Blue Cross AQC Contract Examined

An article in this week’s New England Journal of Medicine takes an interesting look at the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract in terms of its impact on cost and quality and lessons it may hold for broader attempts to move towards global payment, locally and nationally.

The report – Health Care Spending and Quality in Year 1 of the Alternative Quality Contract – was compiled by researchers at the Harvard Medical School, the Heller School and Boston University. According to the report the AQC contains three distinguishing features.  First, physician groups, in some cases together with a hospital, enter into 5-year global budget contracts (rather than standard 1-year contracts).   Second, AQC groups are eligible for pay-for-performance bonuses up to 10% of their budget, with performance measures of ambulatory care and hospital care each contributing to half of the calculation of the bonus. Third, AQC groups receive technical support from BCBS, including reports on spending, utilization, and quality, to assist them in managing their budget and improving quality.

At present, the authors report, there are 321 PCP practices and more than 4000 physicians in the AQC.   The very general findings:

  • AQC was associated with modestly lower medical spending and improved quality in the first year after implementation.
  •  AQC quality bonuses are much higher than those in most pay-for-performance programs in the United States, since they apply to the entire global budget rather than to physician services alone or PCP services alone.
  • Procedures, imaging, and testing accounted for more than 80% of the savings. Savings derived largely from less spending on facility services in the outpatient setting. There were no significant changes in spending for inpatient care or for physician services.

The question raised is: are savings at least for this non Medicare population more in “shifting outpatient care to providers who charged lower fees” than in behavior change?  If so, what lessens are here for broader global payment models, especially those that involve Medciare and Medicaid?


Author: Pat Kelleher

Pat Kelleher is Executive Director of the Home Care Alliance of Massachusetts.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: