The Globe today published a front-page article, “Blue Cross plan shows reduction in spending.” The piece is about Blue Cross’s new contract for Accountable Care Organizations (ACOs), and it suffers from one major problem: both academic reports cited in the article actually show that the Blue Cross ACO plan INCREASED health care spending compared to traditional fee-for-service enrollees.
It is hard to imagine a more misleading presentation of the findings.
The problems begin with the study authors – two of whom are Blue Cross employees – who do their best to spin the findings positively for the insurance company. They do this by defining “total medical spending” for the ACO enrollees in a completely different, and frankly dishonest way from the “total medical spending” for the fee-for-service population. All payments from Blue Cross to the fee-for-service providers are included, but for the ACO population they leave out the capitation payment as well as the pay-for-performance payments: the two things that actually set the accountable care model apart from fee-for-service. I am not aware of any other study or precedent for leaving such payments out of the definition of “medical spending.” It is especially bizarre that when comparing fee-for-service with capitation, they would leave out the actual capitation payment.
Would anyone read this article and not come away thinking that Blue Cross had successfully controlled costs to some extent with this new payment model? The reality is that, at least in the first two years, it drove up costs.
The author partially acknowledges this towards the end of article, writing ‘In the second year of the contract, the bonuses and budgets for doctors were “sufficiently generous” so that the overall dollar amounts Blue Cross paid to the medical groups did not slow compared to what it paid other practices. Therefore, the money doctors saved on care was not reflected in insurance premiums.”
‘[D]id not slow’ is misleading: the accurate word would be ‘increased.’ However, it is hard to understand how doctors ‘saved on care’ when the budgets and bonuses they received for providing care mean they were being paid more than they previously had been under fee-for-service.