Research >> NSF Research Center

Challenges of a changing care paradigm


In an effort to improve healthcare quality and decrease overuse, Blue Cross Blue Shield of Massachusetts enacted the Alternative Quality Contract (AQC) in 2009. This five-year contract established a global payment system that granted providers a fixed budget to spend on their patients. The contract encouraged high-quality care by providing bonuses for positive performance on quality measures. Providers’ efforts were supported by constant communication between provider organizations and Blue Cross Blue Shield. A differences-in-differences study found that the AQC resulted in increased quality of care and decreased spending on procedures, though total spending by Blue Cross Blue Shield did not decrease.


Overall, the AQC reduced procedure spending and improved quality of care in groups associated with the five-year contract. By 2010, all organizations associated with the AQC had received quality bonuses, and provider spending decreased. However, the quality bonuses and the use of resources, among other variables, did not result in total lower spending for BCBSMA. A study using difference-in-differences was conducted for each year of the contract. This study compared spending and quality between groups that joined the AQC and control states from 2009-2012. Table 1 shows the percentage savings from the AQC for each year of the program.

Year Percent Savings Level of Significance

2009 6.8% (P<0.01)

2010 8.8% (P<0.01)

2011 9.1% (P<0.01)

2012 5.8% (P=0.04)

Table 1: Percent Savings from ACQ. Data taken from Song, Z., et al., Changes in health care spending and quality 4 years into global payment. New England Journal of Medicine, 2014. 371(18): p. 1704-1714.

When compared to populations in other states, the members enrolled in the AQC experienced lower spending growth and greater quality improvements after 4 years. The AQC group and the control group did not differ significantly in pre-intervention trends, suggesting that post-intervention results were not driven by different internal trajectories of spending. Average performance on chronic disease management quality measures increased by 4.9% from the 2007-2008 period compared to the 2009-2012 period with AQC. The non-AQC control group saw an increase of 1% when compared during the same periods. Adult preventative care increased in quality by 2.7%, and pediatric care improved by 2.4% in the same time period. Throughout the four-year study, savings were concentrated in outpatient services, including imaging and testing. In the first two years of the contract, 75% of the savings were attributed to reductions in outpatient facility spending. Following the first year of the contract, where all groups met their budgets, the surpluses enabled the providers to invest in technology and infrastructure that further allowed for effective and efficient care in the years to follow.

Project Team

  • Eric Swenson,

  • Abigail Gonzalez,

  • Bita Kash,

  • Joyce Schmulson,

  • James Benneyan Ph.D

177 Huntington Avenue, Boston, MA 02115


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