To Gauge ObamaCare Impact, Ignore CBO and Focus on AQC

To Gauge ObamaCare Impact, Ignore CBO and Focus on AQC

Which three-letter acronym actually matters most in health reform this month? Many are focusing on the CBO's projections -- but news about the AQC, a Massachusetts pilot project, could hold the keys to unlocking ObamaCare's potential.

The big health care story in Washington, D.C., on Wednesday morning comes down to three letters: CBO. The Congressional Budget Office released its latest projections about the Affordable Care Act’s cost and coverage, concluding that the Supreme Court’s changes to the ACA will lead to some states to opt out of its Medicaid reform. As a result, the ACA’s cost would fall by $84 billion over 11 years but lead to about three million fewer people receiving health insurance.

The CBO numbers are incredibly important in one sense: They reframe the debate over the ACA yet again. As “Road to Reform” noted last week, more than two-thirds of states are waffling on whether to participate in the law’s Medicaid expansion, and the new CBO numbers will offer new targets for supporters and opponents of ObamaCare to make their case.

But the CBO score is also more of a political story than policy news. And as both parties continue to haggle over the ACA’s price and impact, keep in mind that the CBO’s projections about health law costs are often wrong.

So rather than focus on estimates of future reforms, “Road to Reform” this week will examine results from a current one: the Alternative Quality Contract. It’s an important payment pilot developed by Blue Cross Blue Shield of Massachusetts — and a key forerunner of the ACA’s accountable care organizations.

AQC Offers Template for ACO

Under the AQC, which Blue Cross launched in January 2009, a hospital or physician group negotiates a budget — or global payment — that covers the cost of care for all patients in their practice. If participating providers stay under budget, they receive bonuses; if they overspend, they pay the difference.

Sound familiar? In one sense, the AQC harkens back to capitated payments, a model that California knows all too well. But it’s also a private-sector effort that mimics the government’s own Medicare Shared Savings Program, which has launched about 150 new ACOs in the past six months.

And as the Washington Post‘s Sarah Kliff noted this month, that’s why the AQC is so important to watch; it’s like “an ACO that is up, running and looks to be delivering the exact results that everyone has hoped for.”

Latest Results Hearten Supporters of Payment Reforms

Eleven organizations — which include 4,800 physicians, caring for more than 420,000 patients — have signed up for the AQC. And there’s new enthusiasm around the model because early reports had suggested that global payments might not effectively slow health cost growth.

Massachusetts Attorney General Martha Coakley (D) last year reported that AQCs did not cost less than the traditional fee-for-service model. One month later, a New England Journal of Medicine study indicated that the program generated only “modest” savings.

But a new Health Affairs study offers the strongest evidence yet that the AQC model can be successful. Harvard Medical School researchers examined the progress of the 11 participating organizations in the first two years of the pilot program. According to the researchers:

One key takeaway, according to the researchers, is that “organizations need time to implement change,” which is reflected in the second-year surge in savings and improvements. Researchers also spotlighted the organizations’ common money-saving strategies, such as referring patients to lower-cost providers and reducing utilization of extra tests, especially imaging.

Can Model Work, in the Long Run?

There are still many open questions about the AQC’s impact, and even why researchers uncovered certain savings.

For example, study author Michael Chernew says his team could not determine whether providers reduced inappropriate imaging or cut back on procedures that could have improved care. And Chernew adds that the “real question is going to become, as the global budget gets tighter, can the groups continue this level of savings” in the coming years?

Meanwhile, Eric Beyer — the president and CEO of Boston’s Tufts Medical Center, one of the first participants in the AQC — says that despite all the praise for the AQC from policymakers and providers, employers aren’t signing up.

“More of our population is moving toward products that have no requirement for paying providers for quality over quantity,” Beyer wrote in the Boston Globe last week. And while “this migration from performance-driven to preferred provider organizations” often gets missed in news coverage, “it’s an enormous step backward” for an industry desperately trying to tamp down its costs while raising care quality.

Here’s what else is happening around the nation.

Medicaid Expansion

In the States

On the Hill

Rolling Out Reform

Public Opinion

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