Health Care Spending and Quality in Year 1 of the Alternative Quality Contract

Study Questions:

Does provider accountability for spending impact spending and quality of care?


Blue Cross Blue Shield of Massachusetts implemented a global payment system called the Alternative Quality Contract (AQC), in which primary care physicians (PCPs) assumed accountability of spending and received bonuses for quality. Claims data from 2006 to 2009 for enrollees whose PCPs were in the intervention group were compared to those enrollees whose PCPs were not in the ACQ system.


A total 380,142 enrollees whose PCPs were in the AQC group were compared to 1,351,446 enrollees whose PCPs were in the control group. Average spending increased for enrollees in both the AQC and control group, but the increase was smaller for the AQC group ($15.51 [1.9%] less per quarter [p = 0.007]). Savings were largely from shifts in outpatient care towards facilities with lower fees and from lower expenditures for procedures, imaging, and testing. Also, savings were from lower spending for enrollees with the highest expected spending. The AQC system was associated with improvement in quality in performance measures related to management of chronic conditions among adult patients and pediatric care, but not for adult preventive care. All AQC groups met 2009 budget targets and earned surpluses. Total payments to AQC groups, including bonuses for quality, are likely to have exceeded the estimated savings in year 1.


The investigators concluded that the AQC system was associated with a modest slowing of spending growth and improved quality of care in 2009.


This analysis demonstrates that systems, which place accountability with physicians and reward quality of care, can impact overall spending patterns for health care. Further research is needed to determine if such programs would impact spending in other groups of patients such as Medicare beneficiaries. In addition, more detailed analysis is required to understand how such programs can improve quality related to preventive care while reducing cost.

Keywords: Quality Improvement, Social Responsibility, Physicians, Primary Care, Polydeoxyribonucleotides, Blue Cross Blue Shield Insurance Plans, Health Expenditures, Nucleic Acid Conformation, Medicare, Massachusetts, United States

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