Blue Cross Blue Shield of Massachusetts The Alternative QUALITY Contract: Year One Results

Introduction In an effort to moderate the unsustainable rate of increase in health care costs and improve the quality of patient care and health outcomes, Blue Cross Blue Shield of Massachusetts (BCBSMA) introduced in 2009 a new provider payment model called the Alternative Quality Contract (AQC). Hospitals and physicians who enter into the AQC agree to take responsibility for the full continuum of care received by their patients — including the cost and quality of care — regardless of where the care is provided. The new contract model combines a per-patient global budget with significant performance incentives based on nationally endorsed quality measures over a five year period. In speaking directly about the AQC model, Stuart Altman, a Professor of Health Policy at Brandeis’ Heller School for Social Policy and Management, and colleagues recently said, “global payment has the greatest potential for encouraging shifts in health care resource use from low-value to high-value services.” The AQC model is premised on the belief that fundamental change in payment is required to move from a system whose incentives have been largely about increasing the quantity of services to a system whose incentives are focused on the quality and value of services provided. Over the past two years, the number of AQC groups – physicians and hospitals – has grown significantly (Figure 1). Early results of the AQC provide compelling evidence that establishing provider accountability for health care quality, outcomes and costs by changing the payment model can stimulate significant improvements in all three areas.