Boston Capital

The state’s big Medicare experiment

It’s hard to imagine the Boston area’s medical establishment and the federal government - two of the most entrenched institutions on the planet - working together as change agents.

As counterintuitive as that may sound, there may be some truth to it. The evidence: Five hospital systems and physician groups in Massachusetts were selected this week to participate in a pilot program that changes the way health care providers are paid to care for Medicare patients.

Yes, the government already runs all kinds of pilot programs related to health care paid for by Medicare and Medicaid. But there are reasons to believe this one, known as the Pioneer model, could lead to big changes within a few years.


It puts medical providers on a budget to care for about 150,000 Medicare patients and replaces some of the basic financial carrots of health care. This kind of arrangement - known as an accountable care organization - offers medical providers financial incentives to save money on the overall cost of patient care and penalizes them when those costs run too high. It also measures the quality of care delivered by doctors - everything from medical outcomes to patient perceptions about the care they receive.

Big players in the Boston medical establishment applied for the Pioneer program and were accepted by the government. That includes Partners HealthCare, Steward Health Care System, Atrius Health, and the Beth Israel Deaconess Physician Organization - four of the five leading hospital/physician organizations in Eastern Massachusetts. The Mount Auburn Cambridge Independent Practice Association is the fifth local group participating in the program.

The basic idea is not new: A version of it has been pitched aggressively to hospitals and physician groups for several years by Blue Cross Blue Shield of Massachusetts as a way to cope with rising medical costs. The Blue Cross Alternative Quality Contract, widely known as the AQC, is similar to Medicare’s Pioneer plan.


In fact, about two out of every three primary care doctors and four of every five specialists in Massachusetts participate in the Blue Cross AQC. They already care for some of their patients, about 700,000 in all, under that arrangement. That’s far more than the number of people who will receive care under the Medicare Pioneer program.

All five Massachusetts medical groups selected for the Medicare program already operate under a Blue Cross alternative quality contract to some degree. (Partners had just recently become involved.)

But the commitment to the Pioneer program - the more aggressive of at least two cost-conscious pilot plans Medicare offered to health care providers - certainly feels like an important threshold to cross. For one thing, the providers who get involved are committing to conduct a majority of their business in the fashion of an accountable care organization within three years.

Gene Lindsey, the doctor in charge of Atrius Health, sees a tipping point in the way big medical organizations think and plan. More financial rewards will become wrapped up in saving money, not in generating increased revenue. Those organizations, he says, will ultimately focus on the financial carrots that come with savings and efficiency.

Blue Cross president Andrew Dreyfus says the Medicare development is a kind of validation for the contracts it has been pushing. The insurer’s “alternative’’ concept is becoming a mainstream idea. “It almost feels like a no-turning-back point,’’ Dreyfus says. “I think when we look back in several years we’ll view this as a critical moment of change.’’


All these things - the Blue Cross contract and the Medicare Pioneer plan - really do require serious cultural change at big medical organizations. But will they actually work?

Blue Cross can produce research that suggests its contract does indeed have an impact on medical costs. Many of the ideas behind accountable care organizations sound like common sense. But conclusive proof is much harder to find. I think they will make a difference, but no one should set their sights too high in the short run.

Medical payment systems based on the total cost of care rather than a collection of bills for individual tests and services bills are going to become standard operating procedure in the health care world of the near future. That future is arriving early in Boston.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.