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Saying “No” to Pay-As-You-Go?
A hospital bill and credit card.

Health care spending is growing, and multiple efforts have been proposed to curb it. Some suggested solutions focus on changing how insurers pay provider organizations (e.g. hospitals and clinical practices) for their care. A common practice requires insurers to pay a fee for each service provided, a model which can incur exaggerated costs due to a desire for more services, even when the benefit is unclear (fee-for-service model). However, a competing model sets an annual budget for clinical practices for a group of patients, which can promote more preventative care and discourage unnecessary services, lowering spending (Global Payment Model).

Unfortunately, evidence supporting this model is often short-term, mixed, and offers limited insights on health care outcomes. To address this issue, Early Independence Awardee, Dr. Zirui Song conducted a study focused on what could be the most expansive and longest running private-payer contract of a population-based global payment model.

Dr. Song’s team used insurance claims data from 2006 to 2016 within the Blue Cross Blue Shield of Massachusetts database. The longest-term data is from the first cohort of providers, which joined the plan in 2009. Over 2009 to 2016, average annual spending on claims had slower growth for the first cohort of people in the global payment model-based contract. They saved nearly 12% ($461 per member, per year) on medical claims, compared with control patients, likely enrolled in traditional, fee-for-service plans northeastern states. Other cohorts with fewer years in the Global payment model had comparable or smaller savings on claims. Patients also received improved quality of care for chronic diseases and conditions (e.g. diabetes and high blood pressure) and experienced fewer emergency room visits than patients in comparable states.

There are some limitations, including the locality and Massachusetts-specific policies, which may hinder how well the study’s findings apply to other locations. However, the expansive and detailed nature of this research is an important step in building evidence for measures that preserve high-quality of care while addressing ballooning health care costs.


Health Care Spending, Utilization, and Quality 8 Years into Global Payment. Song, Z., Ji, Y., Safran, D. G., & Chernew, M. E.The New England Journal of Medicine, (2019).381, 252-263.

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This page last reviewed on September 13, 2023