The health care law's Accountable Care Organizations often get compared to unicorns: We know what they are supposed to look like, but have never actually seen one.
ACOs are meant to move us away from an expensive, broken health care system that rewards doctors for providing a high volume of care and move us towards one that rewards higher quality. They involve groups of doctors accepting flat fees to manage the care of a given set of Medicare patients. If the doctors deliver high-quality care in a cost-effective way, they net any savings left over.
It all sounds great in concept. In practice though, ACOs have proved just as elusive as mythical beasts. That's what makes a new Health Affairs paper exciting. Harvard researchers have found something that looks a whole lot like their unicorn: An ACO that is up, running and looks to be delivering the exact results everyone has hoped for.
Blue Cross Blue Shield of Massachusetts spent years paying health care providers for each service they provided, just like the rest of the health care system. Three years ago, they offered doctors a payment model that looked a whole lot like an ACO.
Physicians and hospitals could accept a lump sum for all care delivered to a group of patients. If they could deliver medical care for less than that amount - while hitting certain quality metrics - the providers would net a profit. There's was also a risk: Providers who spent too much would eat the difference.
This project is called the Alternative Quality Contract. In yesterday's Health Affairs, a team of Harvard researchers published a long look at how its been doing - and it looks to do be doing pretty well.
The seven provider groups involved in the project are saving money. You can see in the chart below, which looks at doctors who came into the program from traditional, fee-for-service payment arrangements:
There is, however, a concern here: What if doctors are getting to those savings simply by skimming on care that patients need?
The Health Affairs paper suggests that's not the case: Quality metrics have ticked upward at the same time that costs have gone down. This payment model was, over two years, associated with a 3.7 percent annual increase in members hitting targets for chronic care management, doing things like managing hypertension and diabetes.
The Alternative Quality Contract is, in short, delivering the exact result that its creators hoped for: Higher quality care at a lower cost. That should be encouraging to the new Accountable Care Organizations just getting started, which will use a similar payment structure for Medicare patients.
Some may not prove equally successful to this Massachusetts experiment. It's difficult to get doctors on board with such payment models; patients, meanwhile, don't always like hearing that less care can be better.
Still, this Massachusetts experiment provides a proof-of-concept. It shows that under certain conditions, these new payment models can work in the exact way health policy wonks have hoped - and that health policy unicorns do, in fact, exist.