Bending the Cost Curve? Results from a Comprehensive Primary Care Payment Pilot

In this paper we analyze the impact of using a risk-adjusted comprehensive payment model, in support of In this paper we analyze the impact on total medical costs of using a risk-adjusted comprehensive payment model, to support a patient-centered medial home. We compare 2008-2010 insurance claims data on treatment and control practices from a network health plan in upstate New York. Practices in treatment group embraced a risk-based comprehensive payment model receiving risk-adjusted base payments and bonuses, compared with fee-for-service in the control group. We estimate the treatment effect using difference-in-differences, controlling for trend, payer type, plan type, and patient fixed effects. We weight to account for partial-year eligibility, use propensity weights to address differences in exogenous variability between control and treatment patients. Our estimation results suggest that medical spending in the treatment group appears to be 5.8 percent lower in year one and 8.7 percent lower in year two; the largest proportional two-year reduction in spending occurs in laboratory test use, 16.5 percent. We find that risk-based comprehensive payment model has notably dampened spending growth for the practices in the treatment group