One popular idea for lowering the nation’s ballooning health care spending is to change the way insurers pay provider organizations for their care.

Instead of paying a fee for each service rendered—a model that can encourage the unscrupulous use of more services even when the benefit is dubious—reformers suggest giving clinical practices a global yearly budget to care for a population of patients. The rationale is that operating with a capped budget would incentivize greater use of preventive care and discourage wasteful services.

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Evidence from preliminary, and mostly short-term, studies of these so-called “global payment” experiments has been mixed and has offered a limited snapshot on outcomes. The question remained: Could it work over the longer term once the early changes or investments in care delivery had been made?

The likely answer may be yes, according to research published July 18  in The New England Journal of Medicine, which reveals that one of the largest, oldest private insurance plans to use population-based global budgets achieved sustained success in slowing spending growth while improving the quality of patient care.

Over eight years, average medical spending for patients of an initial cohort of provider groups covered by an alternative, global payment contract with a large commercial insurance provider in Massachusetts saved nearly 12 percent ($461 per member, per year) on medical claims, compared with patients likely in traditional, fee-for-service plans across the northeastern United States. Subsequent provider groups with fewer years in the payment model had comparable or smaller savings on claims.

Read more at Harvard Medical