Good News Day Three: The Return of Provider Risk

Today’s Managing Health Care Costs Indicator is $1.1 billion

The Centers for Medicare and Medicaid Services recently announced that the Pioneer ACOs could save $1.1 billion over the next five years.   Blue Cross Blue Shield of Massachusetts has declared its Alternative Quality Contract a big success.  Physicians and hospitals across the country are at least asking the question “Can we deliver excellent health care and use fewer resources?”

Do I believe that the Pioneer ACO will save $1.1 billion?  I do not.

Still, this is great news!  Physicians and hospitals determine the resources that will be used in delivering health care.  The combination of the Affordable Care Act, state government shortfalls, and pressure from employers unable to tolerate continuing increases in health care expenses is driving the provider community to consider global budgeting – which was known in a different bygone age as capitation. 

Providers have shown that they can lower costs and improve quality when the incentives are aligned. See this post on Caremore earlier this fall.  Providers also can make health care a fertile environment for disruptive innovation – just as our current fee-for-service system only encourages accretive innovation.

Increased provider risk-sharing is highly likely to lead to improvements in the value delivered by our health care system.  And this year there seems to be substantial movement toward more provider risk sharing.

Who says I can’t be optimistic?