Private-Payer Innovation In Massachusetts: The ‘Alternative Quality Contract’
- 1Michael E. Chernew (Chernew{at}hcp.med.harvard.edu) is a professor of health care policy at Harvard Medical School, in Boston, Massachusetts.
- 2Robert E. Mechanic is a senior fellow at the Heller School for Social Policy and Management, Brandeis University, in Waltham, Massachusetts.
- 3Bruce E. Landon is an associate professor of health care policy at Harvard Medical School.
- 4Dana Gelb Safran is senior vice president for performance measurement and improvement at Blue Cross Blue Shield of Massachusetts, in Boston.
- *Corresponding author
Abstract
In January 2009 Blue Cross Blue Shield of Massachusetts launched a new payment arrangement called the Alternative Quality Contract. The contract stipulates a modified global payment (fixed payments for the care of a patient during a specified time period) arrangement. The model differs from past models of fixed payments or capitation because it explicitly connects payments to achieving quality goals and defines the rate of increase for each contract group’s budget over a five-year period, unlike typical annual contracts. All groups participating in the Alternative Quality Contract earned significant quality bonuses in the first year. This arrangement exemplifies the type of experimentation encouraged by the Affordable Care Act. We describe this unique contract and show how it surmounts hurdles previously encountered with other global-payment models.
- Received October 1, 2010.
- Accepted December 15, 2010.
