Blue Cross Blue Shield Massachusetts - Alternative Quality Contract

Program Location: 
Boston, MA
Payer Type: 
Blue Cross Blue Shield Massachusetts

Reported Outcomes


Established in 2009 by Blue Cross Blue Shield Massachusetts (BCBSMA), the Alternative Quality Contract (AQC), is described as an innovative global payment model that uses a budget based methodology, which combines a fixed per-patient payment (adjusted annually for health status and inflation) with substantial performance incentive payments (tied to the latest nationally accepted measures of quality, effectiveness, and patient experience). The goal of this restructured model is to enable the delivery system to give the patient the best result from the most appropriate treatment by the right kind of provider at the right time and in the most appropriate setting. Blue Cross Blue Shield of Massachusetts' Alternative Quality Contract gives provider groups an annual budget for meeting all the healthcare needs of their patients while still hitting quality targets.

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Payment Model: 

BCBSMA establishes a global budget for AQC provider organizations to cover all services and costs. The contract model is designed to include inpatient, outpatient, pharmacy, behavioral health, and other costs and services associated with each of their BCBSMA patients. The initial global budget is based on historical health care cost expenditure levels. It is adjusted each year for inflation, and the health status of the provider’s specific BCBSMA patients. Providers retain the margins derived from the reduction of inefficiencies.

Global Budget: 

  • population-based budget covers full care continuum
  • health status adjusted
  • based on historical claims
  • shared risk
  • trend targets set at baseline for multi-year

Long-term contract

  • 5 year agreement
  • sustained partnership
  • supports ongoing investment and commitment to improvement

In addition to the global budget, BCBSMA also offers providers performance incentives with the potential to increase the total payment by up to 10 percent. It is a key feature of the AQC, designed to promote quality, safety, and patient-centered care. These incentives apply to both physician and hospital services, and are intended to support providers in achieving the highest levels of safe, affordable, effective, patient-centered care. The incentives are linked to clinical performance measures related to process, outcomes, and patient care experience, and include inpatient and ambulatory care.

Throughout the term of the AQC, all member claims are reimbursed on a fee-for-service basis. At the end of each year, all of the services and costs, including inpatient, outpatient, pharmacy, behavioral health, and others that are associated with the AQC provider organizations’ BCBSMA patients, are then charged against the AQC global budget. This determines the provider organizations’ performance relative to the global budget.

Improved Health: 

In 2010, provider groups that joined the AQC in 2009 continued to improve quality and outcomes—while groups that joined in 2010 made significant quality improvements in their first year. Participating groups exhibited exceptionally high performance for all clinical outcome measures, with many approaching performance levels believed to be the best achievable for chronic conditions, such as diabetes, heart disease, and hypertension.

AQC improved health outcomes to 12 percent above the HEDIS national average

Cost Savings: 

New England Journal of Medicine (October 2014)

  • 6.8% savings over four years when calculated as a proportion of the average post-AQC spending level in the 2009 AQC cohort

Health Affairs (August 2012)

  • $107 savings per patients in 2nd year of program
Last updated March 2019
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