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New health care payment model lowering costs

A first-of-its kind health plan that rewards doctors for keeping patients healthy, rather than just doing expensive procedures, lowered health care spending and improved the quality of patient care for the fourth straight year, according to a new study.

The analysis by researchers at Harvard Medical School and published in the New England Journal of Medicine shows spending for patients in Blue Cross Blue Shield of Massachusetts’ Alternative Quality Contract grew 10 percent slower than for patients in traditional plans.

The alternative contract pays providers a set budget to take care of patients, rather than paying for every procedure and service -- regardless of outcome. The model aims to provide an incentive to control costs by keeping patients healthy; if providers exceed the budget, they absorb the additional expenses.


“Now we have the results of four years of one of the biggest, if not the biggest, payment reform initiatives in the nation, that show we are approaching the holy grail of health care, which is better care at lower costs,” said Andrew Dreyfus, Blue Cross Blue Shield’s chief executive.

Blue Cross was the first Massachusetts insurer to launch such a contract. Other insurers have started offering similar products as the health care industry faces growing pressure to control costs.

The Alternative Quality Contract includes 680,000 patients, about one-quarter of the insurer’s total members.

Dana Gelb Safran, a senior vice president at Blue Cross who was involved with the study, said savings have increased over the study period, 2009 to 2012, as providers have gradually reduced unnecessary tests and care. Meanwhile, the study tracked an improvement in care. For example, the percentage of chronically ill patients whose diseases were under control rose to 74 percent from 60 percent

These results “may be useful to policymakers, insurers, and providers embarking on payment reform,” the study said. “Although it is still early, these results suggest that a two-sided global budget model may serve as a foundation for slowing spending and improving quality.”


Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.