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Accountable Care Organizations: (a) Alternative Quality Contract

Healthcare: Healthcare System Efficiency
  Literature review updated November 2015.

Evaluations of health care policies and programs often measure two broad types of outcomes: (1) those that reflect the health status of people (e.g., disease incidence) and (2) those that reflect health care system costs and utilization. Cost and utilization measures may or may not be an indication of health status or well-being.

An Accountable Care Organization (ACO) is a provider group that is responsible for the cost and quality of medical care for a patient population. ACO contracts provide financial incentives for providers to reduce costs and improve the quality of care.

The Alternative Quality Contract (AQC) is an ACO model implemented in 2009 by Blue Cross Blue Shield (BCBS) of Massachusetts with providers in their commercial health plans. These ACOs cover general patient populations of children and adults under the age of 65.

Providers are paid a global budget (a fixed payment for expected patient costs), a share of savings relative to spending targets, and incentive payments for meeting quality thresholds. BCBS also provides technical support. Providers are required to absorb some of the costs if spending exceeds targets.

AQC contracts last for five years. Studies have examined provider performance during the first four contract years. The reductions in medical costs reported below do not represent net savings to BCBS. These estimates do not account for BCBS costs from shared savings payments, quality incentive payments, and other support costs.
 
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META-ANALYSIS
CITATIONS

*The effect size for this outcome indicates percentage change, not a standardized mean difference effect size.

Meta-analysis is a statistical method to combine the results from separate studies on a program, policy, or topic to estimate its effect on an outcome. WSIPP systematically evaluates all credible evaluations we can locate on each topic. The outcomes measured are the program impacts measured in the research literature (for example, impacts on crime or educational attainment). Treatment N represents the total number of individuals or units in the treatment group across the included studies.

An effect size (ES) is a standard metric that summarizes the degree to which a program or policy affects a measured outcome. If the effect size is positive, the outcome increases. If the effect size is negative, the outcome decreases. See Estimating Program Effects Using Effect Sizes for additional information on how we estimate effect sizes.

The effect size may be adjusted from the unadjusted effect size estimated in the meta-analysis. Historically, WSIPP adjusted effect sizes to some programs based on the methodological characteristics of the study. For programs reviewed in 2024 or later, we do not make additional adjustments, and we use the unadjusted effect size whenever we run a benefit-cost analysis.

Research shows the magnitude of effects may change over time. For those effect sizes, we estimate outcome-based adjustments, which we apply between the first time ES is estimated and the second time ES is estimated. More details about these adjustments can be found in our Technical Documentation.

Meta-Analysis of Program Effects
Outcomes measured No. of effect sizes Treatment N Effect sizes (ES) and standard errors (SE) Unadjusted effect size (random effects model)
ES SE Age ES p-value
Healthcare costs*
Percent change in total medical costs.
34 4 1348235 -0.075 0.013 34 -0.075 0.001
Emergency department visits*
Whether someone visited the emergency department, or the number of times they visited the emergency department.
34 1 380142 0.007 0.013 34 0.007 0.607
Prescription drug costs*
Percent change in prescription drug or pharmaceutical costs.
34 1 332624 -0.002 0.019 34 -0.002 0.923

Citations Used in the Meta-Analysis

Afendulis, C.C., Fendrick, A.M., Song, Z., Landon, B.E., Safran, D.G., Mechanic, R.E., & Chernew, M.E. (2014). The impact of global budgets on pharmaceutical spending and utilization: early experience from the alternative quality contract. Inquiry: a Journal of Medical Care Organization, Provision and Financing, 51.

Sharp, A.L., Song, Z., Safran, D.G., Chernew, M.E., & Mark, F.A. (2013). The effect of bundled payment on emergency department use: alternative quality contract effects after year one. Academic Emergency Medicine: Official Journal of the Society for Academic Emergency Medicine, 20(9), 961-4.

Song, Z., Rose, S., Safran, D.G., Landon, B.E., Day, M.P., & Chernew, M.E. (2014). Changes in health care spending and quality 4 years into global payment. The New England Journal of Medicine, 371(18), 1704-14.