Commercial Accountable Care

The evaluation course examined why most federal payment models did not produce net savings. The most durable counterexample in the literature is not a federal model at all. It is a commercial contract between one insurer and provider organizations in one state.

The Alternative Quality Contract

Blue Cross Blue Shield of Massachusetts introduced the Alternative Quality Contract in 2009. Its structure is a global budget for a defined population combined with substantial quality incentives, which is to say population-based payment of the kind the introductory course described, implemented commercially rather than through Medicare.

What the eight-year evaluation found

Researchers followed the contract from 2009 through 2016 and published the results in the New England Journal of Medicine.

On spending: “the increase in the average annual medical spending on claims for the enrollees in organizations that entered the AQC in 2009 was $461 lower per enrollee than spending in the control states (P<0.001), an 11.7% relative savings on claims.”

On quality: “Most quality measures of processes and outcomes improved more in the AQC cohorts than they did in New England and the nation in unadjusted analyses.”

On whether it paid for itself: this is the finding that distinguishes it from much of the federal record. “In the later years of the initial AQC cohorts and across the years of the later-entry cohorts, the savings on claims exceeded incentive payments, which included quality bonuses and providers’ share of the savings below spending targets.”

The authors concluded that the model “was associated with slower growth in medical spending on claims, resulting in savings that over time began to exceed incentive payments,” with quality “higher than or similar to average regional and national quality measures.”

Why it worked when so many models did not

Several features distinguish the Alternative Quality Contract from the typical federal demonstration:

• Time. Eight years, with cohorts entering in different years. The evaluation course noted that most federal models were assessed after three to five years, often before redesign could mature.
• One payer with real volume. Participating groups had enough of their panel under the contract that changing care patterns made economic sense, rather than managing a small carve-out differently.
• A negotiated budget rather than an administratively rebased benchmark. The ACO course covered how benchmark rebasing erodes returns for successful federal ACOs over time. A commercial negotiation does not eliminate that dynamic, but it is not governed by the same formula.

Worth remembering: the honest reading is that this is one insurer, in one state, in an unusually consolidated and sophisticated provider market, evaluated against a comparison group drawn from other states. That is a real study with a real effect, and it is not proof that the same contract would work in a fragmented market with less capable provider organizations. What it does establish is that population-based payment can produce sustained savings alongside maintained quality when the conditions are right, which is more than the federal record on its own demonstrates. The useful question is which of those conditions did the work.

Key takeaways

• The Alternative Quality Contract is a commercial global budget with quality incentives, launched in 2009.
• Over eight years, claims spending for the initial cohort was $461 lower per enrollee, an 11.7 percent relative saving.
• Quality measures improved more than regional and national comparisons.
• Savings eventually exceeded incentive payments, which much of the federal record did not achieve.

Sources

• Song et al., Health Care Spending, Utilization, and Quality 8 Years into Global Payment, NEJM 2019 (opens in a new tab)