonuses for meeting quality targets related to patient care, outcomes, and satisfaction.
They also have flexibility to invest in new and better ways to care for patients — for example, by making social services, behavioral health care, and home care available to those living with serious chronic conditions.
Information. Health care delivery is far too complex for incentives alone to bring about systemic improvements in quality, efficiency, and effectiveness. Physicians also need information they can act on. We provide AQC physicians with weekly, monthly, and yearly data reports and analytics, including how they’re doing on quality measures, how satisfied their patients are with their care, and where their greatest opportunities for improvement may be in areas ranging from prescriptions to cost trends to emergency department use. We also arrange forums for groups of physicians to share their best practices.
Leadership. When we launched the AQC a decade ago, there was a common misconception that a value-based care model would work only for large physician groups with advanced electronic medical record systems and relatively healthy patient populations. That isn’t the case. What matters most is physician leadership. Success has been achieved by groups with inspirational leaders and physicians who are willing to change, stay passionately involved, and make a sustained commitment to the shared goal of better care and lower costs. More than 80% of Massachusetts physicians and hospitals currently take part in the AQC model.
Trust. As a local not-for-profit health plan, we constantly work with physicians and hospitals in Massachusetts on initiatives aimed at improving the health of communities, from expanding coverage to tackling the opioid epidemic to improving care at the end of life. This shared commitment to affordable, high-quality care for all of the state’s residents has created a level of trust that allows ongoing, productive conversations about changing and continuously improving the payment model.
It’s no secret that our national health care systems have serious problems. The U.S. is spending more and getting less for it. Americans are not getting healthier, despite the nearly one-fifth of our economy we devote to health care. But there is hope.
My colleagues and I believe that the positive, long-term results of the Alternative Quality Contract model will signal to other payers — public and private, in red and blue states — that they should continue on this path. The model didn’t require new laws or complex regulatory changes, so the opportunities are readily available. There is potential for significant savings for Americans, as well as significant improvements in not only health care but also the nation’s health.
Andrew Dreyfus is the president and CEO of Blue Cross Blue Shield of Massachusetts, which provides coverage to 2.8 million people. He previously served as the not-for-profit health plan’s executive vice president of health care services and led the development of the Alternative Quality Contract.