Quality Contract ' In Massachusetts Medical Group Responses To Global Payment : Early Lessons From The ' Alternative

The largest insurer in Massachusetts, Blue Cross Blue Shield, began a new program in 2009 that combines global payments—fixed payments for the care of patient populations during a specified time period—with large potential quality bonuses for medical groups. In interviews with representatives of the participating medical groups, many of which could be considered prototype accountable care organizations, we found that most groups initially focused on two goals: building the infrastructure to help primary care providers earn quality bonuses; and managing referrals to direct patients to lower-cost settings. Groups are working to overcome numerous challenges, which include improving their data management capabilities; managing conflicting incentives in their fee-for-service contracts; and establishing cultures that emphasize teamwork, patient-centered care, and effective stewardship of medical resources. The participating medical groups are diverse in terms of size, organizational structure, and prior experience with managed care contracting. If the groups can succeed in reducing annual growth in health spending by half over the five-year contract, it could signal that even newly formed accountable care organizations can navigate a shift from fee-for-service to population-based payment models. P olicy makers interested in delivery system reform have recently focused on the potential for accountable care organizations to improve both the quality and the efficiency of health care. Accountable care organizations are groups of providers organized to deliver efficient, well-coordinated health services to defined populations across the continuum of care. In the health policy community, there is widespread hope that these organizationswill be able to achieve better quality at lower cost,when combined with payment mechanisms that support these objectives. However, skeptics argue that most health care providers are ill prepared to implement the principles of accountable care organizations effectively. Nevertheless, the Affordable Care Act of 2010 has prompted many providers to begin preparing to become accountable care organizations in anticipation of the newMedicare shared savings program, which would reward them for meeting certain spending and performance standards. The draft Medicare rules, which were released for public comment in March 2011, have been criticized extensively and are being revised. The Centers for Medicare and Medicaid Services has also proposed other accountable care organization models—most notably the proposed “Pioneer” program and the proposed “Transitions” program for organizations that previously participated in the Medicare Group Practice Demonstration Project. The advent of these various models raises a doi: 10.1377/hlthaff.2011.0264